IndianOil-Adani Gas JV to invest Rs 2,500 crore to double gas sales
IndianOil-Adani Gas Pvt Ltd will invest 25 billion rupees ($301.24 million) over four years as it looks to double gas sales to small industries and households in India, a company executive said on Friday. The company, an equal joint venture of refiner Indian Oil Corp and Adani Total Gas, daily sells about one million standard cubic metres of gas through its 300 retail outlets, said S.K. Jha, a director in the joint venture. The joint venture aims to double gas sales in four years and strengthen infrastructure to more than 600 retail outlets during the period to meet India’s rising gas demand, Jha added.
India to overtake China as oil demand growth centre in 2027: IEA
India will overtake China as the biggest driver of global oil demand in 2027 as transportation and industry consumption in the world’s fastest-growing major economy will drive growth despite a big push for clean energy and electrification, the International Energy Agency said on February 7. The Paris-based agency, in a special Indian Oil Market Outlook to 2030 report released at the India Energy Week in Goa, said the country’s oil demand will rise from 5.48 million barrels per day in 2023 to 6.64 million bpd in 2030. China currently is the biggest driver of oil demand and India ranks second in growth. The numbers given by IEA in the report seem to talk of crude oil processed into fuel for domestic use as well as for exports. The domestic consumption as per the Oil Ministry data is around 5 million barrels per day (bpd). “India’s oil demand will grow at a rapid pace by 2030 despite accelerated green energy moves,” IEA director of energy markets and security Keisuke Sadamori said. “Growth in India will surpass that of China in 2027.” However, demand in India will still lag China’s even in 2030 in absolute terms. “As oil demand slows in developed countries and China, India becomes the largest source of growth,” said Toril Bosoni, head of oil industry and markets division, IEA. India currently is the third largest consumer of oil behind the US and China. It imports 85% of its oil needs and this dependence is likely to rise as domestic production falls. Diesel, she said, accounts for about 50% of Indian gains and 20% of global demand growth
India to be largest global oil demand growth driver through 2030 -IEA
India is expected to be the largest driver of global oil demand growth between 2023 and 2030, narrowly taking the lead from top importer China, the International Energy Agency (IEA) said on Wednesday. The world’s third-largest oil importer and consumer is on track to post an oil demand increase of almost 1.2 million barrels per day (bpd), accounting for more than one-third of the projected 3.2 million bpd global gains, the IEA said in a report released at the India Energy Week in Goa. The agency forecast India’s demand would reach 6.6 million bpd in 2030, up from 5.5 million bpd in 2023. “India will become the largest source of global oil demand growth between now and 2030, while growth in developed economies and China initially slows and then subsequently goes into reverse in our outlook,” it added. To meet this demand, India is expected to add 1 million bpd of new refining capacity over the seven-year period and this will increase its crude imports further to 5.8 million bpd by 2030, the IEA said. Among products, diesel will be India’s single largest source of oil demand growth on the back of massive industrial expansion, accounting for almost half of the rise in the nation’s demand and more than one-sixth of total global oil demand growth through to 2030, the IEA said. Jet fuel is poised to grow at 5.9% annually on average but this will be from a low base compared with other countries, it added. The electrification of India’s vehicle fleet will lead to a more muted 0.7% annual growth average for gasoline, the IEA said. New electric vehicles and energy efficiency improvements in India will avoid 480,000 bpd of extra oil demand from now to 2030, it added.
India to invest $67 bn in 5-6 years for developing gas sector: PM Modi
Prime Minister Narendra Modi on Tuesday said India will witness a USD 67 billion investment in the natural gas supply chain in 5-6 years as part of “unprecedented” investments flowing into the energy sector to meet the needs of the world’s fastest growing major economy. Speaking at the second edition of the India Energy Week here, he said reforms by his government are leading to a rise in domestic natural gas production as part of the wider aim to increase the share of the fuel in the energy basket to 15 per cent by 2030 from current 6.3 per cent. Natural gas is seen as a transition fuel in India’s march towards net zero carbon emission by 2070. Gas, which is used to generate electricity, make fertiliser or turn into CNG for running automobiles as well as for cooking, is considered less polluting fuel than other fossil fuels such as coal. Modi said India’s world-beating economic growth rate is fuelling a surge in energy needs. “India is the world’s third largest energy, oil and LPG consumer. It is the fourth largest LNG importer and refiner as well as the fourth largest automobile market,” he said, adding the nation’s energy demand is estimated to double by 2045
Mahanagar Gas may raise prices if subsidised supply drops more
India’s city gas distributor Mahanagar Gas said it will consider hiking gas prices for customers if a shortfall in subsidised supply persists, a company executive said. Companies including Indraprastha Gas, Gujarat Gas, Mahanagar Gas have seen their margins squeezed because the allocation of natural gas sold under government-set Administered Pricing Mechanism (APM) has fallen because of lower output at domestic wells. To make up the shortfall, the companies have to buy gas on the more expensive open market. APM allocations are expected to further decline as explorer Oil and Natural Gas Corp slashed its peak output from the KG-D6 basin in January. “In December, we have seen some disruptions in APM gas allocations and eventually as the gas demand increases, the allocations will come down,” said Ashu Shinghal, managing director of Mahanagar Gas. “Right now we are absorbing costs, if APM allocations go down further we will take a call on price hikes,” Shinghal said. Shinghal expects the company’s gas demand to rise by 6% to 7% from a year ago in the fiscal year 2025. Demand from the industrial, commercial sector has been good and Asian liquefied natural gas prices are expected to be stable, Shinghal added.
India Seeks Stronger Energy Ties With US; Asserts Russian Oil Purchases Stabilize Market
In the midst of geopolitical turbulence sparked by the Ukraine war, India has underscored the importance of its energy partnership with the United States, citing its strategic purchases of Russian oil as a stabilizing force in global crude markets. According to S&P Global Commodity Insights, Assistant Secretary of State for Energy Resources Geoffrey R. Pyatt revealed that discussions between US officials and India’s Petroleum Minister Hardeep Singh Puri highlighted India’s perspective on the matter during a recent online interaction with the media. Pyatt emphasized that India’s significant procurement of Russian oil served the dual purpose of curbing global crude prices and ensuring affordable fuel for its citizens. “On Russian oil, this was a big part of my conversation with Minister Puri. We both agreed – and I said the same thing at much greater length on my visit to India last year. India has played a key role in our effort to stabilize global energy markets in the face of the extraordinary destabilization caused by Vladimir Putin’s brutal invasion of Ukraine and the weaponization of his oil and gas resources,” Pyatt stated, echoing sentiments shared during his previous visit to India.
Supply and Demand Shocks Still Rocking Energy Markets
A year and a half after a renowned Harvard professor described the pandemic of 2020 as “the mother of all shocks” to energy markets, oil and gas prices are still being rocked by supply and demand shocks, with economic growth trends and geopolitical tensions offsetting or exacerbating them. “One reason why oil and gas prices are so volatile is that short-term demand for energy responds much faster to changes in growth than to price changes. So, when there is an energy shock, it can take a huge price change to clear the market,” Kenneth Rogoff, a Professor of Economics at Harvard University and former Chief Economist and Director of Research at the International Monetary Fund (IMF), wrote in an opinion piece in Project Syndicate in July of 2022. The big shock to energy markets that year was the impact of the Russian war in Ukraine on global oil and gas supply and prices. Yet, the pandemic of 2020 was “the mother of all shocks, bringing about the biggest sustained shift in demand since World War II,” Rogoff said. According to the economist, in the longer term, “Giant waves of supply and demand shocks will likely continue to roil energy markets and the global economy.” Shocks are always lurking around the corner in the energy markets. After the big Russian export destination shift, the geopolitical event of 2023 that disrupted flows again was the Hamas-Israel war, which started in the last quarter of the year. The market had just adjusted to Russia’s crude and oil products going to Asia, Africa, and South America instead of to Europe. Now, it’s grappling with trade route changes as tankers carrying oil and LNG have started to avoid the Suez Canal and the Houthi missile attacks in the Red Sea and are opting for two-week-longer routes via the Cape of Good Hope in Africa. These new shocks to global oil and gas markets have been largely offset by constant concerns about the state of the global economy and fears that recession hasn’t been avoided yet. According to Rogoff’s forecast, carried in Project Syndicate last month, 2024 could be a “rocky year for everyone.” The economist believes that the chances of a recession in the U.S. are still “probably around 30%, compared to 15% in normal years.” China still faces “several daunting challenges” to have its economy recover to 5% annual growth, while other emerging markets could be most at risk to withstand a crisis if the global economy falls short of expectations, Rogoff says. In oil markets, on the supply side, OPEC+ continues to cut production and exports in 2024, while non-OPEC+ producers have surprised to the upside with supply growth, offsetting some of the cartel’s cuts. The shock on the natural gas markets from 2022 and early 2023 after the Russian invasion of Ukraine was mitigated by a warmer 2022/2023 winter and industrial slowdown in Europe, as well as high LNG imports and a rush to replenish stockpiles, which were full to the brim ahead of this winter. After the pandemic, economic and geopolitical factors continued to surprise energy markets, leading to high volatility. Crude oil prices, which had tanked in the spring of 2020, surged to above $130 in the wake of the Russian invasion of Ukraine. Natural gas prices hit records in August 2022 when Russia cut off most pipeline gas supply to Europe. Still, shocks such as the Hamas-Israel war that would have pushed prices higher have been offset by continued concerns about the global economy. Demand has been resilient over the past year, but concerns about economies are keeping a lid on oil price spikes from the rising tensions in the Middle East, the world’s most important oil-exporting and oil trade route region. Weak economic data and the ongoing property crisis in China, plus a U.S. economy not out of the woods yet, have also contributed to a muted market reaction to OPEC’s cuts to supply. Following a short-lived spike in oil prices after the Hamas-Israel conflict began in early October, futures have traded in a narrow $75-$80 a barrel range, suggesting that economic and demand reduction shocks could outweigh in the near term supply shocks, unless a wider conflict in the Middle East cuts actual supply to the market.
LNG Prices Linger at 7-Month Lows Despite High Asian Imports
Ample supply is keeping spot LNG prices in Asia around the lowest level in seven months, defying seasonal patterns in which prices spike in peak winter. Last week, the average LNG price for March delivery into northeast Asia was up by $0.10 week-on-week to $9.60 per million British thermal units (MMBtu), remaining close to the seven-month low of $9.50 per MMBtu from the previous week, according to estimates from industry sources quoted by Reuters. For a third week in a row, Asia’s spot LNG prices remained below the $10/ MMBtu threshold, despite the season–peak winter in north Asia. Comfortable inventories and reduced demand, coupled with high exports from the top LNG exporters the U.S., Australia, and Qatar, are keeping prices muted. Asia’s LNG imports were estimated to have hit in December a record-high for any month in history as China regained the top importer spot from Japan and lower spot prices incentivized purchases. Imports of LNG into Asia rose to 26.5 million metric tons in December, per data from commodity analysts Kpler reported by Reuters columnist Clyde Russell. In January this year, Asia is estimated to have imported LNG volumes of 26.13 million tons, close to the record-high level from the previous month. But supply has also increased, especially from the United States and Australia, Reuters’ Russell notes. U.S. LNG exports are estimated to have reached a record high in December and the second-largest volumes in January, according to the data Russell quoted. Outside Asia, demand in Europe is tepid, with industries hesitant about boosting natural gas consumption, although prices are now a fraction of the records seen in 2022 and Europe appears to have put the worst of the energy crisis behind. The still high volatility in gas futures prices, compared to historical averages, and uncertainties ranging from geopolitical flare-ups in the Middle East to the U.S. pausing new LNG export project approvals, continue to be a concern for European industrial gas customers, analysts tell Bloomberg. Weak demand from Europe’s industry, due to lower consumption and weak economies, has been one of the reasons of the gas price slump this winter, despite the peak demand period for heating.
Green hydrogen: Proposals for projects worth ₹2.70 trillion received, says energy minister
To boost energy production from non-conventional sources, the Uttar Pradesh government was spearheading campaigns such as installing rooftop solar panels in 25,000 homes in Varanasi, energy minister AK Sharma said here on Saturday adding the goal was to provide roof-to-grid solarisation to 1.35 million households across the state. He also said that the state had received proposals for projects worth ₹2.73 trillion from 20 companies for setting up green hydrogen facilities. “The move is expected to reduce carbon emissions and create employment opportunities for 1,20,000 individuals in renewable energy,” he said. The state, he said, was actively participating in the National Green Hydrogen Mission, also offering subsidies for the purchase of biomass collection machinery and supporting the establishment of compressed biogas, biodiesel and bio-coal units. “The state aims to capitalise on the renewable energy sector and provide technical skills training to the youth in manufacturing, maintenance, and operation of solar facilities. The focus on green hydrogen aligns with the national goal of achieving net-zero carbon emissions by 2070, as announced by Prime Minister Narendra Modi,” Sharma said.
India’s crude oil imports from Russia hit 12-month low but long-term appetite remains intact
India’s crude oil imports from Russia fell for a second straight month in January to its lowest in 12 months but the nation’s insatiable appetite for Russian crude remains for the long term, according to data from energy cargo tracker and industry officials. Russia supplied 1.2 million barrels per day of crude oil to India in January, down from 1.32 million barrels in December and 1.62 million barrels in November 2023, according to data from energy cargo tracker Vortexa. Russia however continues to remain India’s top oil supplier, accounting for a little less than a quarter of 4.91 million barrels a day of oil that the world’s third largest energy consumer imported in January. The decline in cargoes from Russia was made up by increased sourcing from Iraq, which supplied 1.1 million barrels per day (bpd) in January, up from 985,000 bpd in the previous month. Supplies from Saudi Arabia declined to 659,000 bpd from 668,000 bpd in December. India is more than 85 per cent dependent on imports for its needs of crude oil, which is converted into fuels such as petrol and diesel at refineries. Its appetite for Russian oil swelled ever since such oil started trading on discount as the West shunned it to punish Moscow for its invasion of Ukraine. According to Vortexa, an energy intelligence firm, India imported just 36,255 bpd of crude oil from Russia in December 2021 as compared to 1.05 million bpd from Iraq and 952,625 bpd from Saudi Arabia. There were no imports from Russia in the following two months but they resumed in March, soon after the Ukraine war broke out in late February. Imports from Russia soared to an all-time high of 2.1 million bpd in June last year, accounting for almost 40 per cent of all oil India imported. According to Serena Huang, Vortexa’s head of APAC analysis, the reason for the fall in Russian crude oil import in last couple of months was the narrowing of Russian crude discounts versus Middle Eastern crude, recent US sanctions on shipowners carrying Russian crude above the price cap and rising tanker premiums as a result of the Red Sea attacks. Also, some state refiners rushed to fulfill term commitments with Middle Eastern suppliers, industry officials said adding the removal of sanctions on Venezuela has whetted the appetite of private Indian refiners to resume purchases from the South American supplier. Indian refiners started snapping up crude shipments from Venezuela after a three-year suspension in September 2020. These developments together have contributed to a slowdown in Russian purchases. Industry officials said the long-term demand for Russian crude oil remains intact. “A dip in one month and rise in another doesn’t tell you the entire story. The fact remains that Indian companies will continue to buy Russian crude oil as long as they make economic sense,” an official said. Indian state firms buy Russian crude oil on a delivered basis, meaning the supplier has to make arrangements for shipping and the buyer pays only when oil is delivered at the receiving port. This is unlike sourcing from the Middle East where the buyer pays for shipping and insurance. “Till such time that the delivered cost of Russian crude oil is less attractive as compared to alternate sources, Indian refiners will buy,” another official said. Trade sources and analysts also said that refiners are currently expressing increasing concerns about rising shipping costs and insurance. The US in December imposed sanctions on ships and vessel operators carrying Russian oil sold above the USD 60 a barrel cap set by the Group of Seven nations. Several tankers had to divert as banks and service providers were asked to ensure cargoes do not breach the price limit. Hindustan Petroleum Corporation Ltd (HPCL) chairman Pushp Kumar Joshi at an investor call last month said Russian oil made up for 30 per cent of all oil that the company imported and that the company has tied up supplies from Russia and other sources till mid-April. Bharat Petroleum Corporation Ltd (BPCL) chairman G Krishnakumar at an earning call late last month stated that 40 per cent of all crude oil that the firm imported in December quarter came from Russia.