Over 20% of the World’s Oil Refining Capacity Is at Risk of Closure
More than 20% of the total global refining capacity is at some risk of closure as refining margins are set to weaken alongside demand, while carbon taxes could also burden many refiners, Wood Mackenzie has said in a recent report. Overall, based on expected net cash margins in 2030, Wood Mackenzie has identified 121 out of 465 screened refining sites “at some risk of closure”. This represents a cumulative 20.2 million bpd of refining capacity, or 21.6% of the global capacity last year, WoodMac’s analysis showed. The energy consultancy sees refiners in Europe and China at higher risk of shutting down because of worsened economics. European refineries will see their net cash margins decline from 2030 due to the unwinding of free allowances for carbon emissions, while transport fuel demand in developed countries is expected to begin to decline from next year onwards, according to WoodMac’s analysis. “China will see liquid demand peak by 2027 and start to fall as the country actively electrifies their road transport. Non-OECD countries will enjoy continued demand growth beyond 2030, but their refiners will not be immune as global demand for transport fuels falls,” researchers and analysts and Wood Mackenzie wrote. Europe could also see its long-standing fuel export trade volumes with Nigeria tumble after the start-up of the Dangote Refinery, Africa’s biggest, earlier this year. The trade, estimated to be worth $17 billion each year, could be threatened by soaring output at the Dangote refinery, traders and analysts told Reuters earlier this month. The Dangote refinery, with a processing capacity of 650,000 barrels per day (bpd), is expected to meet 100% of Nigeria’s demand for all refined petroleum products, and will also have a surplus of each of the products for export. Meanwhile, oil majors have recently announced upcoming closures of European oil refineries that would be converted into biofuels-making facilities. The latest include Eni’s refinery in Livorno, Italy, and Shell’s oil refinery at the Wesseling site in Germany which will be converted into a production unit for base oils.
Adani Power enters into 20-year PPA with Reliance Industries
Adani Power’s wholly-owned subsidiary Mahan Energen Limited (MEL), which recently bagged a big coal block in Chhattisgarh for commercial coal mining, has entered into a 20-year, long-term Power Purchase Agreement (PPA) with Reliance Industries Limited (RIL). The agreement is for the supply of 500 MW of electricity under the captive user policy as defined in the Electricity Rules, 2005, the company said in a regulatory filing on Thursday. One unit of 600 MW capacity of MEL’s thermal power plant, out of its aggregate operating and upcoming capacity of 2,800 MW, will be designated as the captive unit for this purpose, it stated.
Numaligarh Refinery partnered with Assam Gas Company Limited
Yet another Landmark Moment. Numaligarh Refinery Limited has partnered with Assam Gas Company Limited by Signing of Sales Purchase Agreement on 27th of March 2024 at Corporate office of NRL in presence of Shri Bhaskar Jyoti Phukan, Managing Director, NRL, Shri Nikunja Borthakur, Sr. CGM (Corp. Affairs), MD, AGCL, Shri Gokul Chandra Swargiary along with other officials from both the organisation. Assam Gas Company Limited has ventured into the retail domain of MS & HSD. AGCL will be commissioning their retail outlets in Assam and other NE States from this Financial Year and NRL will be supplying MS and HSD to all their proposed retail outlets.
Transporting crude oil from Russia to India offers huge margins
Discounted seaborne crude oil flowing from Russia to India, which accounts for more than one-third of New Delhi’s overall imports, has opened up avenues to make huge margins — sometimes to the tune of $23 a barrel — from transporting the critical commodity. he findings form part of a report by the Oxford Institute for Energy Studies (OIES), released on Monday, on the outlook for Russia’s oil and gas production and exports, which said “the biggest beneficiary of this new trade at discounted prices has been India”. The report pointed out that there is an “obvious logic” on increased Indian purchases of Russian oil due to the large discount on Urals Blend to Brent, but it needs to be remembered that this is based on the FOB price in the Baltic Sea. “The discount has not only offered cheap oil to India but has also opened a huge margin to be made in the provision of transport and ancillary services to deliver the oil from northern Europe to Southern Asia,” the OIES study said. Analysing the delivered price of Russian oil to the west coast of India with the FOB price at Primorsk during 2023, the study said that although the differential narrowed significantly over the last eight months (till August 2023) the margin has ranged from a high of around $23 per barrel to the current $8 per barrel. “This has tempted traders and tanker owners to get involved with the trade in Russian crude not only to India but also to other Asian destinations where similar margins have been on offer and has helped to facilitate the liquidity of the global oil market. This has underpinned the decline in the oil price from its high of over $122 per barrel in May 2022 to the current level of around $84 per barrel (October 5, 2023),” it added.