Oil Prices On Course For A Weekly Gain Despite Economic Uncertainty
After four days of gains, crude oil prices were on track to end their two-week losing streak as traders once again turned their attention from economic indicators to OPEC+ supply policy. Brent crude was trading above $86 per barrel at the time of writing and West Texas Intermediate was changing hands at close to $84 per barrel, two days after the U.S. Energy Information Administration reported another massive draw in oil inventories, at 10.5 million barrels for the second to last week of August. That inventory draw followed another recently reported one of 17 million barrels, which contributed to a perception of strong, resilient demand for crude in the world’s largest consumer of the commodity. To date, crude inventories in the U.S. are at the lowest since last December. This perception undermined fears among traders that sluggish economic growth in the biggest oil markets in the world would affect global demand negatively, helped by positive economic data from the U.S. Even China’s latest PMI reading did not pressure prices, possibly because while the overall figure was in the contraction zone below 50, several important sub-readings were above 50, indicating growth. Meanwhile, OPEC+ is meeting next week to discuss its next moves and analysts expect the production cuts to remain unchanged and get extended for another month as the group seeks sustained higher prices. “We continue to expect cuts to be extended, with prices above US$90/bbl (on a sustained basis) required to draw OPEC supply back to market, as well as incentivize U.S. shale producers to increase drilling activity,” the National Australia Bank said in a note, cited by Reuters. Russia has already said it would extend its export cuts for another month, which also contributed to this week’s price gains and now traders anticipate an identical move by Saudi Arabia with regard to its production.
ONGC eyes 11pc rise in oil, gas output by 2026
ONGC expects to produce 44.546mn t of oil equivalent of crude oil and natural gas by the April 2025-March 2026 fiscal year, up by 11pc from 2022-23. It sees oil output increasing to 20.23mn t (148.3mn b/d) by 2023-24 and 20.838mn t by 2025-26, from 19.584mn t in 2022-23. It expects natural gas output to hit 20.882bn m³ (57.2mn m³/d) by 2023-24 and 23.708bn m³ by 2025-26, from 20.63bn m³ in 2022-23. ONGC is India’s largest oil and gas producer and any growth in its output will boost India’s efforts to enhance domestic oil and gas production to reduce dependence on imports. The firm has 22 major projects under implementation with an expected output of 94mn t of oil equivalent in the coming years, along with a strong pipeline of over 40 upcoming projects, ONGC chairman Arun Kumar Singh said. Exploration acreage area is also set to increase to 500,000km² by 2025-26 from 162,000km² currently. The firm has set a capital expenditure of over 300bn rupees ($3.62bn), focusing on exploration and rejuvenation of matured western offshore fields. These investments are alongside ONGC’s target to achieve net zero Scope 1 and 2 emissions by 2030. It is also set to invest another Rs1 trillion in green energy initiatives, including setting up renewable energy capacity as well as green ammonia, green hydrogen and offshore wind energy projects, and developing carbon capture, utilisation and storage (CCUS) technology. The company currently has 189MW of renewable energy generation capacity and is targeting 10GW by 2030 with this investment, according to its annual report. During 2022-26, ONGC is planning to set up 25 compressed biogas plants, 5GW of renewable energy capacity in Rajasthan, a 1mn t/yr green ammonia plant and wind energy projects, details of which are not yet known. Petrochemical plans ONGC will continue to transform 40-60pc of its feedstock crude into chemicals, and aims to increase its petrochemical capacity to over 8mn t/yr by 2030 from 3.4mn t/yr currently. “ONGC is collaborating with other entities to explore opportunities in the oil to chemical, refining and petrochemicals value chain by setting up two greenfield [oil-to-chemical] (O2C) plants in India,” Singh said. Further details of the O2C projects are not yet known. Petrochemical demand is expected to remain strong and will continue to be a key driver of oil and gas demand in the future, he added. Singh previously said state-controlled refiner MRPL is going ahead with plans to expand its petrochemical business. ONGC is MRPL’s main shareholder with a 72pc stake. MRPL will focus on establishing a petrochemical plant on India’s west coast and the expansion programme is under configuration, the company’s general manager M Venkatesh told Argus at the end of May, but did not give further details.
Government Hikes Price Of Domestic Natural Gas For September
The central government raised the price of domestic natural gas on Thursday to $8.60 per million metric British thermal units for September, from $7.85 per mmBtu in August. The gas produced from the nomination fields of Oil and Natural Gas Corp. and Oil India Ltd. will have a ceiling of $6.50/mmBtu, according to a notification by the Petroleum Planning and Analysis Cell. On April 8, the Ministry of Petroleum and Natural Gas linked the price of natural gas produced from legacy nomination fields of ONGC, OIL, and the New Exploration Licencing Policy blocks to the Indian crude basket. The price of natural gas from these fields was fixed at 10% of the monthly average of the Indian crude basket. Earlier, the gas prices were reviewed every six months under the New Domestic Natural Gas Pricing Guidelines, 2014, which were based on volume-weighted prices prevailing at four global gas trading hubs. These guidelines have now been rationalised due to the significant time lag and high volatility in gas prices. Gas produced by ONGC and OIL from their nomination blocks will be within the floor and ceiling prices, and gas produced from new wells or well interventions in the nomination fields of ONGC and OIL will be allowed a premium of 20% over the price under the administered price mechanism.