Indian refiners buy more US crude amid tighter sanctions on Russian oil
More than 250,000 barrels per day of U.S. crude is set to arrive in India next month, the highest in more than a year, ship tracking data showed, amid tighter enforcement of sanctions on Russian crude. India, the world’s third-biggest oil importer and consumer, is looking to diversify its oil supplies as fresh U.S. sanctions on Moscow threaten to dent Russian oil sales to India, the biggest buyer of Russian seaborne crude. About 7.6 million barrels of oil, or 256,000 barrels per day (bpd), were headed to India on three very large crude carriers and three Suezmax vessels, according to ship tracking firm Kpler. The ships, which were largely headed to India’s west coast, were chartered by Reliance Industries, Vitol, Equinor and Sinokor, among others, according to data from financial firm LSEG. India was the top buyer of Russian oil last year after other groups retreated from purchases following Western sanctions on Moscow for its invasion on Ukraine in February 2022. Last month, the U.S. tightened efforts to reduce Russia’s oil trade adding sanctions on state-owned shipping firm Sovcomflot and 14 crude oil tankers involved in Russian oil transportation. India’s Reliance, operator of the world’s biggest refining complex, will not buy Russian oil loaded on tankers operated by Sovcomflot after recent U.S. sanctions, sources told Reuters last week. More Indian refiners plan to shun Sovcomflot vessels, which may weigh on imports of Russian oil and leave Russia with fewer outlets for its flagship product, sources saIf.
LNG importers rush to buy spot cargoes as price hits 3-year low
Power companies and refineries are doubling down on spot liquefied natural gas (LNG) as prices have hit a three-year low, according to industry officials aware of the development. LNG importers Gail, Gujarat State Petroleum Corporation (GSPC), Torrent Gas, Bharat Petroleum Corp (BPCL) and Indian Oil Corp (IOC), among others, are buying spot cargoes as the Asia spot LNG price has declined between $8.3 and $9 per million British thermal units (mmBtu) due to weak demand and high inventory in both Asia and Europe, giving these companies room to expand sourcing and sales to the power, fertiliser, refining and other sectors. During the same period last year, spot LNG prices averaged $18.75 per mmBtu. In 2022, spot LNG prices touched a record $70 per mmBtu on the back of the Russia-Ukraine war. LNG is mostly traded through long-term contracts of 20-25 years and in the spot market. The price of spot LNG is higher than long-term LNG. “This price drop in LNG is aiding power units, refineries, petrochemical and fertiliser plants,” said one of the persons cited above. “Reliance Industries and HPCL (Hindustan Petroleum Corp) have sought cargoes from GSPC, and Indian Oil is also procuring LNG cargoes for its refineries.” As demand for power rises amid higher temperature, power companies including Torrent Power and NTPC are also buying more LNG. India has 25,000 MW of installed gas-based power capacity. While NTPC owns 5,000 MW, the rest is with private as well as state government entities. “The government wants power generation companies to buy gas and commission their stranded power units. We are anticipating record power demand this summer,” he said. The Central Electricity Authority (CEA) has said power demand may see a spike between March and June.
LNG imports increase 37.5% in February 2024
INDIA’s imports of liquefied natural gas (LNG) are up 37.5% in February 2023 over the corresponding period of the previous year, according to a monthly report by the Petroleum Planning Analysis and Cell (PPAC). The total LNG import in February 2024 was 2,522 million standard cubic meters (MMSCM) against last February’s 1,834 MMSCM. According to an S& P report, India is anticipating an upswing in LNG imports in 2024, with projections suggesting a substantial 7-8% year-on-year increase. “Total imports of LNG (provisional) during the month of February 2024 was 2,522 MMSCM (an increase of 37.5 % over the corresponding month of the previous year),” reads the report. India is trying to increase its LNG import capacity to lift the share of natural gas in its energy mix to 15% by 2030 from the current level of 7%. The move is to lower the dependence on dirtier fossil fuels such as coal and oil. India’s gas production in February was up 11.1% from the same month in 2023, at 2,947 MMSCM. The total consumption in February this year was 5,650 MMSCM (provisional). Major consuming sectors were Fertilizer (28%), City Gas Distribution (20%), Power (12%), Refinery (10%) and Petrochemicals (4%). The total natural gas available for sale during February 2024 was 4935 MMSCM (an increase of 22.5% over the corresponding month of the previous year). Meanwhile, India is also trying to cut down its import and increase production. According to a report by CareEdge Ratings, India’s reliance on imported liquefied natural gas (LNG) is projected to decrease to around 45% by FY26, down from 53% in FY21. This change is attributed to an increase in domestic natural gas production, with nearly 30 MMSCM per day of new production added over the past three years.