Asia’s Coal Boom is Bad News For Natural Gas
Natural gas bulls betting on the world’s largest and fastest-growing power market to drive global demand over the next couple of decades could be in for disappointment. According to Global Energy Monitor (GEM), Asia’s largest economies have three times more coal-fired power capacity under construction than gas-fired capacity, with coal accounting for ~45% of the region’s power generation. Asia’s largest economies are developing far more solar, wind and hydropower capacity than gas-fired capacity. According to GEM, across 10 of Asia’s largest economies, there is just over 1 million megawatts (MW) of new power capacity under construction, with coal & clean energy sources dominating the continent’s power development pipeline. Solar energy accounts for 26%, or 270,000 MW, of Asia’s power generation under construction, while new coal-fired capacity makes up the second largest share at 24% with just under 250,000 MW. Wind farms and hydropower plants account for a further 20% each, while gas-fired power plants account for a mere 7% share, or 70,000 MW. For some perspective, natural gas accounted for 43.1% of utility-scale power generation in the U.S. in 2023, renewable energy 21.4% while coal contributed 16.2%. Asia’s largest economies are not about to ditch coal despite some having ambitious clean energy goals. China approved 66.7 gigawatts (GW) of new coal-fired power capacity in 2024, with Asia’s largest economy building coal-fired power plants at a record clip as it tries to counter the effects of drought on hydropower production. In 2024, China’s coal production reached a record 4.76 billion tons, a 1.3% increase from 2023, according to China’s National Bureau of Statistics (NBS). At the same time, 94.5 GW of new coal power projects started construction and 3.3 GW of suspended projects resumed construction in 2024, the highest level since 2015, with a large number of new coL plants slated to come online in the next 2-3 years. “China’s government has put energy security and energy transition at odds with one another. Beijing has clearly stated that coal power will still grow at a ‘reasonable pace’ into 2030,” Greenpeace’s Gao Yuhe has told Reuters. Meanwhile, two years ago, India’s coal minister declared that the country has no intention of ditching coal from its energy mix any time soon. Addressing a parliamentary committee, minister Pralhad Joshi said that coal will continue to play an important role in India until at least 2040, referring to the fuel as an affordable source of energy for which demand has yet to peak in India. “Thus, no transition away from coal is happening in the foreseeable future in India,” Joshi said, adding the fuel will continue to play a big role until 2040 and beyond. China Still Rules Renewable Energy In sharp contrast, the global coal fleet outside China shrank by 9.2 GW in 2024, reinforcing China’s dominant role in shaping the future of coal power. China now accounts for 93% of global construction starts for coal power in 2024. In yet another paradox, China remains the global leader in clean energy manufacturing. Last year, China’s clean-energy technologies made up more than 10% of the country’s economy for the first time ever, with sales and investments hitting 13.6tn yuan ($1.9tn), exceeding the real estate sector. China’s renewable energy sales and investments dwarfed the global fossil fuel funding total of $1.12 trillion. China’s installed capacity for renewable energy, including wind and solar, reached 1,410 gigawatts last year, surpassing coal. China has become especially dominant in solar energy manufacturing, having invested 10 times more than Europe in wafer-to-solar panel production lines. China controls ~95% of the world’s polysilicon and wafers, prompting the International Energy Agency (IEA) to warn of the dangers the world is exposing itself to by relying so heavily on the Middle Kingdom for its solar needs, “The world will almost completely rely on China for the supply of key building blocks for solar panel production through 2025. This level of concentration in any global supply chain would represent a considerable vulnerability,” the agency wrote in a special report. Last year, U.S. Treasury Secretary Janet Yellen warned that China’s national underwriting for energy and other companies is creating oversupply and distorting global markets.“I will convey my belief that excess capacity poses risks not only to American workers and firms and to the global economy, but also productivity and growth in the Chinese economy, as China itself acknowledged in its National People’s Congress this month,” she added.
BP to boost oil and gas investment to $10 billion, slashes green spending
BP announced on Wednesday that it will raise its annual oil and gas investment to $10 billion, reaffirming its focus on fossil fuels as part of CEO Murray Auchincloss’ strategy to enhance returns and strengthen financial performance, Reuters reported. “We will grow upstream investment and production to allow us to produce high-margin energy for years to come. We will focus our downstream on markets where we have leading integrated positions,” Auchincloss was quoted as saying by Reuters The shift reflects a broader trend in the energy sector, where companies that previously pivoted towards low-carbon alternatives are refocusing on oil and gas due to rebounding fossil fuel prices, the reports said. BP’s revised strategy comes amid pressure from investors, particularly Elliott Investment Management, which has built a stake in the company, urging major changes, said the report. As part of its financial restructuring, BP is also reviewing its Castrol lubricants business and aims to divest $20 billion in assets by 2027, it added.
India’s crude oil production falls 1.2% in January, petroleum output up 8.3%
India’s crude oil and condensate production stood at 2.5 million metric tonnes (MMT) in January 2025, registering a 1.2% decline compared to the same month in the previous year, according to the latest data from the Petroleum Planning & Analysis Cell (PPAC) under the Ministry of Petroleum & Natural Gas. According to official data, Oil India Limited (OIL) produced 0.3 MMT, Oil and Natural Gas Corporation (ONGC) registered 1.6 MMT, while production under Production Sharing Contracts (PSC) and Revenue Sharing Contracts (RSC) stood at 0.6 MMT. Total crude oil processed by Indian refineries in January 2025 reached 23.7 MMT, reflecting a 5.2% increase over January 2024. Public Sector Undertaking (PSU) and Joint Venture (JV) refiners accounted for 16.4 MMT, while private refiners processed 7.4 MMT. Indigenous crude contributed 2.3 MMT, with imported crude making up 21.4 MMT of the total. Crude processing for April-January FY 2024-25 saw a 2.5% increase compared to the same period in the previous financial year. Petroleum product output was recorded at 24.9 MMT in January 2025, an 8.3% increase over January 2024. Of this, refinery production contributed 24.6 MMT, while 0.3 MMT was sourced from fractionators. During April-January FY 2024-25, petroleum product output rose by 3.4% compared to the corresponding period in FY 2023-24. Among key petroleum products, high-speed diesel (HSD) accounted for 43.1% of total production in January 2025, followed by motor spirit (MS) at 17%, naphtha at 6.3%, aviation turbine fuel (ATF) at 5.7%, pet coke at 5.3%, and liquefied petroleum gas (LPG) at 4.7%. The remaining production was shared by bitumen, fuel oil, lubricants, and other petroleum derivatives.
High spot LNG prices a concern for Indian Gas companies: JM Financial
The sustained high prices of spot liquefied natural gas (LNG) remain a key concern for Indian gas companies, as it could impact domestic demand and affect the volumes and margins of city gas distribution (CGD) firms, according to a report by JM Financial. The report highlighted that Gujarat Gas (GGas), in particular, faces higher exposure, with 20-30 per cent dependency on spot LNG purchases. It said “Sustained high spot LNG price is a key concern for all gas companies in India as it could impact domestic LNG demand, and volume/margins of CGD companies”. The report stated that spot LNG has been trading at around 18 per cent of Brent crude prices, significantly higher than the historical average of 12 per cent before the Russia-Ukraine conflict. This prolonged surge in prices poses a challenge for Indian gas firms that rely on spot market purchases to meet their supply needs. Global oil and gas companies foresee the risk of sustained high spot LNG prices continuing into 2025. The tight market conditions have been exacerbated by supply disruptions and rising demand from key markets. Despite a 19 per cent year-on-year decline in Europe’s LNG demand to 93 million metric tons (mmt) in 2024, recent months have witnessed a resurgence in European imports. The report noted that the drop in annual demand was primarily due to sluggish industrial growth, reduced gas-fired power generation, and increased competition for LNG volumes from other regions.