Environmentalists Sue UK for Oil and Gas Licenses
An ocean conservation entity is suing the UK state for 31 oil and gas exploration licenses issued by the previous government earlier this year. Oceana UK claims the issuing authorities had failed to consider the effects of exploration on marine life, Reuters reported. The entity is part of a group called the Ocean Alliance Against Offshore Drilling, which wrote to the current Energy Secretary Ed Miliband asking him to concede the lawsuit. “By conceding the case, the government can make good on promises made to the public and signal a clear departure from the previous administration’s continuing reliance on fossil fuels,” the group said. The UK’s North Sea Transition Authority, previously the Oil and Gas Authority, issued 31 exploration licenses back in May as the Sunak government tried to juggle energy security and the transition that required an end to oil and gas production, per advocates. The licenses were expected to add an estimated 600 million barrels of oil equivalent to 2060, or 545 million barrels of oil equivalent by 2050. Interestingly, some of the awarded in May were in areas previously earmarked for offshore wind power licenses. “Following discussions with our partners in The Crown Estate and Crown Estate Scotland, we have introduced a new clause for overlapping oil and gas licences and wind leases for the first time,” NSTA said. However, when the Starmer government took office, they were quick to go on the offensive against the oil and gas industry, after promising to raise taxes further and end exploration licensing. The ban has not been made official but media have reported that it is in the works. That course of action could put the government in the legal crosshairs as well, The Guardian reported recently, as companies could challenge Downing Street for costing them a lot of money spent on successful exploration bids.
Europe’s Gas Supply Tightens as Norway Begins Field Maintenance
Europe is facing a tighter gas market as Norwegian field operators enter scheduled maintenance season. Any unplanned extension of the maintenance period would cause an imbalance on gas markets on the continent and leas to price rises, Bloomberg reported. “Europe is already struggling,” Florence Schmit, a European energy strategist at Rabobank, told the publication. “Any deviation to the planned maintenance season can cause significant fluctuations in gas availability and in turn market prices, especially this year.” Norway supplies about 30% of Europe’s natural gas, becoming the biggest supplier after the halt of most Russian gas flows. Right now, there is a risk of a suspension in remaining flows passing through the Ukraine after the latter’s incursion into Russian territory, which would tighten supply even further. Bloomberg points out that an extension to Norway’s gas field maintenance season would not be unusual due to the complexity of the work involved in those operations. “The repairs involve careful balancing of pipeline pressure, while the complexity of the facilities and the North Sea’s harsh environment means it’s not unusual for additional work to be discovered,” Bloomberg explained. “You will always see a shift from what was planned; something will take longer or less time and that has ripple effects across the rest of the work,” a senior executive from Norway’s gas pipeline operator Gassco told Bloomberg. Earlier this month, Saxo Bank’s head of commodity strategy, Ole Hansen, noted that the European Union’s gas inventories were at 86.7% full and the expected slowdown in filling rates due to Norway’s maintenance season should not really affect final targets before heating season. The EU has a target of 90% full gas storage before winter begins. “However, any major disruption in the coming months would heighten the need for alternative supplies, primarily via LNG, driving up prices as Europe competes with Asia and South America,” Hansen added at the time.
Why Lack Of Government Support On LPG Loss Could Hit Oil Firms Hard
Oil marketing companies saw weaker earnings in the first quarter of fiscal 2025, mainly on the back of loss on cooking gas sales ranging from Rs 20 billion to Rs 40 billion. At the run-rate seen in the April-June quarter, companies like Indian Oil Corp., Bharat Petroleum Corp. and Hindustan Petroleum Corp. could record losses from liquified petroleum gas sales to the tune of Rs 80 billion to Rs 164 billion, as per NDTV Profit’s calculations. This is why the LPG subsidy provided by the government of India in fiscal 2025 is important for the profitability of these oil companies. Why Are Companies Incurring Losses On LPG? Currently, LPG prices in India are subsidised to ensure affordability for domestic consumers. Oil companies like Indian Oil, Bharat Petroleum and Hindustan Petroleum not only produce their own LPG, but also import it from international sources and sell them domestically. Thus, higher production costs, as well as import costs, exert pressure on the companies’ profitability in the segment as the domestic selling prices remain capped. Government Support The government of India has provided oil marketing companies one-time subsidies as a part of a buffer mechanism. In fiscal 2023, when LPG losses of companies swelled up to around Rs 250 billion in the quarter, due to rise in international LPG prices, the government of India announced a one-time budget subsidy of Rs 220 billion to cover the loss. While a similar subsidy announcement was expected in the 2024 Union Budget, no provision of the same disappointed the street.