Nigeria Has Lost $46 Billion Worth Of Crude Oil To Theft
In the decade to 2020, Nigeria lost to oil theft more than 619.7 million barrels of crude oil valued at $46.16 billion, representatives for the Nigeria Extractive Industries Transparency Initiative (NEITI) said at a forum this week. During the period 2009 to 2020, Nigeria’s losses to oil theft averaged 140,000 barrels per day (bpd) valued at $10.7 million daily, the organization said, as quoted by local outlet Leadership. NEITI has compiled reports to establish how much oil, gas, and mining companies paid to the country and how much of those revenues were actually received by the government. More recently, Nigeria plans to hold an international roadshow to attract investments in its upstream sector, the petroleum regulator of OPEC’s biggest African oil producer said in a speech shared with Reuters this week. The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) plans to organize in the coming weeks an international roadshow to pitch upstream investments in the country, which looks to boost its oil production and significantly raise its natural gas output. “Whereas the global imperatives for energy transition is clear and justified, the need for Africa’s energy security, economic development and prosperity cannot be overemphasised,” the Nigerian regulator said. Nigeria aims to significantly increase its oil production to up to 1.7 million bpd by November 2023, hoping to win a higher quota in the OPEC+ agreement, Gabriel Tanimu Aduda, Permanent Secretary at Nigeria’s Ministry of Petroleum Resources, told Energy Intelligence last month Nigeria has consistently failed to produce to its quota in the OPEC+ agreement. The combination of pipeline vandalism and oil theft with a lack of investment in capacity has made Nigeria the biggest laggard in crude oil production in the OPEC+ alliance. Oil theft and pipeline vandalism have long plagued Nigeria’s upstream oil and gas industry, driving majors out of the country and often resulting in force majeure at the key crude oil export terminals.
IndianOil, BPCL To ONGC: Here’s How The Oil & Gas Sector Fared In Q1
The aggregate consolidated net profit of Indian oil and gas companies more than doubled in the June quarter of fiscal 2024. The 21 companies considered for the analysis posted cumulative profit growth of 134% year-on-year to 574.794 billion in the April-June period. Public sector refiners led the profit growth for the sector, with Indian Oil Corp. leading the pack as it recorded a net profit of Rs 137.5044 billion, compared to a net loss of Rs 19.925 billion in the year-ago period. Bharat Petroleum Corp. came in second with a consolidated net profit of Rs 105.509 billion, compared to a net loss of Rs 62.631 billion during the same period last year. Hindustan Petroleum Corp. posted a net profit of Rs 62.039 billion, compared to a net loss of Rs 101.969 billion in the June quarter of fiscal 2023, while Hindustan Oil Exploration Co.’s profit doubled to Rs 661 million from Rs 324 million a year ago. However, Chennai Petroleum Corp. posted the biggest net profit fall of 76% year-on-year to Rs 5565 million in the June quarter. This was followed by Supreme Petrochem Ltd. and Mangalore Refinery and Petrochemicals Ltd. which reported a 63% fall in net profit each. In terms of revenue, the sector saw an aggregate 13% fall in revenue growth, mainly on account of lower crude prices. Hindustan Oil Exploration, Deep Industries Ltd., and Castrol India Ltd. recorded the highest year-on-year revenue growth at 100%, 39%, and 7.4%, respectively. Sector giants in terms of market capitalisation like Reliance Industries Ltd., Oil and Natural Gas Corp., and Indian Oil saw a fall in revenue growth. Revenues of Reliance Industries Ltd. and Oil and Natural Gas Corp. fell by 20% each, while Indian Oil’s top line was down by 12%. Oil India Ltd. witnessed the highest revenue fall as sales slipped by 42%. This was followed by Chennai Petroleum and Mangalore Refinery, which recorded a 35% and 34% decline in revenue, respectively.
India Losing Its Steep Discount on Russian Crude Oil
The discount enjoyed by India on Russian crude oil since Moscow’s full-scale invasion of Ukraine in February 2022 has now shrunk from around $30 to $4 per barrel. Yet, while steep discounts have plunged, the Russian-managed shipping rates continue to remain higher than normal. India is now bearing anywhere between $11 and $19 of shipping costs per barrel from the Russian ports to India, which is higher than the rates for similar distances from other countries (Economic Times, July 10). Moreover, the price of Urals-grade oil has surged and surpassed the $60 price cap imposed by the Group of Seven (G7) countries, thus making it difficult for India to continue its oil trade with Russia in US dollars. As such, New Delhi is alternatively considering payments for Russian oil in Chinese yuan, as Russia has been banned from using the international SWIFT system due to its invasion of Ukraine. The price for Urals crude surged following the commitments made by Saudi Arabia and Russia to cut output by 1 million barrels per day (bpd) and exports by 500,000 per day starting in August 2023 (Times Now, July 16). India is the world’s third-largest importer of oil. As a result, New Delhi fully exploited the rapidly changing situation in the global oil market after Russia invaded Ukraine. India was able to further capitalize on the situation as some Western companies shunned buying Russian crude in retaliation for Moscow’s war (Al Jazeera, January 17). Only two months after the Kremlin’s invasion, Russia became India’s fourth-largest oil provider. New Delhi imported between 970,000 and 981,000 bpd of crude oil from Moscow in 2022–2023, which accounts for more than a fifth of India’s overall imports (see EDM, April 27). On December 5, 2022, the European Union and G7 imposed a $60 price cap on Russian oil to cut Moscow’s oil revenues and consequently limit its ability to finance its war. Before the embargo, India’s December 2022 oil imports from Russia were the highest in seven months. According to one estimate, Indian imports surged to an all-time high of 1.25 million bpd, about a quarter of the 4.9 million bpd New Delhi purchased overall. The Organization of the Petroleum Exporting Countries witnessed their share in India’s crude imports reduced to 64.5 percent in 2022, from a peak of 87 percent in 2008 (Al Jazeera, January 17). According to some estimates, India’s total bill of discounted Russian crude oil from April 2022 to May 2023 is valued at $186.45 billion; without the discount, this bill would have been $193.62 billion on average. Hence, India saved at least $7.17 billion just through purchasing discounted Russian oil (Indian Express, July 5). And the story does not end here, as India opened a backdoor to European markets and began to resell the discounted Russian oil it had purchased. New Delhi bought more and more Russian oil and exported it to Europe after refining it into fuel. This helped India boost its exports of diesel and jet fuel to Europe, with the country exporting between 70,000 and 75,000 bpd to Europe already for the 2023 fiscal year (see EDM, April 27). Now, it seems that the honeymoon is over for India. Today, the steep discount on Russian crude has decreased due to various factors. One major reason for the shrinking discount is the higher and more opaque costs for the shipping and insurance involved in the delivery of Russian oil to India. New Delhi buys crude oil from Moscow on a “delivered” basis, which means that the Kremlin makes all the arrangements for shipping and insurance. As such, invoicing for oil remains under the $60 price cap; however, the shipping and insurance costs are given by the three Russia-arranged shadow entities, which consume a large portion of Russian oil revenues. According to Indian refiners, the overall identity and nature of these entities remain opaque. Nevertheless, if these costs were taken into consideration, Russia’s Urals crude is actually being sold at a price around $70–$75 per barrel (Economic Times, July 10) Another reason for India’s narrowing discount is that Russian oil has found additional buyers, including China and Pakistan. Some Indian officials hold China’s rising oil demand as responsible for the decrease in Russia’s discount to India. “With Russian oil finding more buyers, the discounts to Indian refiners have been coming down. Earlier, we were getting discounts that varied from cargo to cargo,” one government official said. Another official mentioned, “We used to get around $15–$20 per barrel discount on Russian oil cargoes depending on what used to be the price in the spot market. That discount has become less now” (Wionnews.com, April 28). For Moscow, Pakistan has become a new outlet in South Asia for selling its crude oil. On July 12, former Pakistani Petroleum Minister Musadiq Masood Malik disclosed that Islamabad is in talks with Moscow for a second shipment of discounted Russian oil following the successful arrival in June 2023 of the first cargo of 100,000 tons of Russian Urals-grade crude to Pakistan (Dawn, July 12). Islamabad placed its first order for discounted Russian crude in April (Dawn, June 11). At present, Pakistan mainly relies on Saudi Arabia and the United Arab Emirates for 80 percent of its oil needs, about 154,000 bpd. Thus, the projected 100,000 bpd from Russia would significantly reduce Pakistan’s dependence on Middle Eastern fuel (Dawn, June 11).
Modi govt may soon decide on cutting petrol tax among other steps to quell inflation before Vote
Indian officials are considering a plan to reallocate as much as Rs 1000 billion ($12 billion) from the budgets of various ministries to contain a surge in food and fuel costs without imperilling the federal deficit target, according to people familiar with the matter. Prime Minister Narendra Modi will take a decision in the coming weeks, which could include lowering taxes on local gasoline sales and easing import tariffs on cooking oil and wheat, the people said, asking not to be identified as the discussions are private. It would be the second straight year of similar adjustments to contain costs for consumers after the government unveiled a $26-billion plan last year. The proposals follow the central bank’s last week rate decision where it left borrowing costs unchanged — one of the highest in Asia — flagging risks from soaring prices Shares of Hindustan Petroleum Corp., Bharat Petroleum Corp. and Indian Oil Corp. erased some of the earlier losses on news that India will cut domestic fuel taxes