Oil And Gas Investment Could Halve By 2030 To Meet Climate Goal: IEA
The current $800 billion invested annually in the global oil and gas sector could be halved by 2030 if a goal to limit global warming to 1.5 degrees Celsius is to be reached, the International Energy Agency (IEA) said in a report Thursday. The report added that no new long-lead-time oil and gas sector projects would be needed if that goal were to be reached, and some current projects would need to be shuttered. The highest emitters in the global oil and gas industry have “vast potential for improvements”, the IEA said, as they face choices amid a climate crisis fuelled in large part by their products. The industry will need to reduce emissions by 60% by 2030 in order for the industry to align with climate goals to limit warming to the 1.5C above pre-industrial average defined in the Paris agreement, the IEA said. Temperatures this year are set to be the world’s warmest in 125,000 years, and there are concerns that the 1.5C threshold could be breached as early as this decade, which would lead to more and deadlier climate disasters. “With the world suffering the impacts of a worsening climate crisis, continuing with business as usual is neither socially nor environmentally responsible,” IEA executive director Fatih Birol said.
India’s net oil, gas import bill down 25% in April-October amid lower international prices
India’s net oil and gas imports in value terms for April-October of 2023-24 (FY24) declined by nearly a fourth on a year-on-year basis to $68 billion due to relatively subdued prices of crude oil, natural gas, and petroleum products globally, latest government data shows. This decline in the value of oil and gas imports came despite a rise in import volumes, suggesting that the fall in prices was significant enough to offset the volume growth. In the first seven months of the previous financial year—FY23—the country’s net oil and gas import bill was $90.1 billion. The price of oil, gas and refined petroleum products saw a hike last year following Russia’s February 2022 invasion of Ukraine. In the initial few months of FY23, international prices of these commodities were overheated. Their prices in the current financial year have been relatively softer and less volatile. For instance, the average price of the Indian basket of crude for April-October of last year was almost $102 per barrel, but in the first seven months of FY24, it was $83.44. According to provisional data from the Petroleum Planning & Analysis Cell (PPAC) of the oil ministry, India imported crude oil worth $75.5 billion in April-October of the current financial year, against $101.2 billion a year ago. However, in volume terms, oil imports for the period were higher by 0.6 per cent at 134.4 million tonnes. Apart from generally lower prices of crude oil globally, India has also benefited from ramping up imports of discounted Russian crude. Although the discounts are not as high as last year, the volume of oil imported from Russia has gone up significantly. Moscow now accounts for over 40 per cent of New Delhi’s overall oil imports.
Traders offer sanctioned Iranian crude to India as Chinese purchases peak
Suppliers of sanctioned crude oil led by Iran are making a beeline for Indian shores, after India encouraged imports of cheap Russian crude last year defying western pressure and sanctions, permitting Moscow to capture over 40 per cent of India’s oil market. Traders in the Middle East have approached Indian state-run refiners in the last few weeks with offers for sanctioned Iranian grades at deep discounts, industry sources said. Traders in Dubai contacted Indian state-run refiners offering Iranian crude at discounted prices, refining officials said. State-run refiners led by IndianOil, Bharat Petroleum and Hindustan Petroleum bought a combined 350,000 barrels per day of Iranian crude in 2018.
Margins of Indian refiners likely to be under pressure in 2024
Margins of Indian petrochemical companies like Reliance Industries, GAIL, and Indian Oil are likely to remain under pressure in the upcoming year. According to brokerage firm Prabhudas Lilladher, Chinese plans to reduce dependence on oil imports coupled with low demand environment in Europe are expected to be the reasons behind such margin pressure. “China, the world’s largest producer and consumer of petrochemicals has been adding new petrochemical capacities and improving its self-sufficiency. Thus, China has reduced its reliance on imports. Along with this, demand concerns too persist in Europe on the back of high inflation and interest rates. This has led to suppressed product margins,” the brokerage firm wrote in a report. Meanwhile, Indian refiners have announced aggressive expansion plans. Reliance has announced expansion plans across its petrochemical value chain, which will come up by 2026. Indian Oil is planning to enhance its petrochemical capacity from 4.1 mmtpa to 15 mmtpa by FY30. Similarly, GAIL is also expanding its capacity by setting up new plants. “Petro-chemical margins have been suppressed since the beginning of 2023 and we expect RIL, GAIL and IOCL’s petro-chemical margins to remain weak going into 2024 too, on the back of production capacities exceeding demand,” PrabhudasLilladher wrote in its report. As Chinese and Indian petrochemical producers add capacity, it is likely to create a supply glut without matching demand globally. With prediction of mild recession in the US and weak European economic health, demand for petrochemical products is not likely to improve in the next calendar year. Against this backdrop, Indian refiners’ margins will continue to be under pressure in 2024.
India ups LNG imports in October
India’s liquefied natural gas (LNG) imports rose in October compared to the same month last year, according to the preliminary data from the oil ministry’s Petroleum Planning and Analysis Cell. The country imported 2.34 billion cubic meters, or about 1.71 million tonnes of LNG, in October, a rise of 18.2 percent compared to the same month in 2022, PPAC said. During April-October, India took 17.75 bcm of LNG, or some 13 million tonnes, up by 13.4 percent, PPAC said. India paid $1.2 billion for October LNG imports, down from $1.4 billion last year, it said. As per India’s natural gas production, it reached 3.16 bcm in October, up by 9.3 percent compared to the corresponding month of the previous year. During April-October, gas production rose by 4.8 percent to about 21 bcm, PPAC said. At the moment, India imports LNG via seven facilities with a combined capacity of about 47.7 million tonnes. India’s Adani and France’s TotalEnergies started supplying natural gas in April to the grid from their 5 mtpa Dhamra LNG import facility located in Odisha, on India’s east coast. In August, the partners completed the first truck loading operation at the facility. During April-October, Petronet LNG’s 17.5 mtpa Dahej terminal operated at 94.3 percent capacity, while Shell’s 5 mtpa Hazira terminal operated at 39.8 percent capacity, PPAC said. The Dhamra LNG terminal operated at 26.4 percent capacity, it said.