US trying to help India get lower prices for Russian oil, Joe Biden envoy says
The United States is trying to help India negotiate lower prices for Russian oil as it deepens sanctions on tankers carrying the petroleum above Western price caps, President Joe Biden’s energy envoy said on Tuesday. Washington imposed sanctions late last month on Russia’s leading tanker group Sovcomflot on the two-year anniversary of Moscow’s full scale invasion of Ukraine. It also designated 14 crude oil tankers as property in which Sovcomflot had an interest. That led to concerns in India of a potential dent in Russian oil sales to India, the biggest buyer of Russian seaborne crude, and that the fresh sanctions could complicate efforts by Indian state refiners to secure annual supply deals, Reuters reported late last month. “At the end of the day, my goal is not to take it off the market, I’m not looking to take these tankers, take the crude, the product, off the market,” Amos Hochstein, Biden’s energy and global infrastructure adviser, told Reuters on the sidelines of a conference. “I’m trying to get the Indians to negotiate better prices by forcing the tankers into a different direction. I think the Indians understand what we’re trying to do,” Hochstein said. Western sanctions on Russia, one of the world’s top energy producers, have shifted global oil markets, forcing the country to ship oil to new customers in India and China and away from traditional consumers in Europe. The sanctions and the $60 per barrel price cap imposed on cargoes of Russian oil that use Western-based maritime services such as insurance, transportation and flagging, have pushed dozens of tankers carrying Russian oil to swap flags from Liberia and the Marshall Islands that have registries based in Virginia, to flags from other countries, including Gabon. The tankers have swapped flags in an effort to avoid sanctions, but they could still be vulnerable to the measures if they carried oil above the price cap with the original flag. The goal of the price cap has been to reduce Russia’s revenues it can spend on the war in Ukraine while keeping oil flowing to global markets.
IEA, OPEC Divergence on Oil Demand Becomes Too Big To Ignore
Ever since the International Energy Agency switched from a pure-play information provider to an advocate of the energy transition, its forecasts about oil demand have shifted to increasingly reflect this advocacy. This has led to a growing divergence between the IEA’s and OPEC’s outlooks on the future of the commodity, increasing the risk of confusion among analysts and investors. The question “Who’s right?” has become a legitimate one. To begin with, it’s worth noting that neither authority is completely impartial. OPEC has a vested interest in stronger global demand, so there may well be an overestimation bias in its outlooks. The IEA, on the other hand, acts like it has a vested interest in the energy transition, which has led it to regularly underestimate oil demand, with its most marked departure from reality to date contained in the original Net Zero Roadmap. The document came out in May 2021. In that report, the IEA said there was no need for new oil and gas exploration as of that year because the energy transition was moving fast enough to make that redundant. But did not take long for the IEA to revise its view. In November of that same year, the agency called for more investment in new oil and gas exploration amid a risk of a supply shortage. Last year, the IEA began the year by forecasting oil demand growth at 1.9 million barrels daily. Over the next 11 months, it kept revising this, to end the year at 2.3 million bpd in global demand growth—a view it held over January this year as well, and a figure very close to OPEC’s forecasts during the year that all saw demand growing by over 2 million barrels daily. Related: Europe’s Secret Weapon In Its Energy War With Russia Reuters this week reported that the divergence between IEA and OPEC demand numbers is the largest in 16 years, based on the analysis of data going back to 2008. This divergence concerns the February oil demand forecasts of the two organizations, and the gap is indeed considerable, at over 1 million bpd. In its February Oil Market Report, the IEA forecast oil demand growth at a modest 1.2 million barrels daily this year, citing a deceleration in demand recovery after the pandemic lockdowns. OPEC, for its part, kept its 2024 oil demand growth forecast unchanged from previous months at 2.2 million bpd. There is also divergence over the longer-term prospects for oil demand, with the IEA last year predicting that it would peak before 2030, along with natural gas demand and coal demand. This prediction seems to have been the last drop for OPEC, which reacted with a sharp warning to the IEA to stop politicizing energy, accusing it of cheerleading for the energy transition and letting this affect the accuracy of its forecasts. “The IEA has a very strong perception that the energy transition will move ahead at a much faster pace,” a former official at the agency told Reuters. “Both agencies have boxed themselves in with a position, which is why they have this enormous gulf in demand forecasts,” Neil Atkinson, former head of the agency’s oil markets division explained. Some form of bias is almost unavoidable when it comes to predicting oil demand, and this is precisely because of the massive push for a transition that has seen a lot of money funneled into climate advocacy organizations that, among their advocacy activity, also deal in forecasting.
Another Russian Refinery Is Ablaze After Ukrainian Drone Attack
A fire erupted at an oil refinery in a region southeast of Moscow following a suspected Ukrainian drone attack in the latest such incident ahead of this weekend’s presidential election in Russia, in which Vladimir Putin is running unopposed and sure to win another six-year term in office. A drone attacked early on Wednesday an oil refinery in the region of Ryazan, whose main city of the same name is some 120 miles southeast of Moscow, the region’s governor Pavel Malkov wrote on the Telegram channel. The attack led to a fire and according to preliminary information, people have been injured, Malkov added. Wednesday’s drone attack is the latest in a series of such incidents since the beginning of the year, and follows several attacks by drones on Tuesday. A Lukoil refinery in western Russia caught fire after a drone attack early on Tuesday local time in what appears to be several coordinated attacks by drones from Ukraine on Russian refinery and fuel facilities. A crude processing unit at the refinery in Nizhny Novgorod is on fire after a drone attack was carried out on Tuesday morning, Gleb Nikitin, governor of Nizhny Novgorod, wrote on his Telegram channel. A few hours earlier, another energy facility in western Russia was also attacked by a drone. A drone attack was launched at a fuel and energy facility in the Oryol region, governor Andrey Klychkov said on Telegram. One of the fuel tanks caught fire as a result of the attack, a representative of the local authorities told Russian news agency TASS. Local officials in the capital city Moscow, as well as in the regions of Kursk, Tula, Voronezh, and Belgorod also reported drone attacks, without giving more details. Lower refining capacity in the second quarter, due to refinery maintenance and emergency repairs following the attacks, could be one of the reasons why Russia said it would focus on cuts to oil production instead of exports in its voluntary supply reduction as part of OPEC+ in the second quarter, analysts say.
US trying to help India get lower prices for Russian oil, Joe Biden envoy says
The United States is trying to help India negotiate lower prices for Russian oil as it deepens sanctions on tankers carrying the petroleum above Western price caps, President Joe Biden’s energy envoy said on Tuesday. Washington imposed sanctions late last month on Russia’s leading tanker group Sovcomflot on the two-year anniversary of Moscow’s full scale invasion of Ukraine. It also designated 14 crude oil tankers as property in which Sovcomflot had an interest. That led to concerns in India of a potential dent in Russian oil sales to India, the biggest buyer of Russian seaborne crude, and that the fresh sanctions could complicate efforts by Indian state refiners to secure annual supply deals, Reuters reported late last month. “At the end of the day, my goal is not to take it off the market, I’m not looking to take these tankers, take the crude, the product, off the market,” Amos Hochstein, Biden’s energy and global infrastructure adviser, told Reuters on the sidelines of a conference. “I’m trying to get the Indians to negotiate better prices by forcing the tankers into a different direction. I think the Indians understand what we’re trying to do,” Hochstein said. Western sanctions on Russia, one of the world’s top energy producers, have shifted global oil markets, forcing the country to ship oil to new customers in India and China and away from traditional consumers in Europe. The sanctions and the $60 per barrel price cap imposed on cargoes of Russian oil that use Western-based maritime services such as insurance, transportation and flagging, have pushed dozens of tankers carrying Russian oil to swap flags from Liberia and the Marshall Islands that have registries based in Virginia, to flags from other countries, including Gabon. The tankers have swapped flags in an effort to avoid sanctions, but they could still be vulnerable to the measures if they carried oil above the price cap with the original flag. The goal of the price cap has been to reduce Russia’s revenues it can spend on the war in Ukraine while keeping oil flowing to global markets.
IEA, OPEC Divergence on Oil Demand Becomes Too Big To Ignore
Ever since the International Energy Agency switched from a pure-play information provider to an advocate of the energy transition, its forecasts about oil demand have shifted to increasingly reflect this advocacy. This has led to a growing divergence between the IEA’s and OPEC’s outlooks on the future of the commodity, increasing the risk of confusion among analysts and investors. The question “Who’s right?” has become a legitimate one. To begin with, it’s worth noting that neither authority is completely impartial. OPEC has a vested interest in stronger global demand, so there may well be an overestimation bias in its outlooks. The IEA, on the other hand, acts like it has a vested interest in the energy transition, which has led it to regularly underestimate oil demand, with its most marked departure from reality to date contained in the original Net Zero Roadmap. The document came out in May 2021. In that report, the IEA said there was no need for new oil and gas exploration as of that year because the energy transition was moving fast enough to make that redundant. But did not take long for the IEA to revise its view. In November of that same year, the agency called for more investment in new oil and gas exploration amid a risk of a supply shortage. Last year, the IEA began the year by forecasting oil demand growth at 1.9 million barrels daily. Over the next 11 months, it kept revising this, to end the year at 2.3 million bpd in global demand growth—a view it held over January this year as well, and a figure very close to OPEC’s forecasts during the year that all saw demand growing by over 2 million barrels daily. Reuters this week reported that the divergence between IEA and OPEC demand numbers is the largest in 16 years, based on the analysis of data going back to 2008. This divergence concerns the February oil demand forecasts of the two organizations, and the gap is indeed considerable, at over 1 million bpd. In its February Oil Market Report, the IEA forecast oil demand growth at a modest 1.2 million barrels daily this year, citing a deceleration in demand recovery after the pandemic lockdowns. OPEC, for its part, kept its 2024 oil demand growth forecast unchanged from previous months at 2.2 million bpd. There is also divergence over the longer-term prospects for oil demand, with the IEA last year predicting that it would peak before 2030, along with natural gas demand and coal demand. This prediction seems to have been the last drop for OPEC, which reacted with a sharp warning to the IEA to stop politicizing energy, accusing it of cheerleading for the energy transition and letting this affect the accuracy of its forecasts. “The IEA has a very strong perception that the energy transition will move ahead at a much faster pace,” a former official at the agency told Reuters. “Both agencies have boxed themselves in with a position, which is why they have this enormous gulf in demand forecasts,” Neil Atkinson, former head of the agency’s oil markets division explained. Some form of bias is almost unavoidable when it comes to predicting oil demand, and this is precisely because of the massive push for a transition that has seen a lot of money funneled into climate advocacy organizations that, among their advocacy activity, also deal in forecasting. In itself, this bias is not a problem as long as the users of that information are aware of it. It becomes a problem, however, when biased forecasts begin to be shared and amplified, painting a distorted picture of, in this case, oil demand growth prospects and affecting investment decisions.
India’s crude imports from Russia up for second straight month in February
India’s crude oil imports from Russia appreciated for the second consecutive month in February hitting 1.54 million barrels per day (mb/d), accounting for around 33 per cent of the cumulative inbound shipments, aided by rising supply of Urals. According to energy intelligence firm Kpler, India’s crude oil imports from Russia rose marginally by 0.7 per cent M-o-M. However, on an annual basis, the shipments fell by more than 16 per cent from 1.84 mb/d clocked in February 2023. Russia’s flagship grade, Urals, which accounts for a major part of oil cargoes from the erstwhile Soviet Union, also rose for the second consecutive month in February. The cargoes rose 12 per cent M-o-M to 1.195 mb/d, but declined by 3 per cent Y-o-Y. Viktor Katona, Kpler’s Lead Crude Analyst, told businessline: “Indian imports of Russian crude came in at 1.54 mb/d in February, some 50,000 barrels per day (kb/d) higher compared to January and marking the second straight M-o-M increase for India’s refiners.” Overall, India’s crude oil imports stood at around 4.7 mb/d in February 2024, against 4.8 mb/d in January 2024 and 4.4 mb/d in December 2023. Urals shipments grow India being by far the largest buyer of Urals globally, the flow of the medium sour grade has been remarkably consistent over the past six months, trending around 1.1-1.2 mb/d, he added. “In February, it (Urals) moved to the upper limit of that range, the highest import figure since October (2023) for Urals,” Katona explained. Shipments from Russia continued via the Red Sea route without any major issues. “The past months’ consistent figure of 1.5 mb/d Indian imports passing through Red Sea remains unchanged, despite widespread Red Sea diversions, supply into India sees no change. All of this is coming from Russia flows that have found a new equilibrium in the 1.5-1.6 mb/d range. Urals deliveries to India are trending sideways around 1.1-1.2 mb/d, minimal change from one month into another,” Katona explained. India also imported 97,229 barrels per day (b/d) of Sokol in February, after the world’s third largest crude oil importer did not procure any cargoes of the light sweet crude grade during December 2023 and January 2024. “When it comes to Sokol, the main point of contention between Indian buyers and Russian sellers lately, there were four delivered Sokol cargoes from Sakhalin totalling 100,000 b/d, however not a single one to the usual buyer, Indian Oil Corporation (IOC). “Hindustan Petroleum Corporation (HPCL) bought three of those, two into Visakhapatnam and one into Mumbai, whilst the remaining one went to Nayara (Energy). Before February, the last Sokol delivery was on November 23, 2023, so there’s a partial recovery in flows after the IOC-Rosneft standoff,” Katona said.
India targets multi-billion-dollar green hydrogen export and import plans
India has targeted a leading role in the green hydrogen market, which could result in exports worth $3-5bn and import substitution worth $7-15bn over the next ten years, according to a report by Alvarez & Marshall. The move is part of the country’s plan to reduce its reliance on imported liquefied natural gas (LNG) and boost domestic GDP growth through sustainable energy sources. “For India, the case to aggressively support green hydrogen is strong,” said the report. “By moving early, we can stake a claim to a larger share of the global energy trade, substitute some of our imports, especially LNG, and spur domestic GDP growth.” “By 2030, this could lead to $3-5bn of exports and $7-15 of import substitution, opening the doors to a much larger opportunity in the decades ahead.” However, India could need to scale up its outlay to $4-12 cumulatively in the run up to 2030, depending on how quickly costs fall. “While this figure is large in absolute terms, it is small in the context of our economy and our oil import bill, which is estimated at a staggering $1-1.4 trillion over the same period.” The global green hydrogen trade is expected to be worth between $24-34bn by 2030, led by export-focused countries equipped with ample supply of renewable resources such as Argentina, Australia and Chile. The report also highlights the focus on green hydrogen imports within the EU as part of its REPowerEU plan, a strategy which targets the import of ten million tonnes of green hydrogen from other countries in 2030. Together with South Korea and Japan, Europe is expected to import 12m tonnes of low-carbon or green hydrogen by 2030. The US and China are expected to have over 14m tonnes of low-carbon and clean hydrogen demand by 2030. However, due to their significant internal demand, neither country is expected to play a major role in the hydrogen export market by 2030. According to the report, the green hydrogen suppliers countries will be key to bridging the supply of gas for importer countries. It suggests that the UAE, India and Saudi Arabia can provide low-carbon hydrogen at the lowest cost and will be competitively placed for supply in Europe, Japan and South Korea
IOC’s second compressed biogas plant, manufactured by CEID, inaugurated by CM Yogi Adityanath in Gorakhpur
Indian Oil Corporation Ltd’s second Compressed Biogas (CBG) plant was inaugurated by Uttar Pradesh Chief Minister Yogi Adityanath in Gorakhpur on Tuesday. The gas generation (EPCC 1) and gas purification (EPCC 4) aspects of the project were spearheaded by CEID Consultant and Engineering Pvt Ltd, known for its CBG technology approved by MOPNG, aimed at promoting clean energy solutions and environmental stewardship. By utilizing agricultural waste, the plant is set to generate a minimum of 20 tons of pure compressed Biogas (CBG) per day, making a significant impact on waste management and reducing the carbon footprint associated with traditional farming practices. The initiative supports CEID’s commitment to sustainable energy and aligns with UP government’s vision for promoting clean and renewable energy sources. Prince Gandhi, Founder & CEO, of CEID Consultant and Engineering Pvt Ltd expressed his pride in the project, stating, “I am thrilled to witness the successful commissioning of the CBG plant in Gorakhpur, marking another milestone in our partnership with IOCL. Our expertise in EPC services has enabled us to deliver innovative solutions that harness renewable resources like paddy straws for clean energy generation. With ongoing collaborations with GAIL and other PSUs and our recent MOU signing with IGL at India Energy Week, we are committed to accelerating the transition towards sustainable energy across India.” Abhinav Govil, DGM Marketing, CEID Consultant and Engineering Pvt Ltd further states, “As pioneers in sustainable energy solutions within the CBG sector, we take pride in implementing the second CBG plant in Uttar Pradesh. This plant signifies our dedication to utilizing agricultural waste, particularly paddy straw, to produce clean energy, generating 20 tons of CBG per day. Our first plant in UP, operating on multi feedstock and producing 5TPD CBG, located in the Hapur district, has been successfully operational for more than a year. With 14 additional plants scheduled for commissioning in UP within the next year, we eagerly anticipate continuing our journey towards a greener future.” By harnessing 200 tons per day of agricultural waste, the plant not only offers an eco-friendly solution to waste management but also fosters job creation within local communities by employing 120 individuals.