Russia-China Gas Deal May Seal New Gas World Order
The signing of the Power of Siberia 2 pipeline deal by the presidents of Russia and China was perhaps the biggest news to come out of the two leaders’ meeting earlier this month. It was also the deal that may very well make the new global natural gas flow order permanent, potentially interfering with President Trump’s energy dominance ambitions. The Power of Siberia 2 project has been in the works for years. Yet China took its time deciding to commit to it. Now, the decision has been made, and although details have yet to be tailored, the signal is clear: China will be sourcing more natural gas from Russia—a lot more. The annual amount of gas Russia will be selling to China once the second Power of Siberia is completed would exceed 100 billion cu m. Incidentally, this is a similar amount to that which Russia was supposed to be sending to Europe after the completion of the second branch of the Nord Stream pipeline. This will not be happening now, not with the EU leaders pledging to suspend all imports of Russian energy within two years, even as they keep buying Russian gas from TurkStream and step up LNG imports from the most sanctioned country in the world. This will have to stop if the EU is serious about ending all Russian energy imports. As luck and geopolitics would have it, the EU has a ready and willing alternative supplier. U.S. gas producers have been on a roll, boosting production for the liquefaction plants along the Gulf Coast, eyeing the European market as a long-term demand source. The Trump administration has been encouraging this as part of its energy dominance agenda. For both, the Russia-China pipeline deal is a problem. It is, however, a bigger problem for the European Union. European businesses have a competition problem. It stems from high energy costs that drive up final prices for things produced in Europe. China, on the other hand, has lower energy costs that boost the competitiveness of Chinese-made products. There is also the innovation issue, but that’s a different topic. So, China enjoys low-cost energy to enhance the competitiveness of its products on international markets, while Europe struggles with the impact of high-cost energy on its competitiveness. Now, the struggle is about to become chronic. Europe is already the largest market for U.S. liquefied natural gas. This is good in terms of supply security but not so good in terms of price. As has been repeated ad nauseam, there is no way in the physical world we inhabit for U.S. LNG to become cheaper for European buyers than Russian—or indeed Norwegian—pipeline gas for obvious reasons related to geography and the production costs of gas liquefaction. This automatically puts LNG-dependent Europe at a disadvantage compared to China, an even greater one than it is already facing. The situation is somewhat problematic for the Trump administration as well, because the energy cost troubles of European businesses will eventually begin to affect their purchasing power—and the purchasing power of the governments responsible for securing energy supplies for, say, the heating season. This is not good for governments planning to dedicate billions in subsidies to specific industries and financial aid to households unable to afford current energy prices. Essentially, there is not enough money to cover all the expenses in Europe. From the U.S. perspective, the Power of Siberia 2 deal is also bad news because it means China would be importing less LNG, including U.S. LNG, as Reuters’ Ron Bousso pointed out in a recent column. Yet China has not imported U.S. LNG for months. It stopped importing U.S. LNG in early spring, amid the tariff spat between Washington and Beijing. Meanwhile, U.S. LNG exports hit an all-time high last month, suggesting producers don’t really need the Chinese market all that vitally. The future may, on the face of it, seem uncertain for both U.S. LNG producers and European buyers. The latter’s governments have insisted they want to reduce and eventually phase out the consumption of all hydrocarbons. This, however, would take decades, if it ever happens. The reality of energy has helped motivate the surge in new U.S. LNG capacity expected to come online over the next few years. However, there are limits to how much new export capacity can be built—because demand for gas is on the rise in the U.S. itself as well. With the boom in data center construction, domestic demand in the U.S. is rising for the first time in over a decade. As soon as this pushes prices high enough, more gas will be going into the domestic market, making LNG even more expensive for European buyers. Perhaps it’s time Europe’s leadership started looking into pipeline gas alternatives, from, say, Central Asia.
India Expands Crude Purchase From Nigeria
India Oil Corp has significantly sustained oil imports from Nigeria after skipping the purchase of U.S. oil in its latest tender. According to Reuters, which quoted trade sources on Friday, the company purchased 2 million barrels of Nigeria’s crude oil and a million barrels of Middle Eastern grade. The state refiner also bought one million barrels each of Nigerian oil grades Agbami and Usan from French oil major TotalEnergy, and another million barrels of Abu Dhabi’s Das crude from Shell, the people said. Nigerian oil has been bought on a free-on-board basis, and Das has been purchased and delivered to Indian ports in late October or early November. IOC bought 5 million barrels of U.S. West Texas Intermediate in its previous tender last week. In recent months, Indian refiners have advantage of a favourable arbitrage window and raised their purchase of U.S. oil via tender.
GST Cut On Biogas Plants To Spur Investment, Says Industry Body
Effective from 22 September, the GST on biogas plants and devices has been cut from 12 per cent to 5 per cent following a major restructuring of the tax regime. The GST Council, comprising the Centre and states, last week agreed to reduce tax rates on 375 items and simplify slabs from four to just two. From the effective date, most common-use goods will attract 5 per cent GST, while the rest will be taxed at 18 per cent. According to IBA, the tax cut will make biogas plants more affordable and financially attractive, directly improving project viability. The sector is expected to see a 4–5 per cent rise in new investments in the short to medium term, with the multiplier effect across the value chain likely to be even higher. By 2030, the Indian compressed biogas (CBG) industry could draw USD 4–5 billion in private investment, the association said. IBA president A R Shukla welcomed the reform, saying it would not only make biogas more accessible but also create jobs in manufacturing, installation and maintenance. However, he stressed the need to correct the inverted tax structure, where inputs for biogas equipment attract higher GST than the finished plant, inflating project costs. The move is expected to accelerate the adoption of decentralised renewable energy in rural areas, complementing other green technologies such as solar, wind and waste-to-energy systems, while reducing installation expenses and supporting India’s energy transition goals.
India will continue to buy Russian oil despite US tariffs, finance minister says
India will continue to buy Russian oil as it proves economical, its finance minister said on Friday, despite the Trump administration’s decision to impose heavy import tariffs on Indian goods due, in part, to its energy purchases from Moscow. As Europe and the US have shunned Russian oil over Moscow’s 2022 invasion of Ukraine, India has taken advantage of discounts on Russian output to become the largest buyer of Russian seaborne crude. New Delhi has said its purchases of Russian oil have kept the markets in balance. US President Donald Trump, who is seeking to broker an end to the Ukraine conflict, has said India’s oil imports are helping fund Moscow’s war effort and imposed a 50 per cent tariff on imports from India last month. Finance Minister Nirmala Sitharaman, speaking on local news channel CNN-News18, said India, the world’s third-biggest oil importer and consumer, had no plans to eschew Russian supplies. “We will have to take a call which (supply source) suits us the best. So we will undoubtedly be buying it,” she said, adding that India spends most of its foreign exchange on purchases of crude oil and refined fuels. US Commerce Secretary Howard Lutnick urged India on Friday to back the dollar, resume trade talks with Washington and stop buying Russian oil. “We’re always willing to talk. The Chinese sell to us. The Indians sell to us. They’re not going to be able to sell to each other. We are the consumer of the world,” Lutnick said in an interview with the “Bloomberg Surveillance” program. “Either support the dollar, support the United States of America, support your biggest client – who’s the American consumer – or, I guess you’re going to pay a 50% tariff. And let’s see how long this lasts.” He predicted India will come back in one or two months, apologize to Trump and seek a trade deal. In the fiscal year to March 2025, oil and refined fuels purchases from overseas accounted for about a quarter of India’s overall imports. “Whether it is Russian oil or anything else, it’s our decision to buy from the place which suits our needs whether in terms of rates, logistics, anything,” Sitharaman added. Indian Prime Minister Narendra Modi joined Russian President Vladimir Putin at a summit in Tianjin this week that Chinese President Xi Jinping hosted as a demonstration of solidarity against the West. Modi’s participation in the meetings, dubbed “the Axis of Upheaval” by some observers, alongside the leaders of countries like North Korea and Myanmar was viewed by some experts as a consequence of New Delhi’s falling out with Washington.