OIL to form 3 JVs for CBG and CGD
Oil India Limited (OIL) has got a nod from its board for formation of three joint venture companies with HWTPL, GPS Renewables, and BPCL. Formation of a Joint Venture Company (JVC) with Hindustan Waste Treatment Pvt. Ltd. (HWTPL) to take up initiatives for establishment of Compressed Biogas (CBG) projects with equity holding in the ratio of 50:50, subject to approval of DIPAM and other authorities. Formation of a Joint Venture Company (JVC) with GPS Renewables Pvt. Ltd. (GPSRPL) to take up initiatives for establishment of Compressed Biogas (CBG) projects with equity holding in the ratio of 50:50, subject to approval of DIPAM and other authorities. Formation of a Joint Venture Company (JVC) with Bharat Petroleum Corporation Limited (BPCL) with equal equity shareholding, subject to necessary approvals from DIPAM and any other authorities, to execute City Gas Distribution (CGD) project in the Arunachal Pradesh State Geographical Area as authorised by Petroleum and Natural Gas Regulatory Board (PNGRB)
Oil Prices Fall as Trump Inches Toward Victory
Crude oil prices trended lower in midmorning Asian trade today, pressured by the first results from the U.S. elections and the latest weekly U.S. oil inventory report from the American Petroleum Institute. At the time of writing, Brent crude was trading at $73.68 per barrel, with West Texas Intermediate at $70.26 per barrel. Both were down by over 2.4% from the market’s opening. “The initial signs have been favourable for the Republicans and while it’s still early days, U.S. yields and the U.S. dollar are both trading higher,” IG analyst Tony Sycamore told Reuters. “This in turn is weighing on the crude oil price which has had a good run in recent sessions,” he added. “US foreign policy is shaping up to be a potential factor for oil markets in the near term,” especially with regard to Iran, Commonwealth Bank of Australia analyst Vivek Dhar told Bloomberg. He added that “markets now must consider whether OPEC+ will perennially be forced to push their decision to reverse their voluntary oil production cuts.” “If Trump wins, it is bullish for the oil market in the short-term due to prospects of tighter sanctions on Iranian oil,” ANZ Research analyst Soni Kumari told Reuters. Bloomberg meanwhile reported that oil traders are piling into bullish bets in case of a spike in Middle Eastern tensions that could lead to much higher oil prices. The report cited data showing that on Monday alone, some 10 million barrels worth of call options for December were traded at a price spread of $90/$100 per barrel. The expiry date for the contracts is November 15. The Monday trade volume is an extension of a rather bullish October: interest in call options on higher oil prices reached a record high last month, per Bloomberg, which also noted that even after the price retreat following Israel’s retaliatory strike against Iran, premiums on call options versus put options remain at the highest since Russia’s invasion in the Ukraine in February 2022.
HPCL to Boost Iraqi Oil Imports in 2025
According to a report by Reuters, India’s state-owned Hindustan Petroleum Corp Ltd plans to increase its yearly oil import agreement with Iraq to 100,000 barrels per day (bpd) in 2025, which would represent a 43% increase from this year. According to the report, HPCL has an annual agreement to purchase 70,000 barrels of Iraqi oil per day in 2024. As it activates certain residue upgrade units at its 274,000 bpd Vizag refinery in Southern India, the company’s imports of crude oil are expected to increase in the upcoming year. To reach 300,000 bpd, the refinery is being expanded. In western India, HPCL also runs the Mumbai refinery, which produces 190,000 barrels per day. By the end of December or the beginning of next year, it also plans to begin operations at its 180,000 bpd Barmer refinery in Rajasthan, a desert state in India.
Subsidies to oil & gas sector reduce 85% to $3.5 bn in 10 years: MNRE
Subsidies to the oil & gas sector saw a reduction of 85 per cent from a peak of $ 25 billion in 2013 to $ 3.5 billion by 2023, according to an official note on Monday. Since 2010, India has steadily reformed its fossil fuel subsidies, adopting a “remove, target, and shift” approach, the Ministry of New and Renewable Energy (MNRE) said. The ministry said, as per a report of Asian Development Bank (ADB), structured approach, including adjusting retail prices, tax rates, and subsidies on select petroleum products collectively reduced fiscal subsidies in the oil and gas sector by 85 per cent from a peak of $ 25 billion in 2013 to $ 3.5 billion by 2023. “A significant step in this journey was the gradual phasing out of petrol and diesel subsidies, coupled with incremental tax hikes. These reforms created fiscal space for greater government support in renewable energy initiatives, electric vehicles, and critical electricity infrastructure,” it said. From 2014 to 2017, tax revenues were further boosted by rising excise duties on petrol and diesel, implemented strategically during a period of low global oil prices. The additional revenues were then redirected toward targeted subsidies that expanded access to liquefied petroleum gas (LPG) for rural communities, addressing both environmental goals and social welfare. India’s fossil fuel subsidy reforms mark a decisive shift, channelling resources toward sustainable energy and laying the foundation for cleaner energy alternatives. The petrol and diesel subsidies were phased out gradually from 2010 to 2014, followed by measured tax hikes on these fuels till 2017, the report said. These moves were made to create fiscal year breathing room for renewable projects, allowing the government to channel funds into clean energy initiatives at an unprecedented scale, it added. Subsidies for solar parks, distributed energy solutions, and state-owned enterprises by the government reflects its purpose and commitment to clean power, setting a strong example for others looking to shift toward a more resilient energy future, the report noted. India steadily whittled down its fossil fuel support, opening doors to new investments in solar power, electric vehicles, and a stronger energy grid, it said.
India Diesel Demand Growth Slows
The growth in demand for diesel fuel in India is slowing down, the latest sales figures have suggested, with the total for October flat on the year, per a report by Bloomberg citing government data. Sales of diesel fuel in the country stood at 7.64 million tons last month, the data showed, with sales over the first ten months of the year up by a modest 1.8%, which according to the report suggests a slackening pace of demand growth for oil products overall. If confirmed, this slackening pace of growth would have implications for global oil demand prospects seeing as India is the world’s third-largest importer of crude after China and the United States. “The consumption of goods in smaller towns and cities of India has not picked up at the pace that was expected,” R. Ramachandran, former director of refineries at Bharat Petroleum Corp Ltd., told Bloomberg. “This has in all likelihood impacted the movement of trucks that transport goods, hurting diesel demand. Also, rains this year got extended, further adding to pressure on diesel sales for farm sector.” There is, however, another element in this change in demand. According to Kpler, diesel demand may be slowing but gasoline demand is on the rise as India’s middle class continues to expand, driving higher consumer spending, including on personal transport. What’s more, Kpler analysts believe demand for diesel will pick up next year, to grow by 2.5%, after booking growth of 2.2% for this year. “We observe a moderation in the growth rate compared to the post-pandemic recovery,” Kpler senior demand analyst Esteban Moreno Cots told Bloomberg. India is seen by analysts as the future biggest driver of global oil demand, set to replace China, which is electrifying its transport sector fast and expected to reach peak oil demand growth in the not too distant future.
Aramco and ADNOC Look To Seize More Market Share in Asia
As Asia is driving almost all of the global oil demand growth today and is set to continue to do so in the coming decades, some of the world’s biggest oil producers, those in the Middle East, are looking to expand their presence in the key demand growth market. Saudi oil giant Aramco and Abu Dhabi’s ADNOC plan to expand their downstream businesses, especially in Asia, to lock in future demand for their crude in the petrochemicals sector. Over the past two years, Saudi Arabia has announced a flurry of downstream deals in Asia, including in China and south and Southeast Asia, as it seeks to capture more markets for its crude oil. China may soon see a peak in its demand for road transportation fuels, such as gasoline and diesel, due to booming electric vehicle (EV) sales and LNG-powered trucks, respectively. While OPEC, whose de facto leader is Saudi Arabia, recognizes a structural shift in road fuel demand in China, it hasn’t backed down from its estimate that global oil demand will continue to grow, and peak oil demand is not on the horizon. Both OPEC and the International Energy Agency (IEA) – far apart as they are about long-term global oil demand trends – expect India to overtake China soon to become the biggest oil driver of demand growth. OPEC’s World Oil Outlook 2050 says that India, Asia outside China, Africa, and the Middle East will be the key sources of incremental demand in the coming years. Combined demand in these four regions is set to increase by 22 million barrels per day (bpd) between 2023 and 2050. India alone will add 8 million bpd to its oil demand by 2050. China, for its part, will see its oil demand increase by 2.5 million bpd, according to OPEC. Petrochemicals in China and refining and petrochemicals in India, south Asia, and Southeast Asia will be driving global growth. And the Middle East’s top oil producers want to be in pole position to capture this demand growth. From Abu Dhabi, ADNOC – in a consortium with Borouge and Borealis – announced in July a project collaboration agreement with China’s Wanhua Chemical Group to launch a feasibility study to develop a 1.6 million tons per year specialty state-of-the-art polyolefin complex in Fuzhou, China. The world’s single largest crude oil exporter, Saudi Aramco, signed additional agreements with China’s Rongsheng Petrochemical and Hengli Group in September to advance talks on cooperation in the refining and petrochemical sectors in China and Saudi Arabia. Aramco’s agreement with Hengli Group advances talks about Aramco’s potential acquisition of a 10% stake in Hengli Petrochemical Co., Ltd., subject to due diligence and required regulatory clearances. Earlier this year, Aramco entered into discussions with Hengli Group about the potential acquisition of 10% in Hengli Petrochemical. “China is an important country in our global downstream growth strategy, and we look forward to building on a relationship that spans more than three decades to unlock new opportunities in this crucial market,” Mohammed Al Qahtani, Aramco Downstream President, said in September. Saudi Aramco continues to be on the lookout for acquisition opportunities in the downstream segment and LNG, Yasser Mufti, Aramco’s Executive Vice President for Products and Customers, told Reuters in an interview earlier that month. In recent years, the Saudi oil giant has been pursuing deals to expand its international downstream presence, especially in demand centers such as Asia. Last year, Aramco entered Pakistan’s downstream market by acquiring a 40% stake in Gas & Oil Pakistan Ltd, one of the country’s largest retail and storage companies. In 2023, Aramco also announced two major refinery and petrochemical deals in China, which not only give the world’s largest oil firm a share of the Chinese downstream market but also an additional export outlet for 690,000 bpd of Saudi crude in China. Just last week, Aramco signed a collaboration agreement with Vietnam’s oil firm Petrovietnam for potential cooperation spanning the storage, supply, and trading of energy and petrochemical products. During the signing of one of the deals with China, Aramco Downstream President Al Qahtani, said in April, “We continue to explore new opportunities in important markets, as we seek to progress in our liquids-to-chemicals strategy.”
Indraprastha Gas And Mahanagar Gas’ Margin Pain Likely To Continue In Near Term—Here’s Why
Indraprastha Gas Ltd. and Mahanagar Gas Ltd. may experience further decline in unit margin after having contracted by over 20% year-on-year in the second quarter of fiscal 2025 due to several negative developments ranging from lower subsidised-gas allocation to higher gas costs and increased competitions. This has led analysts to cut these companies’ earnings estimates for fiscal 2025 and 2026. Lower APM Gas Allocation Indraprastha Gas and Mahanagar Gas reported over a 20% reduction in the administered price mechanism, or APM, gas allocation for their CNG sales in October 2024, resulting in lower subsidised gas, which negatively impacts profitability. Emkay Research estimates this cut could reduce CNG margins by Rs 2 per standard cubic meter. Nuvama predicts gas costs for Indraprastha Gas may rise by $0.4 to $0.6 per million British thermal unit, potentially leading to an 18-25% decline in fiscal 2026 Ebitda, while that of Mahanagar Gas would drop by 13-22% Ebitda during the same fiscal. Indraprastha Gas’ management suggested that CNG prices in Delhi may need to increase by Rs 5-6 per kilogram to maintain their earlier margins, though the timing of these hikes still remains uncertain. Higher Gas Costs The companies with reduced APM gas allocations will need to rely on gas imports. Due to a series of project delays and stronger-than-expected fuel demand in Asia, market expert Javier Blass expects the LNG market to remain tight next year and possibly until mid-2026. Blas suggests that buyers won’t regain leverage in terms of price until early 2027, when new supply becomes available. This scenario is unfavorable for Indraprastha Gas and Mahanagar Gas..
Cairn Oil & Gas joins UN’s methane reduction initiative, first in India
Cairn Oil & Gas, a Vedanta Group company, has become India’s first oil and gas producer to join the United Nations Environment Programme’s Oil & Gas Methane Partnership (OGMP) 2.0, signing a memorandum of understanding on Monday, in Abu Dhabi. The shares of Vedanta Limited were trading at ₹455.65 down by ₹11.70 or 2.50 per cent on the NSE today at 11.50 am. The partnership requires Cairn to set a five-year methane reduction target and report progress transparently, supporting its commitment to achieve net-zero carbon emissions by 2030. The move brings approximately one-fourth of India’s oil and gas production under OGMP 2.0 oversight. OGMP 2.0, UNEP’s flagship methane reporting and mitigation program, currently covers over 40 per cent of global oil and gas production. The framework provides measurement, reporting, and verification protocols for methane emissions management.
India’s fuel consumption rises in October; Petrol demand up 8.3%, diesel steady
India’s petrol consumption rose by 8.3% year-on-year in October 2024, reaching 3,401 thousand metric tonnes (TMT) compared to 3,140 TMT in the same month last year, according to the latest data from the Petroleum Planning and Analysis Cell(PPAC). Diesel consumption, however, remained flat, inching up only 0.08% to 7,640 TMT from 7,634 TMT in October 2023. Aviation turbine fuel (ATF) saw a notable rise, with consumption increasing by 8.58% to 751 TMT, up from 692 TMT in October 2023. This reflects the ongoing recovery in the aviation sector as both domestic and international travel continue to rise toward pre-pandemic levels. Meanwhile, LPG consumptionalso climbed 7.46% year-on-year to 2,820 TMT, up from 2,625 TMT in October 2023, signaling stable demand in Indian households for cooking fuel. Compared to pre-COVID levels in October 2019, the report shows substantial growth across fuel categories. Petrol usage surged by 33.95% with a compound annual growth rate (CAGR) of 6.02%, reflecting increased reliance on personal transportation. Diesel demand, while showing slower growth, registered a 17.36% increase over the same period, with a CAGR of 3.25%, underscoring diesel’s continued importance in sectors like freight and logistics.
Crown executes final agreements for LNG projects
Crown LNG Holdings Ltd, a leading provider of LNG liquefaction and regasification terminal technologies for harsh weather locations, has announced the conclusion of two strategic acquisition agreements forming the basis of Crown LNG’s entry into the global LNG infrastructure network: KGLNG and Grangemouth. The KGLNG agreement finalises the acquisition of all shares of KGLNG, which owns the operating license for the Company’s planned LNG import terminal in Kakinada, India. The Grangemouth agreement finalises the acquisition of LNG import terminal assets in Grangemouth, Scotland, from GBTron Lands Ltd. The Kakinada project, located on the East coast of India, is licensed to operate 365 days a year, a first for the harsh weather prone area. Imported gas from the planned terminal would reach demand centres via the East-West Pipeline, helping to support the Indian government’s drive to more than double the share of natural gas in the country’s energy mix to 15% by 2030. Total consideration for the KGLNG acquisition will be made in shares of Crown LNG equal to $60 million. The Grangemouth project, located on the East coast of Scotland, seeks to support the UK’s increasing drive for energy security post-Brexit and in the context of geopolitical impacts on energy markets. Currently, the UK relies on just three facilities for all of the country’s LNG imports, which increased 74% from 2021 to 2022. Total consideration for the GBTron acquisition will be made in shares of Crown LNG equal to US$25 million. “We are excited and proud to announce the execution of these two transactions and move these two projects down the path,” said Swapan Kataria, CEO of Crown LNG. “With Crown LNG and our subsidiaries now firmly in control of the Kakinada and Grangemouth projects, we look forward to driving the success of these two transformative projects for both India and the UK.”