Germany snapping up Indian fuels amid Russia sanctions: data
German imports of refined oil products from India soared in the first seven months of the year, official data showed Tuesday, much of which was likely made using crude oil from sanctions-hit Russia. Germany bought 451 million euros’ ($480 million) worth of Indian petroleum products between January and July. That was an increase of more than 1,100 percent on the 37 million euros spent over the same period a year earlier, national statistics agency Destatis said. The 12-fold jump comes after India became a leading buyer of Russian crude in the wake of Moscow’s invasion of Ukraine in February 2022. India’s fuel exports to Germany were “mainly gas oils used for the production of diesel or heating oil”, statistics agency Destatis said. Destatis noted that these products were derived from crude oil and that according to the UN Comtrade database, “India has been importing large quantities of crude oil from Russia” since the start of the war. Western countries have hit Russia with a slew of sanctions over the war, including a European Union embargo on seaborne oil deliveries from Russia. The EU – along with its G7 partners — also agreed to a price cap of $60 per barrel for Russian crude exported to other parts of the world. The measure has allowed India to snap up discounted crude from Russia before refining it and selling it to European customers.
Party has ended for oil marketers as high oil prices squeeze margins, say analysts
Oil marketing companies find themselves in a spot as oil prices have trended higher over the past few weeks, with little prospect of raising retail prices in the medium term, at least until the general elections next year. Higher oil prices and higher cracks, which have led to under-recovery, point to a tough second half of FY24 for them. In the week to September 10, refining benchmarks have declined 15 per cent to $10.3 a barrel, accompanied by a modest increase in marketing margins; however, margins have decreased sharply in the current quarter to date, Nomura said in a note on the sector. It observed that OMCs are recording under-recoveries of Rs 5.6 a litre on the sale of auto fuels. Last week, OPEC leaders led by Saudi Arabia and Russia, extended their oil production cuts, leading to an immediate hike in oil and fuel prices. With both countries extending their production cuts till the end of 2023, the situation is likely to remain tight till then. Oil prices have moved up to $90 a barrel in recent weeks. Fuel crack margins – the difference between oil prices and petroleum products – are higher, and this is likely to hurt OMCs, as retail prices are frozen. “Oil prices can get firmer in the short term. With key elections not far away, retail price hikes are unlikely,” said a note by Kotak Institutional Equities. It added that inventory gains are likely to help the OMCs in the current quarter, but the second-half will be tough if oil prices remain firm. The broker has a ‘reduce’ rating on the public sector OMCs — BPCL, HPCL and IOC. At the retail level, India is grappling with high food inflation and the government has to tread a tricky path in reining in inflation, while ensuring that fuel prices do not get out of control ahead of the elections. US investment bank Jefferies said diesel marketing margins are deep in the red, as the production cuts coincide with 20-year-low oil inventories in the US. OMCs benefited from low oil prices at the start of 2023, with margins of Rs 8-10 a litre. With a rise in oil prices, those gains have diminished, while margins on petrol have fallen to less than half, and they are making marketing losses on diesel. Jefferies said. HPCL is likely to be worst affected as it has the most adverse marketing-to-refining ratio among the pack. In India, with retail prices steady, fuel consumption has also been above pre-COVID levels. In August fuel consumption was at 18.6 million tonnes, up 6.5 per cent on year, and more than 3 per cent higher on pre-pandemic levels. Another area of concern for OMCs is higher capex as they allocate more towards achieving zero emission targets. Cumulatively, they are expected to spend around Rs 4000 billion, but the return ratios will likely be lower, said Jefferies.
Indian Oil Corp seeks LNG cargo for end-Oct delivery
Indian Oil Corp (IOC) has issued a tender seeking a cargo of liquefied natural gas (LNG) to be delivered to the Dahej terminal at end-October, according to two industry sources. The state-run firm is seeking the cargo for delivery on Oct. 30, and the tender closes on Sept. 12. Bangladesh To Import Two LNG Cargoes In September-October – RPGCL Official September 13, 2023: Bangladesh will import two cargoes of liquefied natural gas (LNG) in September and October, said an official from Rupantarita Prakritik Gas Co Ltd (RPGCL The first cargo will be provided by total energies at $13.77 per million British thermal units (mmBtu) for delivery on Sept. 28-29, said the official, who declined to be identified as he was not authorised to speak to the media. The second cargo will be shipped by Vitol at a cost of $14.90/mmBtu for delivery date on Oct. 12-13. Total energies and Vitol did not immediately respond to a Reuters request for comment