OMCs may reduce fuel prices if crude stays low: Petroleum Secy
State-run oil marketing companies (OMCs) may consider lowering petrol and diesel prices if international crude oil prices remain subdued for an extended period, said Pankaj Jain, secretary at the ministry of petroleum and natural gas. His statement comes as Brent crude has traded below $75 per barrel for over a week. “OMCs will consider a cut in retail prices if international prices of crude oil remain subdued for a longer duration,” Jain told reporters at the sidelines of the International Conference on Green Hydrogen. He added that the state-run companies, along with the government, would monitor price trends over time before making a decision. Earlier this month, global oil prices reached three-year lows due to demand concerns. Currently, Brent crude for November contracts on the Intercontinental Exchange is trading at $71.81 per barrel, up 1.7% from the previous close. This drop in oil prices is expected to improve the profitability of OMCs, which could pass on the benefit to consumers through price cuts. India imports 85% of its energy requirements, making international oil prices a key factor in domestic fuel pricing.
Russia’s search for new crude markets helps India cut its oil import bill
Russia’s diligent efforts to find markets for its crude oil and refined fuels since the Ukraine war, and ongoing tensions in the Red Sea are yielding conflicting outcomes for India’s crude purchases and diesel exports. Indian refiners are benefiting from lower crude prices but diesel exports to Europe are facing major challenges on the volume and margin front. Russian oil started flooding the Indian market soon after the start of the Ukraine war in February 2022 as European nations began closing their markets to Moscow. Russia’s share in India’s crude imports spiralled from less than 1% before the war to 42% in the first five months of this fiscal year, pushing down the share of other key suppliers like Iraq, Saudi Arabia, the UAE, and the US, according to energy cargo tracker Vortexa. At the same time, Russia’s aggressive inroads into the South American diesel market has negatively impacted Indian refiners. “Europe, which was a key market for Indian diesel, saw increased competition from US Gulf coast supplies. This is an effect of Russian diesel eating into the share of US exports to South America, which forced US exports to divert towards Europe instead and, in turn, led to lower Indian exports,” said Rohit Rathod, an analyst at Vortexa.
LNG buyers flag US supply risks of purchase after Biden pauses export
Major buyers of liquefied natural gas (LNG) flagged risks of purchasing cargoes from the United States following the decision by President Joe Biden’s administration to pause export permits of the superchilled fuel to non-Free Trade Agreement countries. Officials from Taiwan’s CPC Corp and Germany-based SEFE, which trades LNG cargoes and sells in Asia, stressed the importance of reliability of supply while responding to a question on the impact of the US export pause on Asian markets. “I do trust the traditional LNG suppliers more than US LNG players,” said Jane Liao, vice president at CPC, told the APPEC conference. “Most of the Asian buyers, we rely on traditional LNG suppliers, which cherish the loterm relationship more. When you are in difficulties in the implementation of your contract, people will sit down and talk,” she said. Fabian Kor, executive vice president Asia at SEFE, said energy security was the topmost priority this year, adding that SEFE may even “slightly over contract” to ensure availability. “We will not concentrate on supply, just because it is the cheapest in the U.S. We like a bit of geographical supply diversification,” he said. On supplies of Russian LNG, Liao also said Chinese and Indian purchases of Russian LNG cargoes would ensure the market remains in balance. “Let’s say the Chinese companies or the Indian companies, they continue to purchase from Russia, so they won’t compete with us in the rest of the market,” she said.
Oil Prices Tumble as Traders Turn Bearish
Rising global oil supply and weaker-than-expected demand have made traders increasingly bearish on oil prices. Hedge funds and other money managers accelerated their selling in the most traded petroleum futures contracts in the latest reporting week to September 3. Portfolio managers slashed their overall net long position—the difference between bullish and bearish bets—to the lowest level since exchanges began compiling such data in 2011. The positioning in crude oil was already tilted to the bearish side in the previous reporting week to August 27, as traders had more than halved their bullish bets since early July. The week to September 3 saw additional selling and a market rout in which oil prices dipped to their lowest level so far this year. The prospect of a return of Libyan oil exports—after a halt amid a political feud—and continued weak Chinese data and weaker outlooks of its economic growth have weighed on market sentiment. As a result, the combined net long position on the two crude oil benchmarks, Brent and WTI, was slashed by 99,889 lots to just 139,242 lots in the week to September 3, according to data from exchanges cited by Bloomberg. This was the lowest bullish positioning in data from ICE Futures Europe and the CFTC since ICE began collecting such data in March 2011. The net long position in the U.S. benchmark WTI Crude was slashed by 62,000 lots to 125,000 lots. The net long in Brent Crude was nearly halved to about 42,000 lots in the week to September 3. “Including the three fuel products the net long slumped to 121k contracts, lowest recorded energy exposure since 2011 when ICE began collecting data,” Ole Hansen, Head of Commodity Strategy at Saxo Bank, said. Fears of slowing economies in China and the United States continued to drive speculators and hedge funds, as did concerns about oversupply with an OPEC+ production increase. After the end of the reporting week to September 3, the OPEC+ group decided to delay the planned rise in output by two months from October to December. However, this did little to reverse the bearish market sentiment, and prices slipped after the announcement at the end of last week. Demand concerns trumped the alliance’s decision to delay adding 180,000 barrels per day (bpd) to supply. Last week, WTI Crude saw its worst weekly performance since October 2023, with an 8% drop for the week. On Friday, WTI and Brent settled at their lowest levels since June 2023—at $67.67 and $71.06 per barrel, respectively. Early Monday, prices rebounded by 1% following the selloff last week, partly due to forecasts that a weather system in the Gulf of Mexico could become a hurricane. The early Monday rebound, however, is being overshadowed by concerns about the U.S. and Chinese economies. Weak U.S. jobs data on Friday, with a lower number of jobs created than expected, rekindled fears of recession. Yet, the data paves the way for the Fed to cut interest rates next week. A rate cut could boost demand for oil if economic growth picks up. However, Chinese economic data continues to drag commodity prices down. Major Wall Street banks, including Goldman Sachs, JP Morgan, Citi, and Bank of America, have already cut their forecasts of China’s GDP growth to below the official Chinese target of “about 5%” economic growth this year. BofA was one of the latest to lower its estimate to 4.8% from 5%, saying earlier this month, “We find both the fiscal and monetary policy stance less accommodative than desired and insufficient to revive domestic demand growth.” Improving Chinese demand would be vital in turning the current exceptionally bearish sentiment on oil, as would a rebound in the U.S. economy following the expected Fed rate cuts.
ADNOC pens 15 year LNG supply HOA with IndianOil
Abu Dhabi’s ADNOC has entered into a 15-year heads of agreement with IndianOil, the state-owned Indian energy company, for the supply of 1mn tonnes/year of LNG, as announced by the Abu Dhabi Media Office on September 9. The announcement followed a meeting between Sheikh Khaled bin Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi, and Indian Prime Minister Narendra Modi during Zayed Al Nahyan’s visit to India. The Abu Dhabi Media Office did not provide any other information about the HoA. The LNG will primarily be sourced from ADNOC’s lower-carbon Ruwais LNG project, currently under development in Al Ruwais Industrial City, Al Dhafra, Abu Dhabi. This facility will be the first in the MENA region to export LNG using clean power, according to ADNOC. Upon completion, the project will feature two LNG liquefaction trains, each with a capacity of 4.8mn tonnes/year, totalling 9.6mn tonnes/year. This expansion is expected to more than double ADNOC’s current LNG production capacity, increasing from 6mn tonnes/year to approximately 15mn tonnes/year.
Government aims to power 33% of trucks on LNG by 2030
The Indian government is planning a major shift towards liquefied natural gas (LNG) to power a third of the country’s long-haul heavy-duty vehicle (HDV) fleet over the next 5-7 years. A draft proposal from the Ministry of Petroleum and Natural Gas outlines steps to make this transition possible, including allocating domestic gas for LNG supply. According to the ministry’s plan, 0.5 million metric standard cubic meters a day (mmscmd) of domestic natural gas may be allocated for an initial period of three years to ensure stable and predictable LNG prices. This allocation is expected to power 50,000 trucks within the next 2-3 years. To further support this transition, the ministry has proposed the establishment of small-scale liquefaction plants in off-grid areas to convert biogas into bio-LNG. This would enhance the availability of bio-LNG for transport. The oil ministry has already directed state-run oil companies to set up 49 LNG dispensing stations across the country. Additionally, oil marketing companies may incentivise fleet owners to convert diesel trucks to LNG-powered trucks, accelerating the shift towards cleaner fuel. One of the pilot initiatives under consideration is developing the Delhi-Mumbai expressway as an LNG highway. The proposal suggests exempting LNG-powered trucks from toll taxes on this route, which could significantly reduce operational costs and encourage faster adoption. With LNG offering a 24% lower emission factor than diesel, this transition aligns with India’s sustainability goals. Currently, medium and heavy commercial vehicles consume about 40% of all diesel in the country. By promoting LNG adoption, India aims to reduce its carbon footprint and enhance the efficiency of its transport sector.LNG trucks, oil ministry, LNG, LNG in heavy-duty vehicles, LNG for trucks in India, sustainable transport India, LNG dispensing stations, bio-LNG in transport, Delhi-Mumbai LNG highway, diesel to LNG conversion.
Diesel dilemma: Demand drop in India and China puts pressure on crude oil prices
Chinese and Indian diesel markets — which account for the bulk of Asian demand — are showing signs of a slowdown, potentially leading to more weakness in crude oil prices. In China, the biggest oil importer, demand for the fuel is contracting, while in India, consumption growth has collapsed. Against that backdrop, the profits for refiners across the region from turning Dubai crude into diesel have fallen by more than 40% since the start of the year, Bloomberg Fair Value data show. Diesel’s fortunes matter because the workhorse industrial fuel is a pillar of the traditional global energy market, powering trucks, mining, construction and agriculture. It accounts for the single largest share of products made from crude worldwide, according to data from the International Energy Agency. Weaker conditions for diesel impact oil, with global benchmark Brent hitting the lowest since late 2023 this week amid concern about a global glut. The weakness for diesel in Asia echoes trends in Europe, where futures hit the lowest level since mid-2023 this week. In recent days, a key metric for measuring the profitability of making the fuel in that region fell to its weakest in more than 15 months, creating a headwind for refiners. In China — where economic growth is slowing, a property crisis is grinding on, and concerns are mounting that the government won’t meet GDP targets — apparent consumption of diesel has fallen by more than 10% so far this year, putting it on course for the first full, on-year decline in three, according to Bloomberg calculations based on official figures. Part of the reason for the drop-off in China is cyclical — cooling growth eats into demand as activity slows — but there’s also a structural element from the spread of alternatives. More trucks are turning to natural gas, while for autos, the percentage of new natural-gas and electric commercial cars increased to 5.2% and 11.7% in 2024, up from 2.9% and 0.7% in 2020.
Russia Ships LNG Straight to Storage as Sanctions Bite
Russia has started shipping LNG from its flagship Arctic LNG 2 project—but not to customers. The shipments have been made from the Arctic project to floating storage units either in Russia or in European waters, as potential customers are unwilling to buy LNG from the facility, which has seen tightened Western sanctions in the past months, the Financial Times reported on Thursday, citing data from ship-tracking providers. Located in the Gydan Peninsula in the Arctic, Arctic LNG 2 was considered key to Russia’s efforts to boost its global LNG market share from 8% to 20% by 2030-2035. But the project has come under intensifying sanctions from the United States, which have put off any buyers that were previously considering buying cargoes from Arctic LNG 2. The project has already seen months of delays after the initial U.S. sanctions in November 2023 upended the company’s plans for production start-up and export timelines. Russia, however, has started to amass a dark fleet of tankers to ship its LNG in vessel ownership transfers similar to the moves that Moscow began after the invasion of Ukraine to create a shadow fleet to export oil and products in the face of Western sanctions. Some tankers have recently departed from the sanctioned terminal in northern Russia, signaling Moscow’s continued efforts to circumvent Western restrictions. Last month, the U.S. State Department intensified efforts to derail Russia’s Arctic LNG 2 exports by targeting companies involved in the development of the project and vessels found to have loaded LNG from the facility. The U.S. State Department in August said it had “taken new steps to sanction entities supporting the development of Russia’s Arctic LNG 2 and other future energy projects.” The Department designated multiple companies related to the Arctic LNG 2 project to further disrupt the project’s ability to produce and export LNG, as well as the project’s ability to procure critical LNG carriers. These designations include entities involved in the illicit loading of LNG from Arctic LNG 2 in early August. Three vessels – Pioneer, Asya Energy, and Everest Energy – are LNG carriers targeted by the new sanctions, as well as their registered owners Zara Shiphoding and Ocean Speedstar Solutions.
Govt Plans New Assessment Of Oil, Gas Reserves
The mines and petroleum department is set to initiate a new study aimed at assessing the potential for oil and gas deposits in Rajasthan. This move is expected to further expand oil and gas exploration and extraction sector under the discovered small fields (DSF) scheme. The study will encourage companies in the sector to adopt the latest global technologies in petroleum and gas exploration and extraction, with the goal of identifying and exploiting more areas within the state. In a review meeting on Tuesday, mines and petroleum department’s secretary, Anandi, emphasised the importance of leveraging data from the central govt’s national data repository (NDR). “By obtaining NDR data, new areas for exploiting the available oil and gas reserves will be identified, creating more opportunities for growth, investment, revenue and employment in the petroleum and gas sector,” the secretary said. An official present in the meeting said there are plans to prepare a roadmap to meet the demand and supply of natural gas as an alternative energy source for cement plants in Jaisalmer. “The aim is to ensure affordable green energy for the cement sector while promoting the production and utilisation of natural gas within the state,” he added. Currently, Rajasthan holds 13 petroleum mining leases and 14 petroleum exploration leases. It ranks second in the country for crude oil and natural gas land production.
Govt reduces natural gas price for September from $8.51 to $7.85/mmBtu
The ministry of petroleum and natural gas (MoPNG) said that the price of domestic natural gas has been reduced to $7.85 per million metric British thermal units (mmBtu) for September 2024, down from $8.51 in the previous month. However, the price of the gas from the nominated gas fields of ONGC and Oil India has been kept unchanged at the price cap of $6.50 per mmBtu. “The price of domestic natural gas for the 1st September 2024 to 30th September 2024 is notified as $7.85/mmBtu on gross calorific value (GCV) basis,” said the notification dated 31 July. The price of domestic natural gas has been linked to the India crude oil basket since April and is changed every month. The pricing decision is part of India’s ongoing effort to manage its natural gas sector effectively and balance the needs of producers and consumers. The new price follows the guidelines set forth by the MoPNG’s notification in April 2023, which established the framework for monthly price updates.