GAIL plans 47 km pilot project for natural gas transmission
Gas Authority of India Ltd (GAIL), a state-run natural gas transmission company, has decided to launch a pilot project covering 47 km in Siliguri. Today, GAIL officials met mayor Goutam Deb and other representatives, including the commissioner of the Siliguri Municipal Corporation, to seek permission for laying micro-pipelines for the distribution of natural gas for both commercial and domestic purposes. Mayor Goutam Deb has given in-principle approval to the project, enabling Siliguri residents to benefit from the initiative. Speaking to reporters, Mr Deb stated that the state government and the Public Works Department (PWD) had prepared a standard operating procedure (SOP) for implementing the natural gas transmission system for GAIL in Kolkata. He added, “We will follow the same SOP to implement the pilot project here.
The Future of U.S. LNG: Growth, Delays, and Uncertainty
The U.S. is currently the world’s largest LNG exporter, but future growth is threatened by legal challenges, project delays, and a pause on new export permits. The outcome of the 2024 U.S. presidential election could significantly impact the future of U.S. LNG policy and export potential. Industry leaders are calling for an end to the permitting pause and streamlined regulations to support continued growth in the U.S. LNG sector. The U.S. LNG export industry has recently hit several stumbling blocks. And who will be America’s president in the next four years may not even be the biggest. Litigation at court from environmental groups, a contractor bankruptcy, and President Joe Biden’s permit pause have combined to increase uncertainty for U.S. LNG project developers and exporters this decade. Top LNG Exporter The expansion of the LNG export infrastructure over the past five years and the flexibility in cargo destination of U.S. LNG have made America the world’s biggest exporter of liquefied natural gas. Soaring sales in Europe, which has scrambled to replace Russian pipeline gas, and more LNG projects coming online this decade boosted U.S. exports by 12% in 2023 from a year earlier. At 11.9 billion cubic feet per day (Bcf/d) of LNG exports, the United States easily beat its closest rivals – Qatar and Australia – to become the biggest LNG exporter last year, EIA data showed. Utilization of U.S. LNG export capacity averaged 104% of nominal capacity and 86% of peak capacity across the seven U.S. LNG terminals operating in 2023 as relatively strong demand for LNG in Europe amid high international natural gas prices supported increased U.S. LNG exports last year. This year, U.S. LNG exports are set to average 12.1 billion Bcf/d, slightly up from 2023, and 13.8 Bcf/d in 2025, per the EIA’s latest Short-Term Energy Outlook for October. Two new projects, Corpus Christi LNG Stage 3 and Plaquemines LNG, are in the commissioning phase to start LNG export operations, and each of these facilities will begin exporting LNG by the end of 2024, the EIA said.
Gas Prices Set for a Breakout in 2025
Natural gas prices are on the climb and this climb is about to intensify in the first months of the new year as seasonal demand hits its peak in the northern hemisphere. That’s bad news for struggling economies. Gas prices in Europe, Asia, and North America have made solid gains this year. Reuters’ Gavin Maguire reported this week those fall in the range between 30% and 50%–and that’s not the end of the rally. Winter is just beginning, and the weather in Europe and Asia, as well as most of North America, is about to get a lot colder. Energy market analyst John Kemp reported that speculators in the United States were covering their short bets on natural gas at the fastest rate in over a year, reinforcing expectations of stronger gas prices. What’s more, these bets are being made just when the Energy Information Administration reported that the U.S. is entering winter with abundant natural gas reserves: the highest level since 2016, in fact. Yet even this fact, with gas in storage at over 3.9 trillion cu ft, has not been enough to maintain speculators’ bearish mood. In addition to the seasonal rebound and demand—and the expectation that it will be one major rebound after two warm winters—one driver behind this change in sentiment is the outlook for production. The focus here is on the United States and the fact that gas producers have been curbing production because of the chronically depressed prices. Now that prices are improving, it will be a while before the industry responds with a production boost—and until then, prices will be trending higher. So will power generation costs for most of the key markets. Europe will continue to be a major driver of natural gas demand in the coming months. Winter is not the top performance season for wind and solar, as recently evidenced by the energy mix of Germany, which featured coal as its biggest generator, followed by natural gas, and wind a close second to gas. Yet the gas that Europe is using to generate power is the same gas that much of Asia has come to rely on for its winter needs: U.S. liquefied natural gas. This means we have another tight race for limited LNG supply this winter. China provided some easing of that tightness this week when it completed the final connection of Russia’s Power of Siberia gas pipeline to end consumers, which would allow the pipe to reach its full capacity next year, covering 9% of the country’s gas demand. That’s 38 billion cu m that China won’t be looking to buy on the LNG spot market, and this is good news for other Asian countries—if they can outbid the Europeans. This will be tough, and the Europeans will most likely get more gas than Asian nations this winter, as they did back in 2022. This means two things: that Asian nations will fall back on coal once again and that Europeans’ electricity bills will rise once again, as will the price of everything that features electricity in its input costs. It is a tricky time for yet more consumer price inflation in Europe as people’s disgruntlement with the cost of living intensifies, but there is no chance of avoiding that disgruntlement. Europe doesn’t have a lot of options when it comes to gas supply. And U.S. producers are yet to start ramping up output as prices reverse their decline. This is perhaps the toughest stage in the energy commodity cycle for consumers. Supply is tightening because of a past surplus that drove prices down, prompting the production curbs. At the same time, as fate and the Earth’s rotation around the Sun would have it, demand is on the way to its annual peak, aggravating the imbalance with supply and set to cause some serious pain for consumers. The data on gas withdrawals and injection into storage in Europe is enough to paint a picture that U.S. gas producers would enjoy, unlike European governments and other large buyers. In Germany, withdrawals on Tuesday stood at 942 GWh, while injections totaled 16.22 GWh. For France, the withdrawal figure was 930.7 GWh, while the injection figure stood at 96.50 GWh. Italy and the Netherlands also saw massive withdrawals compared to the injection of new gas into storage. The situation points to looming depletion unless winter temperatures let go smack in the middle of the season to give Europe a breather. Yet the weather is notoriously unreliable when it comes to survival—and to energy security as the countries at the forefront of the energy transition are discovering for yet another winter. The looming gas shortage might give decision-makers in those countries pause for reconsideration of priorities, with energy security coming on top of emission levels. On the other hand, this has happened before, and it has not led to changes in priorities, so the chances of things changing now are slim.
Pakistan defers LNG contract with Qatar for a year, petroleum minister says
Pakistan has deferred an agreement to buy liquefied natural gas from Qatar for a year, Petroleum Minister Musadik Malik said on Wednesday, and will now receive the contracted LNG cargoes in 2026 instead of 2025. “We currently have a surplus of LNG, so we are not importing any new cargo,” said Malik. There were no financial penalties for deferring, rather than cancelling, the order, he added. Annual power use in Pakistan, which gets over a third of its electricity from natural gas, has fallen 8-10% year-on-year over the past three quarters, its power minister told Reuters in November, primarily due to higher tariffs curbing household consumption. The South Asian nation has deferred five LNG cargoes from Qatar and is negotiating to defer five more with other markets, Malik told journalists, without disclosing the names of the sellers. The government said in November it was slashing its electricity tariffs over the winter to boost consumption and cut the use of natural gas for heating. Many power utilities in Pakistan have had to curtail or even halt operations in winter months due to demand dropping by up to 60% from peak summer levels. Malik told Reuters in June that Pakistan was unlikely to buy LNG cargoes on the spot market until at least the beginning of winter in November due to oversupply and high prices. Pakistan, which last bought a spot LNG cargo in late 2023, cancelled its spot LNG tender for delivery in January owing to oversupply and a lack of buyers in Pakistan at spot prices. Malik also denied local media reports that Pakistan was closing a deal to import one cargo of crude oil from Russia each month from January. He said his government had restarted talks with Russia and was looking to solve obstacles such as “insurance, reinsurance, deal structure, shipping lines and ship cargo size”, but had not concluded a deal. The previous caretaker government had decided not to pursue a government-to-government agreement with Russia, allowing the private sector to step in, Malik said. Pakistan signed a deal with Russia in 2023 to import crude oil for local refining, which included a 100,000 metric ton shipment to state-owned Pakistan Refinery Limited. Under that arrangement, Pakistan paid for the crude at a discounted rate using Chinese yIan
Why Gas Markets Aren’t Scared of Mideast Conflict Right Now
U.S. natural gas futures dropped to $3.08/MMBtu on Tuesday, their lowest in over a week, after surging 20% in November. Gas prices have declined amid forecasts of milder weather in mid-December, following a brief cold spell that had driven earlier gains. Utilities have stopped drawing heavily from storage, despite colder-than-usual weather recently boosting consumption. Meanwhile, U.S. gas production clocked in at a robust 101.5 billion cubic feet per day in November, but below last year’s peak of 105.3 bcfd. In contrast, European natural gas futures climbed to €48.7 per megawatt-hour, close to their one-year high, as colder weather is forecast to spread across the continent, increasing heating demand. Temperatures in western Europe are set to drop, adding pressure to fast-depleting gas reserves, with gas stores only 85% full compared to 95% a year ago. Further, there are growing concerns over supply risks, including the upcoming expiration of a key gas transit deal between Russia and Ukraine. The Middle East conflict has so far not significantly impacted global oil and gas flows, reflecting the marginality of Eastern Mediterranean gas on world markets, even as more cracks appear in the ongoing ceasefire between Israel and Hezbollah. On Monday, Hezbollah fired into a disputed border zone held by Israel, with Lebanon’s parliament speaker claiming that Israel has committed 54 breaches of the ceasefire. However, Israel’s energy sector is bound to benefit from the ceasefire by encouraging foreign contractors to return to the country’s offshore and resume key gas expansion projects. U.S. major Chevron Corp. (NYSE:CVX), operator of both Israel’s key gas fields, 23 tcf Leviathan and 14tcf Tamar, put expansion projects at both on hold due to the conflict. The expansion of both gas fields had originally been due for completion by mid-2025. The expansion will increase Israel’s gas exports to Egypt by a reported 6bn cubic feet per year. Back in February, Chevron approved a US$24 million investment to boost gas production at the Israeli?Tamar offshore gas field. Israel–one of the main gas exporters in the region–temporarily suspended some exports in the immediate aftermath of the war but managed to return to normal production quickly. The biggest disruption to Israel’s energy sector has been the suspension of the British Petroleum (NYSE:BP)–Abu Dhabi National Oil Company (BP-Adnoc) bid to acquire a 50% stake in Israeli gas producer?NewMed Energy (OTCPK:DKDRF) for US$2bn. NewMed Energy is the majority shareholder and main operator of the giant Leviathan Natural Gas Field with a 45.3% working interest, while Chevron Corp and Ratio Oil Corp. have a 39.7% and 15% stake, respectively. The deal was first thrown into question after an independent panel appointed by NewMed recommended raising the asking price by 10%-12%, or as much as ~$250M, which might seem like a stretch considering back then the company had a market cap of $2.9B and $87 million in cash but $1.73B in debt. Meanwhile, reports emerged that executives at BP and Adnoc were anticipating further delays on the deal until the political situation improves. Experts are worried that a surge in civilian casualties could make it politically untenable for the companies to proceed, with the death toll in Gaza already approaching 50,000, mostly civilians. NewMed and its two partners discovered the Leviathan Natural Gas Field in the Levant Basin Province in 2010. The gas field straddles the sea borders of Israel, Lebanon, Palestine, the Republic of Cyprus and the Turkish Republic of Northern Cyprus. With 22.9 trillion cubic feet of recoverable gas, Leviathan is the largest natural gas reservoir in the Mediterranean and one of the largest producing assets in the region. Lebanon’s Gas Quest Could Go Bust But the NewMed takeover is not the only energy project that has been disrupted by the Israel-Hamas war. Last year, French energy group TotalEnergies (NYSE:TTE) set the first drilling rig at its location in the Mediterranean Sea off Lebanon’s coast near Israel’s border with the country looking to commence operations in search for gas. The cash-strapped nation hoped that future gas sales could help the country pull out of its deep financial crisis that has seen the local currency lose more than 98% of its value. “The arrival of the equipment marks an important step in the preparation of the drilling of the exploration well in Block 9, which will begin towards the end of August 2023,” TotalEnergies said in a statement. TotalEnergies leads a consortium of energy companies working on the offshore project, which includes Italian oil and gas giant Eni S.p.A. (NYSE:E) as well as state-owned QatarEnergy. The drilling operations came after a landmark U.S.-brokered agreement that saw Lebanon and Israel establish a maritime border for the first time ever. Previously, Lebanon’s Energy Minister Walid Fayad said they hoped to determine whether the exploratory block has recoverable gas reserves by the end of the current year. Unfortunately, the ongoing war is very likely to make cooperation between the two countries almost impossible, with Lebanon being home to Israel’s arch-enemy, Hezbollah.
Oil Prices Predicted to Plummet Below $60 Under Trump
A new survey from law firm Haynes Boone LLC has revealed that banks are gearing up for oil prices to fall below $60 a barrel by the middle of President-elect Donald Trump’s new term, Bloomberg reported on Monday. The survey of 26 bankers showed that they expect WTI prices to drop to $58.62 a barrel by 2027, more than $10 lower than the intraday price of $69.87 at 11.00 am ET on Wednesday. Trump says he’ll push shale producers to ramp up output, even if it means operators “drill themselves out of business.” However, it’s not clear he intends to accomplish this feat since U.S. oil is produced by independent companies and not a national oil company (NOC). Exxon Mobil’s (NYSE:XOM) Upstream President Liam Mallon recently dismissed the notion that U.S. producers will dramatically increase output under a second Trump term. “I think a radical change is unlikely because the vast majority, if not everybody, is primarily focused on the economics of what they’re doing,” Mallon said last week at a conference in London. Meanwhile, StanChart notes that following Scott Bessent’s recent nomination as Treasury Secretary, his Manhattan Institute June session where he spoke at a conference entitled ‘Towards a New Supply-Side: The Future of Free Enterprise in the United States’ is being scrutinised as a potential guide to policy. The commodity analysts point out that U.S. oil and gas output is currently ~40.7 mboe/d; U.S. oil and gas output has grown by an average of about 123 kboe/d per month since 2015, meaning adding 3 mboe/d would take less than 25 months. The commodity experts have noted that 41% of the post-2015 increase has come from natural gas, 28% from natural gas liquids (NGLs) and just 28% from crude oil. StanChart has predicted that the crude oil element of the next 3 mboe/d increase is likely to be significantly less than 20%, with natural gas likely to be the main instrument for meeting the new administration’s energy goals as crude oil output growth becomes increasingly difficult. Recently, Morgan Stanley predicted that the U.S. natural gas market is poised to enter a new cycle of demand growth thanks to surging LNG exports and rising electricity demand.
OPEC Secrecy Isn’t Helping Its Exit Strategy from Production Cuts
This week, the OPEC+ group is meeting to discuss when and how to begin easing the ongoing production cuts. The alliance looks to have dug itself deeper into a position between a rock and a hard place, again. Although they are not publicly admitting it, OPEC and its allies want to keep oil prices fairly high, as many of these need oil to trade at least above $80 per barrel to avoid budget deficits, and even above $90 a barrel for most, including Saudi Arabia. OPEC’s Dilemma However, higher oil prices are also helping non-OPEC+ supply growth, not only from the United States but also from producers such as Guyana and Brazil. For the umpteenth time, OPEC is caught between its own revenue needs and the loss of market share to rival non-OPEC+ supply. OPEC, of course, has been stating for years that it isn’t going for a specific oil price with the production cuts—rather it’s all about ensuring and keeping “market stability.” But as prices have stabilized at just over $70 per barrel Brent in recent weeks, OPEC faces another dilemma at the December 5 meeting, which was postponed from the originally planned date December 1. If the cartel and its allies begin unwinding the cuts in January – as currently planned – they risk a certain slide of Brent Crude prices below $70 a barrel and possibly further down as demand doesn’t appear great and the oversupply next year would only grow. Lower prices could hurt U.S. drillers, but they would also hurt OPEC and Russia, the ultimate petrostates for which oil revenues are the single biggest budget income. OPEC’s Rare Half-Admission In this situation, OPEC’s exit strategy from the production cuts is now more unclear than ever. If OPEC+ producers want to bankrupt U.S. drillers as they have attempted – and achieved – in the past, they would have to bust their own budgets and endure a prolonged period of price pain until demand begins outstripping supply again. Yet, the leader of the cartel and the OPEC+ group, Saudi Arabia, needs oil income pouring in, a lot of it, to fund the Crown Prince’s Vision 2030 program of tech and construction and tourism wonders that would reduce the Kingdom’s reliance on oil. The group has limited options in easing the production cuts as these restrictions, aimed at supporting oil prices, helped non-OPEC+ supply, especially from the United States, Iran’s Governor for OPEC, Afshin Javan, wrote in a column of Iranian state news agency Shana last week. The post was taken down hours after it was published, but it managed to catch the attention of analysts. It is as a rare admission from an OPEC member that the cartel’s policies to boost oil prices are boosting U.S. oil production growth, too, Bloomberg Opinion columnist Javier Blas argues. In the post, which briefly appeared online, Iran’s Javan wrote that “This strategy in support of prices has effectively encouraged higher supply outside the group, particularly on the part of the US.” And acknowledged, “That would leave a limited room for maneuvering by OPEC+ to ease its restrictions.” Javan also cited “bleak economic prospects” in China as throwing in another challenge at OPEC’s plans to ease the production cuts. OPEC+ had earlier this year announced plans to start gradually bringing back supply towards the end of the year, market conditions permitting. Since the price has lingered below $80 per barrel for months, the group has been postponing its supply return. Some have suggested the production caps may have to become long-term because of the market’s refusal or failure to respond to the supply curbs with higher prices. Weak fundamentals could prompt the OPEC+ group to delay – once again – the output increase currently planned to begin in January, according to recent market speculation. Saudi Arabia is pushing for a delay of between three and six months, OPEC+ delegates have told Bloomberg’s Blas. The Saudis have even sought support for extra cuts, but none of the other producers in the alliance has expressed willingness to support additional cuts, according to the delegates. The Trump Wildcard The OPEC+ group is likely to delay the unwinding of the production restrictions, not least to see what U.S. President Donald Trump will do with Iran and Venezuela when he returns to the White House in January. Analysts widely expect Trump to tighten the screws on Iran and attempt stricter enforcement of the U.S. sanctions. If a fairly large chunk of Iran’s supply – which goes mostly to China – is taken off the market, OPEC+ will have a reasonable justification for starting to ease the production cuts. However, if President Trump follows through with his tariff threats, global trade and economies could suffer and reduce the expected oil demand growth, analysts say. OPEC+’s best play for this week’s meeting may be to postpone the cuts until the end of March 2025, to see how the first policies of the new Trump administration would affect the oil market and the economy.
Petrol and diesel sales rebound across India on festival demand
India’s petrol and diesel consumption soared in November 2024 as the festive season reversed a slump in demand for motor fuels that was witnessed in previous months, reveals the preliminary data released by the state-owned oil marketing firms. While petrol sales have shown a year-on-year (YoY) increase, diesel sales remained a laggard since monsoon this year. November was the first month this year that witnessed positive growth in diesel consumption. Petrol sales of the three state-owned firms, which control 90 per cent of the fuel market in India, surged 8.3 per cent to 3.1 million tonnes in November 2024 as compared to 2.86 million tonnes of petrol consumed in the same month last year. On the other hand, diesel demand was up 5.9 per cent to 7.2 million tonnes. Festivities give petrol, diesel’s tepid demand necessary push Petrol and diesel sales in India remained tepid during the monsoon months this year as rains and bad weather conditions resulted in reduced vehicular activities. Also, demand from the agriculture sector was low as well. However, petrol demand soared once rains eased but consumption of diesel lagged on a year-on-year basis. PTI has reported that month-on-month petrol sales in India were up 4.7 per cent in November when compared to 2.96 million tonnes of consumption in October this year. On the other hand, diesel demand was almost 11 per cent more than 6.5 million tonnes of registered consumption in October 2024.
Amit Garg Recommended as CMD of HPCL by MoPNG Panel
Amit Garg, currently serving as Director (Marketing) at Hindustan Petroleum Corporation Limited (HPCL), is set to become the next Chairman and Managing Director (CMD) of the Maharatna public sector enterprise. A selection panel formed by the Ministry of Petroleum and Natural Gas (MoPNG) has recommended his name for the top post following interviews conducted, according to sources. Garg, who took over as HPCL’s Director (Marketing) in December 2023, has extensive experience in the oil and gas industry, spanning over 35 years. Before assuming his current role, he was Executive Director (Aviation) at HPCL. His professional portfolio includes responsibilities across sourcing, storage, logistics, and sales in various capacities at Bharat Petroleum Corporation Limited (BPCL). Earlier this year, the Public Enterprises Selection Board (PESB) had conducted interviews for the CMD position but declared in June that no candidate met the suitability criteria for the role. The board subsequently advised the ministry to explore alternative options for appointing a candidate. Garg’s prior roles also include serving as a full-time director with Indraprastha Gas Limited, India’s largest city gas distribution company, and as a nominee director with Maharashtra Natural Gas Limited, a BPCL-GAIL joint venture. He holds a postgraduate degree in Electronics and Management. The final approval for Garg’s appointment as CMD will likely be announced after formal clearances. HPCL, one of India’s leading oil marketing companies, has been operating under interim leadership since the retirement of the previous CMD.
Ethanol-petrol blending initiative helped farmers earn Rs 575 billion in 3 years: Centre
The Ethanol-Blended Petrol (EBP) programme has helped expeditious payment of about Rs 575.52 billion to the farmers and savings of more than Rs 750 billion of foreign exchange in the last three years, the Parliament was informed on Monday. Under the EBP programme, public sector oil marketing companies (OMCs) sell ethanol blended with petrol. Minister of State for Petroleum and Natural Gas, Suresh Gopi, informed the Rajya Sabha that in the last three years (as on September 30, 2024), the EBP programme also resulted in crude oil substitution of nearly 11 million metric tonnes and net CO2 reduction of about 33.2 million metric tonnes. Under the EBP programme, the blending of ethanol with petrol increased from 1886 million litres in ethanol supply year (ESY) 2018-19 to more than 7 billion litres in ESY 2023-24, with a corresponding increase in blending percentage from 5 per cent in ESY 2018-19 to approximately 14.6 per cent in ESY 2023-24. Since 2019, the number of retail outlets selling ethanol-blended petrol has increased steadily. In 2019, ethanol-blended petrol was sold from 43,168 retail outlets of Public Sector OMCs which increased to all retail outlets across the country in 2024, the minister said. In order to promote the blending of ethanol in petrol, the government has taken several measures which include the expansion of feedstock for the production of ethanol, an administered price mechanism for procurement of cane-based ethanol under the EBP Programme, Ethanol Interest Subvention Schemes (EISS) for ethanol production from molasses as well as grains, and Long-Term Offtake Agreements (LTOAs) by OMCs with Dedicated Ethanol Plants (DEPs), etc. From 1.53 per cent in 2014, ethanol blending has surged to almost 15 per cent in 2024, with the government advancing the target of 20 per cent blending to 2025 – five years ahead of schedule.