EU Considers Lifting Methane Requirements for U.S. LNG
The European Union is considering what Reuters called tweaks to its methane emissions regulation in order to stimulate higher LNG imports from the United States, the publication has reported, citing unnamed sources in the know. The goal, per these sources, was to allow for “equivalent” methane standards to be applicable to U.S. liquefied natural gas exports to the European Union without weakening the overall regulation, Reuters noted in its report. The Biden administration pressured the energy industry in the U.S. to invest in methane emission tracking and control, which puts producers in a relatively favorable position. “The Commission has an ongoing dialogue with industry on all relevant matters related to our legislation,” a spokesperson for the EU’s executive organ told Reuters. The EU’s so-called methane regulation was approved by the European parliament last year and essentially requires all suppliers of liquefied natural gas to the bloc to accompany their cargos with documentation certifying that the methane emissions related to the production of the LNG were tracked, monitored, and, most importantly, minimized. Qatar did not take kindly to that regulation, stating it would simply stop selling LNG to European buyers, leaving said European buyers with a more limited pool of sellers. Now, it seems LNG supply security has trumped emission fears in Brussels, and not a moment too soon—methane emission reporting by LNG suppliers to the European Union was set to enter into effect from next month. LNG suppliers, by the way, were not overnight fans of the regulation. “The methane regulation in general is a good thing,” Ralf Dickgreber, chief of global LNG and biomass at France’s Engie, told an industry event recently. However, “we don’t know exactly how to interpret the rules out there . . . How to comply with it is very difficult at this stage,” the executive said, as quoted by the Financial Times.
Asia Offers to Buy More U.S. Energy to Avoid Steep Tariffs
Most Asian countries are racing to pledge increased imports of U.S. energy to avoid the high tariffs slapped on them in early April. Delegations from many Asian countries are heading to Washington D.C. these days to discuss the U.S. tariffs, now suspended for 90 days, which are the highest for economies in Asia and Southeast Asia. Thailand is looking to import higher volumes of American energy as a way to convince the U.S. Administration not to slap high tariffs on Thai goods sold in the United States. The tariff on Thailand, which U.S. President Donald Trump announced on the so-called “liberation day” on April 2, was as much as 36%–one of the highest among all economies and jurisdictions. Earlier this week, Indonesia, threatened with a 32% tariff, said it would offer to buy an additional $10 billion worth of American oil and liquefied petroleum gas (LPG). South Asian nation Pakistan is actively considering the idea of importing U.S. crude oil for the first time to seek a reduction of its trade surplus with America. South Korea is reportedly looking at more LNG imports to get Washington to drop the tariffs. India is weighing the option to scrap its import tax on American liquefied natural gas to increase U.S. LNG imports and reduce its trade surplus with the United States. However, commitments and contracts to buy more U.S. energy will not necessarily spare any buyer from tariffs. Taiwan, for example, was slapped with a now-halted 32% tariff, although it had just made some big commitments to invest in the U.S., including in U.S. energy projects. Last month, Taiwan’s state-held oil and gas company CPC Corporation signed a letter of intent to invest in the $44-billion Alaska LNG export project and buy LNG from it as part of a move to bolster its gas supply and energy security. Taiwan wasn’t spared from one of the highest now-suspended tariffs despite being the only early committed investor in the huge Alaska LNG project, while Japan and South Korea are hesitating. Unfortunately for Taiwan, in any negotiations with deficit-fixated President Trump, the value of its exports to the U.S. – predominantly semiconductors – vastly outstrips the value of the goods it imports from America.
Sanctioned Russian Oil Exports to China Jump as STS Transfers Rise
Chinese imports of Arctic Russian crude grades are on the rise as ship-to-ship (STS) transfers from sanctioned vessels on non-sanctioned tankers offshore Malaysia and Singapore are booming, according to traders and analysts. The Biden Administration’s farewell sanctions on Russian oil trade and exports sanctioned dozens of vessels carrying the ARCO, Novy port, and Varandey crudes from Russia’s Arctic oil projects. The sanctions, slapped in early January, blacklisted dozens of vessels that Russia used to ship the ESPO crude blend from the Far Eastern port of Kozmino to China’s independent refiners. Many of the vessels, specialized tankers, and shuttle tankers transporting Russia’s oil from the Arctic and Far East Pacific fields and production clusters to Asia have now been sanctioned. Since Chinese buyers began demanding oil to be delivered on non-sanctioned vessels, STS transfers in the South China Sea and near Singapore have been picking up, Russian oil traders have told Reuters. As many as 4 million barrels of Russia’s Arctic crude oil was transferred via STS last week, Emma Li, senior analyst at energy flows analytics firm Vortexa, told Reuters. Another 16 million barrels of Arctic crude from Russia have either arrived or are planned to arrive in the South China Sea in April, Li added. Last month, Chinese crude oil imports rebounded to a 20-month high, also due to increased imports of Russian and Iranian oil. A massive reshuffling of tankers following the sanctions on Russia and Iran has allowed non-sanctioned vessels to pick up trade with Russian and Iranian oil. Iranian crude imports into China surged to a record 1.8 million bpd in March, with Shandong alone absorbing more than 1.5 million bpd and marking a nearly 50% jump from the 2024 average, according to Vortexa. Russian crude is also on the rebound in China, with many cargoes on sanctioned tankers finding buyers in Shandong. Moreover, stranded Russian Arctic cargoes are now targeting Chinese teapot buyers via STS transfers using the dark fleet, Vortexa’s Li noted.
Oil Prices Are Recovering, But Can Exporters Outlast the Tariff Circus?
Oil prices have been on the mend this week after taking a dive following President Trump’s global tariff offensive launch. Yet they still have a long way to go to return to where they were just four months ago—and many oil-exporting countries can’t wait for this to happen. The question is, will it? For now, the situation does not look good for oil producers. The rebound in prices this week came as a result of indications that Trump was willing to consider some tariff exemptions for things like smartphones and semiconductors. It didn’t last, however, because the latest from the tariff front is that the U.S. president has ordered an investigation into the country’s reliance on imported critical minerals with a view to tariffing those, too. In other words, Trump is very much not done with the tariffs. However, Chinese crude oil imports surged in March, which was taken as a strong positive sign by traders, contributing to the oil price recovery that saw Brent crude rebound to $66 per barrel and West Texas Intermediate regain ground to above $61 per barrel. Crude oil intake hit the highest in 20 months in March, topping 12 million barrels per day as flows of Iranian and Russian crude rebounded from the lows seen early this year with the U.S. sanctions. Whether China will keep this rate of imports going forward is an open question, with U.S. exports of crude to the world’s top importer clearly set to get decimated if not outright sapped. For oil exporters, however, the more pressing issue is how long the tariff war will continue. Alas, this is also an open question at this part, although there is a chance of good news down the road. Until then, there will be some suffering, especially among the less wealthy oil exporters. Reuters reported this week that countries such as Angola, Colombia, Nigeria, and Venezuela were set to feel some pain from the oil price rout that the tariff offensive triggered. The publication cited analysts as saying the longer the tariff war continued, the worse the pain would get for these oil exporters. One example came from Angola, which had to cough up $200 million for a margin call issued by JP Morgan last week on a $1-billion total return swap, Reuters noted in its report. Nigeria is also vulnerable with regard to Treasury bills tied to the local currency in carry trades, betting that the naira will not depreciate fast against the U.S. dollar. Of course, besides these specific examples, oil exporters’ general problem with lower oil prices is that it means lower oil export revenues and, consequently, lower budget income in hard currency. Saudi Arabia is feeling that pinch, with its budget deficit set to swell to $75 billion if the rout persists, according to Goldman Sachs analysts. It is not the only one, either. The whole Middle East is going to see higher deficits. “The deficits on the fiscal side that we’re likely to see in the GCC [Gulf Cooperation Council] countries, especially big countries like Saudi Arabia, are going to be pretty significant,” Goldman’s Middle East and North Africa economist Faruk Soussa told CNBC last week. Russia is also feeling the pain, with Urals, its flagship blend, dropping to less than $55 per barrel last week versus $69.70 per barrel set in Russia’s budget for this year. Oil and gas revenues account for some 30% of the country’s budget revenue. By the way, the government just released a new energy strategy this week, which sees oil production stable over the next 25 years at an average daily rate of 10.8 million barrels. Yet, while exporters suffer, importers are set to benefit from the very same price trends—for a while. “The lower oil price outlook is positive for oil importers, albeit unlikely to counterbalance the significant headwinds from the trade war and the significant downside risks,” the chief economist of Abu Dhabi Commercial Bank, Monica Malik, told Reuters. JP Morgan earlier this month raised the odds of a global recession to 60% from 40%. The International Monetary Fund also saw an increased likelihood of global-scale trouble resulting from the tariff war. So, for both exporters and importers of crude oil, the big question is whether the tariff war will get resolved within weeks or will drag on for months, possibly even years. For now, the signs are good: the 90-day negotiations window Trump opened for everyone, but China put a quick end to the stock market rout, suggesting any trade deals closed during that window would have a similar effect on market moods. As optimism returns, oil prices will climb higher, giving exporters a much-needed break but retaining a ceiling from Trump’s focus on China, keeping oil affordable for importers.
Assessing the viability of LNG trucks
India is considering liquefied natural gas (LNG) fuelled trucks as the long-haul road freight solution to replace the highly polluting diesel trucks. While there is little doubt that diesel trucks, a primary source of freight transport in India, require a cleaner alternative, the conundrum for policymakers is which technology to adopt – LNG trucks or electric ones. Carbon emissions from the road transport sector require urgent solutions. Road transport is already responsible for 12% of India’s energy-related carbon emissions. Within the road transport sector, medium-to-heavy duty trucks account for 45% of on-road emissions in the country, even though they form only 3% of the total vehicle population. Further, trucks are responsible for 53% of particulate matter (PM) emissions. With the road freight movement likely to result in 17 million trucks on the road by 2050, from four million in 2022, according to the NITI Aayog, adopting zero-emission trucks (ZETs) is imperative and urgent. The government realises this, and its Bharat Zero Emission Trucking policy advisory outlines potential interventions to achieve 100% ZET deployment by 2050. While LNG trucks lower carbon emissions, they do not entirely eliminate them. According to some studies, trucks powered by LNG lower carbon emissions by 28% to 30% compared to diesel trucks. Another study points to negligible benefits when all greenhouse gases are considered when switching to LNG trucks instead of diesel trucks. According to the study, there are two to five times more nitrogen oxide emissions from LNG trucks than diesel trucks. This could vary for trucks with new emission standards, such as the China VI emission standard, largely equivalent to Euro VI, which requires heavy-duty vehicles to be equipped with remote emissions monitoring systems. Studies also point to the possibility of increased ammonia emissions from China VI emissions standards-aligned LNG trucks due to changes in the type of combustion. The emission benefits of LNG trucks over diesel would perhaps need more research. For instance, lifecycle emissions analysis of LNG extraction, production and transportation could indicate possibly higher overall emissions due to the methane emissions from using LNG.
Govt cut cheaper APM gas supply to CNG retailers IGL, MGL, Adani Total Gas
The government has cut the supply of lower-cost APM gas to city gas distributors such as Indraprastha Gas Ltd, Mahanagar Gas Ltd, and Adani Total Gas Ltd, by up to 20 per cent, replacing the shortfall with more expensive fuel. GAIL (India) Ltd, the state-owned nodal agency for gas supply, has intimated about a cut in supply of gas from legacy fields, called Administered Price Mechanism (APM) gas, the three city retailers said in separate stock exchange filings. The production of APM gas, which is currently priced at $6.75 per million British thermal unit, is declining at the rate of 9-10 per cent annually as recovery from old and ageing fields falls. Oil and Natural Gas Corporation (ONGC) is investing in drilling more wells to maintain the output, but that additional cost is reflected in a higher price of the gas thus produced. Such gas is called new well gas and is priced at about $8 per mmBtu. In the last one year, APM gas supplies to city gas retailers have been cut by almost 50 per cent. With the latest cut, the APM gas now meets about 34 per cent of the total city gas requirement, down from 51 per cent previously.
China’s US Decoupling Collapses Trade in Key Petroleum Product
It’s been just days since China responded to US tariffs with its own set of eye-watering levies, but one corner of the petroleum market is already in crisis as bilateral trade collapses between the two heavyweights. The price of propane, a type of liquefied petroleum gas, has plummeted in the US because selling to China, its biggest customer after Japan, is no longer viable. Chinese buyers are scurrying to find alternative sources of the fuel, which is used for heating and plastics, but are getting gouged by traders taking advantage of their distress.
India’s 2025 Oil product demand expected to average 5.8 million barrels per day says OPEC
Organization of the Petroleum Exporting Countries or OPEC noted that in February, India’s oil demand inched up by 28 thousand barrels (tb) per day (d), y-o-y, down from growth of 132 tb/d, y-o-y, seen the previous month. The largest monthly increases in oil product demand were recorded in transportation fuels, including gasoline and diesel. Gasoline demand posted the largest increase of 67 tb/d, y-o-y, up from a 59 tb/d, y-o-y, increase seen the previous month. Growth in gasoline demand in February was supported by an increase in vehicle sales amid a rise in disposable income and personal mobility. Diesel demand expanded by 45 tb/d, y-o-y, below growth of 79 tb/d, y-o-y, seen the previous month. Robust growth in transport fuels and growth in LPG and naphtha demand are expected to support overall oil demand expansion in 2Q25 by 235 tb/d, y-o-y. In 2025, oil product demand in India is expected to grow by a healthy 209 tb/d, y-o-y, to average 5.8 million barrels per day.
India to set fresh target of 30 per cent ethanol blending in petrol by 2030: Report
India is preparing to set a new target of 30 percent ethanol blending in petrol by 2030, after successfully reaching the 20 percent mark by March this year, reported Business Standard citing sources. The original goal of 20 percent blending was initially planned for 2030 but was later advanced to the 2025-26 ethanol supply year (ESY). In the 2023-24 ESY, the country achieved an average ethanol blending rate of 14.6 percent, up from 12.06 percent in the previous ESY. Officials at the Petroleum and Natural Gas Ministry confirmed that inter-ministerial discussions have agreed to raise the national blending target to 30 per cent by the end of the decade, according to the news report.
India’s Oil Import Price Drops Below $70 for the First Time Since 2021
The average price of India’s crude oil imports fell to below $70 per barrel this month, for the first time since 2021, as international benchmarks plunged amid trade and tariff uncertainty. India, which imports 88% of the crude it consumes, saw its average cost of crude oil imports plunge by 17.87% in April compared to March 2024. The average import cost stood at $69.39 per barrel for the first two weeks of this month—the lowest level since August 2021, Indian outlet Hindustan Times reported on Tuesday. The lower import price could boost purchases by Indian refiners who are sensitive to the price of crude. The lowest crude import cost in nearly four years could also lead to lower prices for gasoline and diesel for Indian consumers, according to Hindustan Times. India last reduced the prices at the pump in March 2024, ahead of the general election last year. Low import bills are very good news for India, the world’s third-largest crude oil importer, which depends on imports for more than 88% of its oil consumption. India’s crude import dependence hit a record high of 88.2% in the April 2024 to February 2025 period and set a record high in the fiscal year ending March 31, 2025, as Indian fuel demand continues to grow while domestic crude production remains flat. The Indian import dependence in the full 2023/2024 fiscal year averaged 87.8%. As import and demand trends have shown in recent months, the 2024/2025 fiscal year will see an even higher – an all-time high – reliance on crude oil imports. Last year, India surpassed China as the world’s largest oil demand driver, amid growing demand for fuel transportation in India and slowing gasoline and diesel demand in China due to the advance of electric vehicles and LNG-fueled trucks in the world’s top crude oil importer. This year was set for another healthy demand growth in India, but the U.S. trade policies with increased tariffs and uncertainties could undermine global trade and economic growth.