Reliance to commission new energy giga complex this year
Billionaire Mukesh Ambani’s Reliance Industries Ltd will commission a new energy giga complex in Gujarat in the second half of 2024, the company said in an earnings statement and investor call. Reliance is building a giga complex spread over 5,000 acres in Jamnagar in Gujarat. The complex comprises five giga factories for photovoltaic panels, fuel cell system, green hydrogen, energy storage and power electronics.
Russia Tops List of China’s Oil Suppliers in 2023
Russia became China’s largest oil supplier last year, selling it a record 107.02 million tons of crude, according to Chinese customs data, as cited by Reuters. The total amount equaled a daily import rate of 2.14 million barrels, far ahead of Saudi Arabia, whose oil exports to China slipped to a daily average of some 1.7 million barrels last year, the data also showed. In June 2023, Russian exports to China hit an all-time high of 2.57 million barrels daily. The Western sanctions on Russian crude were instrumental in this development. The sanctions—in the form of a price cap on Russian oil shipments abroad—prompted previous buyers to shun Russian oil but China was only too happy to take more in, as was India. The price discount that the sanctions caused was a big reason for that, even though it narrowed with time, as Russian oil prices moved in sync with global prices. The same developments turned China into Russia’s largest oil customer last year. Deputy Prime Minister Alexander Novak said earlier this month that half of Russia’s crude oil exports went to China, which made it the biggest buyer of Russian oil. “The main partners in the current situation are China, whose share has grown to approximately 45-50%, and, of course, India,” Novak said, as quoted by VOA News. “Earlier, there basically were no supplies to India; in two years, the total share of supplies to India has come to 40%.” India was the other country that saw Russia turn into its largest oil supplier last year, while the share of Europe in Russian oil imports dropped from around 45% to about 4-5% as the European Union imposed an embargo on Russian oil and petroleum product purchases in December 2022 and February 2023. Together, China and India took in some 90% of Russia’s oil exports in 2023.
OIL, GMC sign MoU to convert municipal solid waste into CBG
In a move towards environmental sustainability and cleaner energy solutions, Oil India Limited (OIL) and Guwahati Municipal Corporation (GMC) have inked a memorandum of understanding (MoU) on Saturday to collaborate on the transformation of municipal solid waste (MSW) into compressed bio gas (CBG). The MoU has been signed by NRL’s Managing Director Bhaskar Jyoti Phukan representing OIL and GMC’s Commissioner Megha Nidhi Dahal (IAS) representing the Guwahati Municipal Corporation in the presence of OIL’s Chairman & Managing Director (CMD) Dr Ranjit Rath, Director (Operations) Pankaj Goswami and Director (HR) Ashok Das at the NRL Corporate Office, Guwahati.
India defers $602 million plan to fill parts of strategic petroleum reserve
India has deferred a 50-billion-rupee ($601.78 million) plan to fill parts of its strategic petroleum reserve, keeping in mind emerging trends in oil markets, the finance ministry said on Saturday. In the federal budget for 2023-24, the government had outlined a plan to purchase crude oil worth Rs 50 billion for caverns in the southern cities of Mangalore and Visakhapatnam India, the world’s third-biggest oil importer and consumer, imports over 80 per cent of its oil needs and has built strategic storage at three locations in southern India to store over 5 million tonnes of oil to protect against supply disruptions.
Petroleum exports fall in Jan on Red Sea tensions, may see steeper decline
India’s export of petroleum products to Europe has declined substantially in January so far owing to the rising tensions in the Red Sea, dropping to just 100 thousand barrel a day (kbd) from 350-400 thousand barrel a day in November and December. Many tankers have instead opted for the longer route via the Cape of Good Hope for the delivery which has resulted in increased shipping costs. “Even if they export to Europe, Indian refiners prefer circumnavigating Africa,” said Viktor Katona, lead crude analyst at Kpler. “In January so far, there have been three cargoes departing from India to Europe, one diesel seemingly will try the Bab el Mandeb strait, whilst two jet fuel cargoes (Doric Courage from Jamnagar and Pacific Julia from Nayara) have opted for the longer route around the Cape of Good Hope.” India’s export of petroleum products to Europe has declined substantially in January so far owing to the rising tensions in the Red Sea, dropping to just 100 thousand barrel a day (kbd) from 350-400 thousand barrel a day in November and December. Many tankers have instead opted for the longer route via the Cape of Good Hope for the delivery which has resulted in increased shipping costs. “Even if they export to Europe, Indian refiners prefer circumnavigating Africa,” said Viktor Katona, lead crude analyst at Kpler. “In January so far, there have been three cargoes departing from India to Europe, one diesel seemingly will try the Bab el Mandeb strait, whilst two jet fuel cargoes (Doric Courage from Jamnagar and Pacific Julia from Nayara) have opted for the longer route around the Cape of Good Hope.” The escalating threats to cargo vessels at the Red Sea has changed India’s export destinations of petroleum products as the country has started supplying more to East Asia and Africa now compared with its supplies to Europe. As per the Delhi-based Research and Information System for Developing Countries (RIS), India could see a nearly 7% drop in exports in FY24, amounting to around $30 billion as higher container shipping rates might prompt exporters to hold back on shipments, reports have suggested. India exports a variety of goods via the Red Sea including petroleum products. The country’s export of petroleum products fell by 7.5% in November last year to $7.48 billion compared to $8.08 billion in November 2022, as per the latest government data. The exports were 15% down during the first eight months of the current fiscal at $65.23 billion. “For standalone refiners such as RIL, MRPL, and CPCL, there could be some margin hit on the crude side, while on the product side, exports to EU could be impacted,” Madhavi Arora, lead economist with Emkay Global Financial Services Ltd had earlier said in a note. Arora noted that freight rates from Asia have spiked 53% in a month and container shipping giants including oil supermajor BP have halted transit via the Red Sea or the Suez Canal.
India raises windfall tax on crude by Rs 1,000; removes taxes on diesel, ATF
Windfall tax: India has sharply raised the windfall profit tax on crude oil to Rs 2,300 per tonne from Rs 1,300. However, New Delhi removed the tax on diesel and aviation turbine fuel, and it will also continue with no windfall taxes on petrol The windfall tax on diesel, ATF have been removed, as against windfall taxes of 50 paise per litre and one rupee per litre earlier. The new rates are effective from January 2, 2024. On December 18, the tax, levied in the form of Special Additional Excise Duty or SAED, on domestically produced crude oil was cut to Rs 1,300 per tonne from Rs 5,000 a tonne. Further, the SAED on the export of diesel was reduced to 50 paise per litre from Rs 1 a litre. India first imposed windfall profit taxes on July 1, 2022,, joining a growing number of nations that tax supernormal profits of energy companies. At that time, export duties of Rs 6 per litre (USD 12 per barrel) each were levied on petrol and ATF and Rs 13 a litre ($26 a barrel) on diesel. The tax rates are reviewed every fortnight based on average oil prices in the previous two weeks. A windfall tax is levied on domestic crude oil if rates of the global benchmark rise above USD 75 per barrel. Export of diesel, ATF and petrol attract the levy if product cracks (or margins) rise above USD 20 per barrel.
India dials Saudi as Russian oil purchases hit 11-month low in December
India increased imports of Saudi oil in December as payment problems drove its Russian oil buys to an 11-month low, with at least five cargoes of the sweet Sokol variant heading to other locations, data from vessel tracking agencies showed. Indian Oil Corp, which was set to get the Sokol oil, had to withdraw from its inventory and buy from the Middle East to make up the shortfall, sources told Reuters last month. Top refiner IOC is the only state-run firm with an annual deal to buy a variety of Russian grades, including Sokol, from Russian oil major Rosneft. India’s oil imports from Russia in December declined between 16% and 22%, according to Reuters calculation on the basis of data from flow tracking agencies Vortexa, Kpler and LSEG. Its imports of Saudi oil, rose by about 4%, however, data from Kpler and Vortexa showed. LSEG data shows India’s monthly Russian oil imports declining by 22% to 1.21 million barrels per day (bpd) in December, while Kpler shows a drop of 16% to 1.39 million bpd. “Perhaps it’s still too early to write off India’s appetite for the Sakhalin grade (Sokol),” said Viktor Katona, lead crude analyst at Kpler, adding that three new Sokol cargoes on the NS Antarctic, Jaguar and Vostochny Prospect were heading for India. Aframax ships NS Century, NS Commander, Sakhalin Island, Lityny Prospect and Krymsk; and a very large crude carrier Nellis carrying Russian Sokol oil for IOC were sailing for the Strait of Malacca, Kpler and LSEG ship tracking data showed. The NS Century faced sanctions imposed by the United States in November for the sale of Russian oil at a price above the cap of $60 a barrel fixed by the G7 grouping of nations and had been floating near Colombo since. “China appears to be the final solution for some cargoes,” said Katona.
U.S. Now World’s Largest LNG Exporter
The United States is now the world’s LNG exporter, after overtaking Australia and Qatar, according to new data compiled and shared by Bloomberg on Tuesday. The United States exported 91.2 million metric tons of LNG last year, after the country’s primary export facility, Freeport LNG, resumed operations after an eight-month hiatus following a fire in June 2022. Meanwhile, EU countries were looking to reduce their reliance on Russian gas and compensate for Russia’s curtailment of pipeline gas into Europe. Australia was the second-leading LNG exporter in 2023, while Qatar, the leading LNG exporter in 2022, reduced its exports by 1.9% in 2023, came in third. This year is shaping up to be another banner year for U.S. LNG. Venture Global LNG Inc. is set to start up a new Plaquemines LNG facility in Louisiana, and ExxonMobil and QatarEnergy are set to start up Golden Pass, an LNG facility in Texas. In the Energy Information Administration’s (EIA) latest edition of its Short Term Energy Outlook (STEO), U.S. LNG exports are set to increase to 12.36 billion cubic feet per day, up from an estimated 11.81 billion cubic feet per day in 2023, and 10.59 billion cubic feet per day in 2022. The Netherlands, the UK, and France were the main destinations for U.S. LNG exports in the first half of 2023, according to the EIA. In the first six months of 2023, Europe and the UK’s LNG imports exceeded imports by pipeline for the first time on record, data from Refinitiv Eikon shows. In December, Europe remained the main destination for U.S. LNG at 61% of the total exported. Asia is the second-largest export market for U.S. LNG.
What Will Influence Oil Prices in 2024?
The last couple of years have seen a series of extraordinary events, most notably the invasion of Ukraine by Russia on 24 February 2022 and the Hamas attacks on Israel on 7 October 2023. This year may well see more equally extraordinary things, with the widening out of the Israel-Hamas War a distinct possibility, as is a ratcheting up of tensions between China and Taiwan, and between North Korea and South Korea. All three would involve the U.S., China, and Russia in one way or another, and all three scenarios carry with them the threat of a sudden spike in all prices. Other events, less predictable, may also emerge that would do the same. That said, as extraordinary as these events have been, the benchmark Brent oil price began 2023 trading at a high of around US$85.88 per barrel (pb) and closed this year lower – at a high of about US$77.96 pb. These numbers mark an extraordinary achievement for those countries that are biggest net consumers of oil at the expense of those that are biggest net producers of oil. This is exactly the opposite of what happened just over 50 years ago after an Arab coalition invaded Israel on 6 October 1973, marking the beginning of the Yom Kippur War. That war directly led to the 1973/74 Oil Crisis, as analysed in full in my new book on the new global oil market order. The Crisis came as OPEC members – plus Egypt, Syria, and Tunisia – placed an embargo on oil exports to the U.S., the U.K., Japan, Canada, and the Netherlands in response to their collective supplying of arms, intelligence resources, and logistical support to Israel during the War. By the end of the embargo in March 1974, the price of oil had risen around 267 percent, from about US$3 per barrel (pb) to over US$11 pb. This, in turn, stoked the fire of a global economic slowdown, especially felt in the net oil importing countries of the West. As highlighted by the then-Saudi Minister of Oil and Mineral Reserves, Sheikh Ahmed Zaki Yamani – widely credited with formulating the Saudi and OPEC strategy – the embargo definitively marked a dramatic shift in in the balance of power in the global oil market from the big consumers of oil (mainly in the West at that time) to the big producers of oil (mainly in the Middle East at that point). Yamani was not the only one to think this – the late U.S. geopolitical strategist Henry Kissinger did too, and this realisation formed the basis of all the U.S.’s energy-related foreign policy from that point to now. After the 1974/74 Oil Crisis had ended, Kissinger – who served as U.S. National Security Advisor from January 1969 to November 1975 and Secretary of State from September 1973 to January 1977 – told every president he advised (virtually all of them in one way or another) of the three conclusions he had reached as a result of the Crisis, as also analysed in depth in my new book on the new global oil market order. The first was that Saudi Arabia and its fellow OPEC members could never be trusted again by the U.S. as the Crisis had seen the Kingdom break the foundation stone agreement between the two countries made back on 14 February 1945 between the then-US President, Franklin D Roosevelt, and the then-Saudi King, Abdulaziz bin Abdul Rahman Al Saud. This deal was simply that the U.S. would receive all the oil supplies it needed for as long as Saudi Arabia had oil in place and, in return for this, the U.S. would guarantee the security both of Saudi Arabia and its ruling House of Saud. Kissinger’s second conclusion was that the U.S. needed to expedite its efforts to become self-sufficient in energy resources as soon as possible. Third, Kissinger concluded that the best course of action for the U.S. to keep obtaining all the oil and gas it needed to retain its top global economic and political position was to ensure that the Middle Eastern countries did not band together again in the future against the U.S. The optimal way for the U.S. to ensure this, he successfully argued, was to use the ‘divide and rule’ principle between the region’s major oil and gas producers, which in turn was a variant of the ‘triangular diplomacy’ he had advocated and used to great effect in the U.S.’s dealings with Russia and China at that time. In short, this involved playing one side off against the other by leveraging whatever fault lines ran through the target countries at any given time, be they economic, political, or religious, or any combination thereof. Kissinger lived to see the balance of power in the global oil markets begin to swing back away from the Middle East’s oil producers and towards the net consumers of the U.S. and its allies, with the inexorable rise of the U.S.’s shale oil sector. This started in earnest in 2010 (shale gas from 2006) and by 2013 the rise in output was virtually a straight vertical line. By 2014, Saudi Arabia believed that the U.S.’s shale oil and gas posed an existential threat to its place in the world and to continued rule of the Al Saud royal family. In an attempt to destroy – or at least significantly disable – the then-nascent U.S. shale sector, Saudi Arabia led its OPEC brothers into the 2014-2016 Oil Price War, as covered in depth in my new book on the new global oil market order. The OPEC tactic was to enormously oversupply the market, pushing oil prices down to levels that would bankrupt the U.S.’s shale oil producers. However, the Saudis and OPEC had seriously underestimated the ability of the U.S. shale sector to adapt and then thrive on much lower oil prices than even the Saudis or its OPEC brothers could endure. From that point, the U.S. began to put into place an informal
India mulls import duty concessions on some petroleum, plastic items in FTA with Oman
India is mulling import duty concessions on certain petroleum products and plastic items as part of the proposed Foreign Trade Agreement (FTA) with Oman, talks for which are likely to close by the end of January, 2024, an Indian official told Moneycontrol. “India may offer some tariff cuts on certain petroleum products, as well as items such as plastics. These are some of the important items for which Oman would want concessions,” the official, who spoke on the condition of anonymity, said. With talks on the India-Oman Comprehensive Economic Partnership Agreement (CEPA) largely concluded, authorities are expected to sign a deal before the general elections scheduled for April-May 2024, Moneycontrol had reported on December 29, 2023. The first round of negotiations took place in New Delhi on November 27-29, 2023, while the second was held in Muscat on December 9-14, 2023.