India, Africa to be major contributors to 112 million barrel/day of peak global crude oil demand in 2030: S&P
The global demand for crude oil is expected to see its peak in 2030 at 112 million barrels a day mark with India and Africa to be major contributors, according to S&P Global Commodity Insights. The current global demand of crude oil is at 103 million barrels per day, Pulkit Agarwal, head of India Content at S&P Global Commodity Insights, said on Thursday. The global demand for crude oil will peak to stay in the range of 112 million barrels a day in 2030 from the present level of 103 million barrels a day, he told PTI at S&P Global Commodity Insights: Media Roundtable Outlook 2024. India and Africa will be the major contributors to the 8.73 per cent increase in demand by 2030 as industrial activities will pick up in the region, Agarwal said. There will be increased use of clean cooking, automotives and setting up of refinernies by various economies, he said. However, the demand for crude oil in India will see its peak in 2040 to reach 7.2 million barrels a day from 5.2 million barrels a day at present, he said. On the price outlook he said, “In our base case, oil prices will likely hover above USD 80/barrel and can inch closer to USD 90/barrel by Q3 2024.” Gauri Jauhar, Executive Director, Energy Transitions & CleanTech Consulting, S&P Global Commodity Insights, said as India grows, it will also transition at a sustainable pace based on an underlying economic transition of mobility, urbanization and a desire for reliability. An energy transition will inevitably be a technology transition to reduce emissions, and the cleaner technology spectrum offers a range of near-term, medium-term and long-term solutions. These cleaner technologies will need financing and policy support, globally and in India, to reach giga scale, she said. Stuti Chawla, Associate Director, India/Middle East Chemicals Pricing, S&P Global Commodity Insights, said India is expected to remain a bright spot in Asia for petrochemical demand in 2024, given its strong economic growth and resilient industrial production. Greater demand, however, is unlikely to bring much relief to domestic producers struggling with pressure on margins, as prices of key bulk chemicals are expected to remain suppressed due to ample supplies and new capacities coming on stream. The market for chemical commodity products in India is expected to grow at around 7 per cent in 2023 and 8 per cent in 2024. The robust demand growth is being driven by a sharp pickup in India’s economic activity after it emerged from COVID-19 lockdowns. Elvis John of S&P Global Commodity Insights said India imposed a slew of restrictions on grains trade in 2023 amid rising domestic prices, fear of El Nino affecting crop production, and ahead of state elections and general elections in 2024. Domestic prices of non-Basmati rice moderated slightly with export curbs in place and arrival of new crop. However, market participants do not see a sharp fall in prices in the short term as they expect the government to be active in procurement ahead of numerous state elections and general election in 2024, he said.
PSUs’ petrol sales up 7.5%, diesel down 7.5% in November
State-run companies’ petrol sales rose 7.5% year-on-year in November while diesel sales fell by an equal percentage point. State companies sold 6% more jet fuel year-on-year in November and 1% less cooking gas, according to the provisional sales data provided by these companies. The oil ministry publishes consolidated sales data for the industry, including for the private retailers, by the tenth of every month, which gives a more accurate picture of the fuel demand in the country. State-run companies control around 90% of petrol pumps in the country but have been losing share in the countrywide sales of diesel and petrol this year after gaining market share last year. This is why their standalone sales growth figures aren’t indicative of overall industry growth. The festive season, which spreads over the last quarter of the calendar year in the country, is usually marked with higher sales of transportation fuels as people travel and shop more than usual, pushing up long-haul transport and factory activity. Record-high vehicle sales have also been boosting fuel demand. Compared to the November of 2019, petrol and diesel sales by state companies are up 25% and 1%, respectively.
India shows some reliance on Venezuelan oil after 3-year hiatus as US sanctions ease
India is set to restart imports of Venezuelan oil after a three-year hiatus, according to brokers and shipping fixtures, as it rushes to take advantage of a US move to ease sanctions on the South American nation. Private refiner Reliance Industries Ltd has booked two supertankers, C. Earnest and C. Genuine, which are scheduled to load crude cargoes from Venezuela between December to early January. Another fixture showed Very Large Crude Carrier Eucaly was also hired to transport Venezuelan crude to India in early December, again for Reliance. Together, the three could hold up to 6 million barrels of crude. A separate Petróleos de Venezuela SA report, however, indicated Eucaly could be sailing to China. India, the world’s third-biggest oil importer, was a major buyer of Venezuelan crude before sanctions were imposed by Washington, forcing its refiners to cede ground to Chinese competitors from 2021. Oil traders have been watching for a resumption of purchases since a temporary rollback of US sanctions on the South American producer’s oil industry in October. A spokesperson at Reliance did not respond to an email seeking comment on the matter. Tankers C. Earnest and C. Genuine are both Liberia-flagged and built in 2022, while Eucaly is older, built in 2005 and carrying a Panama flag, according to data compiled by Bloomberg. Shipbrokers cautioned the final destination could still change. The reappearance of India as a buyer is bad news for Chinese refiners, eager consumers of cheap Venezuelan crude. Discounts offered to China have narrowed over recent weeks, said traders participating in the Chinese crude market, in large part because of India’s return. Private refiners, mostly clustered in China’s northern Shandong province, have been the most resilient customers of Venezuelan oil for the past four years — but they haven’t been active in the market since the second half of October, the traders said, declining to be named as they are not authorized to speak publicly. India imported an average of around 10 million barrels per month from Venezuela before sanctions began, according to data from analytics company Kpler. Reliance purchased a monthly average of five supertankers from the Latin American producer in 2018-2019, Kpler’s crude analyst Viktor Katona said.
Petrol, diesel price revision only when oil price stabilises below USD 80
State-owned fuel marketing companies are likely to revert to daily revision in prices of petrol and diesel only when international oil prices stabilise below USD 80 per barrel on a sustained basis, industry officials said. Three state-owned fuel retailers — Indian Oil Corporation Ltd (IOCL), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) — which control roughly 90 per cent of the market, have kept petrol and diesel prices on freeze for a record 20th month in a row. This is despite the raw material (crude oil) cost surging last year, leading to heavy losses in the first half of 2022-23 fiscal year before easing rates propelled them to profitability. “There is considerable volatility in the international oil market and prices fluctuate wildly,” an official said. “Oil companies can cut prices by Re 1 per litre and everyone will applaud. But when international oil prices go up, will they be allowed to raise rates remains in doubt.” India is the world’s third largest oil consuming and importing nation. It imports more than 85 per cent of its oil needs and hence domestic pricing is linked to international rates. The basket of crude oil that India buys has averaged USD 83.42 per barrel in November, down from USD 90.08 of October and USD 93.54 of September. While at current prices, oil companies are making some money on petrol, diesel — the most consumed fuel accounting for almost 40 per cent of all petroleum products consumed in the country — but it has been in a “touch-and-go” scenario in recent weeks, another official said. “On some days there is profit on diesel but on other days there is loss. There is no consistent trend.” Three retailers had been recouping losses they incurred for holding rates when crude oil prices shot through the roof last year. In May, international oil prices and retail pump rates had come at par, but the subsequent surge widened the gulf between cost and price realised. “For oil companies to revert to daily market based price revision, oil prices will have to come below USD 80 on a sustained basis,” an official said. Petrol and diesel prices have been on a freeze since April 6 last year. Petrol costs Rs 96.72 a litre in the national capital and diesel comes for Rs 89.62 per litre. The three firms made bumper profits in April-September — first half of the current fiscal — but considering the low earnings of last year, they are yet to recoup all losses, officials said. Consider this, IOCL posted a net profit of Rs 26,717.76 crore this year as compared with a full year profit of Rs 8,241.82 crore in 2022-23 (April 2022 to March 2023). In 2021-22 (considered a normal year), the company had posted a profit of Rs 21,762 crore for the full year. Considering that to be a normalised earnings, for two years (2022-23 and 2023-24), it should make about Rs 42,000 crore. In one-and-half years (April 2022 to March 2023 full fiscal and April 2023 to September 2023), the company earned about Rs 35,000 crore. Similar is the situation with BPCL and HPCL. “Not all of the losses have been recouped,” an official explained. “When prices were high in the immediate aftermath of Russia’s invasion of Ukraine, there were huge losses. These losses were trimmed in the second half of 2022-23. In the current year, the losses are being recouped by making profits when oil prices are low.” International oil prices have firmed up since August, leading to margins of three retailers turning negative again. The OMCs’ marketing margins — the difference between their net realised prices and international prices — have already weakened significantly from the high levels seen in the quarter ended June 30, 2023 (Q1 fiscal 2024). Marketing margins on diesel turned negative since August while margins on petrol have narrowed considerably over the same period as international prices increased.
Oil Prices Retreat As OPEC+ Cuts Another 684KBPD, Brazil Joins OPEC+
Oil prices began to retreat on Thursday afternoon as it became clear that OPEC+ members were agreeing to voluntary cuts beginning in the new year, and that those cuts would be announced only by each member country instead of by the group as a whole. OPEC+ announced during the full OPEC+ meeting on Thursday that because all the cuts agreed to today were voluntary, they would be announced not by the group, but by the individual member states. Immediately following the meeting’s kickoff, it was also announced that Brazil would join the OPEC+ group effective in January. Three weeks ago, OPEC’s Secretary General HE Haitham al-Ghais said that the group’s door was open should Brazil wish to join. Brazil has a goal of substantially increasing its crude oil production to become the world’s fourth-largest producer by 2030. In September, Brazil exported $3.92 billion in crude oil, while importing $681 million, according to OEC data. This level of exports is a 13% increase year over year, with China as the primary destination. Brent crude oil prices, which had been trading up around 1.5% during the JMMC meeting, sank to +0.16% on the day in the absence of an announced production strategy from the group’s leadership. WTI slipped into the red with a loss of 3.43% on the day following the full meeting. The specifics of what was agreed to for the first quarter of 2024 among the OPEC+ members: Algeria agreed to cut oil production by another 51,000 bpd Kazakhstan agreed to reduce oil output by an additional 82,000 bpd Saudi Arabia agreed to extend its 1 million bpd output cut Russia’s Deputy Prime Minister Alexander Novak said that it would deepen voluntary oil export cuts by 300,000 bpd, and said it would roll over the existing 500,000 bpd vountary production cuts Oman will cut another 42,000 bpd Iraq will voluntarily cut 211,000 bpd Kuwait will cut 135,000 bpd The UAE will cut 163,000 bpd Angola not only didn’t announce an additional voluntary cut, but it publicly rejected its current quota, and reiterated its proposal for a 1.18 million barrel quota beginning in January. It added that it will not stick to the new OPEC quota. Not including cut extensions from Saudi Arabia and Russia, the additional voluntary cuts beginning in January and carrying through to the end of March is 684,000 bpd. All together, the total voluntary cuts for the first quarter is 2.184 million bpd. The next OPEC+ meeting is scheduled for June 1, 2024.
GAIL’s 3 GSRTC Diesel buses converted to LNG
GAIL celebrates the remarkable accomplishment as 3 GSRTC Diesel buses that were converted to LNG covered an impressive 6,45,105 KM in just 431 days.
HPCL will commission Chhara LNG terminal in two-three months
Hindustan Petroleum Corporation Limited (HPCL) is planning to commission Chhara LNG import terminal with a capacity of 5 million tonnes per annum in Gujarat in the next two-three months. A senior official of the company gave this information on Thursday and said that 6-7 parties have already offered to place orders.