GAIL inks MoU with Petron Scientech to setup bio-ethylene plant in India
GAIl (India) said that it has signed Memorandum of Understanding (MoU) with Petron Scientech Inc (Petron) to jointly explore setting up of a 500 Kilo Tons per Annum (KTA) bio-ethylene plant in India. Petron specializes in setting up biomass and grain processing biorefinery projects to produce ethanol, bio-ethylene, bio-chemicals (ethylene oxide / mono ethylene glycol, Methanol) and various bio-fuel projects worldwide. In line with the MoU, GAIL and Petron will jointly undertake feasibility studies to ascertain technical viability and financial prospects of the project. Both the parties endeavour to secure investment approval from their respective management for investment in the project and forming a JV company. The company will set up bio ethylene plant along with its downstream units in India, based on bio -ethanol produced in the plant in a 50:50 Joint Venture (JV) mode. Singhal said, GAIL is a proud member of Indias clean energy infrastructure and is always committed to incorporate initiatives for sustainable development of the nation. We are elated to enter into this strategic relationship with Petron, a pioneer in bio-ethanol to bio-ethylene technology. The MoU signifies a major step towards enhancing sustainable practices and advancing the bio-economy in India. The skills and strengths of both the companies would create a synergy for achieving the objective of MoU. The collaboration between GAIL and Petron is poised to not only foster technological advancements but also drive economic growth and environmental sustainability in India.
India Beats China To Become Russia’s Top Oil Buyer In July
India became the largest importer of Russian oil in July beating China which reduced its purchases due to lower profit margins in fuel production Data on Indian shipments from trade and industry sources revealed that Russian crude imports increased by 12% year-on-year to 44% of India’s total imports last month, reaching a record high of 2.07 million barrels per day (bpd). The imports increased 4.2% from June. According to Chinese customs data, India’s July oil imports from Russia exceeded China’s 1.76 million bpd, which included both pipeline and shipment deliveries. Indian refiners have been taking advantage of discounted Russian oil following Western nations’ sanctions against Moscow and their reduced energy purchases in response to Russia’s invasion of Ukraine. Data on Indian shipments from trade and industry sources revealed that Russian crude imports increased by 12% year-on-year to 44% of India’s total imports last month, reaching a record high of 2.07 million barrels per day (bpd). The imports increased 4.2% from June. According to Chinese customs data, India’s July oil imports from Russia exceeded China’s 1.76 million bpd, which included both pipeline and shipment deliveries. Indian refiners have been taking advantage of discounted Russian oil following Western nations’ sanctions against Moscow and their reduced energy purchases in response to Russia’s invasion of Ukraine.
Environmentalists Sue UK for Oil and Gas Licenses
An ocean conservation entity is suing the UK state for 31 oil and gas exploration licenses issued by the previous government earlier this year. Oceana UK claims the issuing authorities had failed to consider the effects of exploration on marine life, Reuters reported. The entity is part of a group called the Ocean Alliance Against Offshore Drilling, which wrote to the current Energy Secretary Ed Miliband asking him to concede the lawsuit. “By conceding the case, the government can make good on promises made to the public and signal a clear departure from the previous administration’s continuing reliance on fossil fuels,” the group said. The UK’s North Sea Transition Authority, previously the Oil and Gas Authority, issued 31 exploration licenses back in May as the Sunak government tried to juggle energy security and the transition that required an end to oil and gas production, per advocates. The licenses were expected to add an estimated 600 million barrels of oil equivalent to 2060, or 545 million barrels of oil equivalent by 2050. Interestingly, some of the awarded in May were in areas previously earmarked for offshore wind power licenses. “Following discussions with our partners in The Crown Estate and Crown Estate Scotland, we have introduced a new clause for overlapping oil and gas licences and wind leases for the first time,” NSTA said. However, when the Starmer government took office, they were quick to go on the offensive against the oil and gas industry, after promising to raise taxes further and end exploration licensing. The ban has not been made official but media have reported that it is in the works. That course of action could put the government in the legal crosshairs as well, The Guardian reported recently, as companies could challenge Downing Street for costing them a lot of money spent on successful exploration bids.
Europe’s Gas Supply Tightens as Norway Begins Field Maintenance
Europe is facing a tighter gas market as Norwegian field operators enter scheduled maintenance season. Any unplanned extension of the maintenance period would cause an imbalance on gas markets on the continent and leas to price rises, Bloomberg reported. “Europe is already struggling,” Florence Schmit, a European energy strategist at Rabobank, told the publication. “Any deviation to the planned maintenance season can cause significant fluctuations in gas availability and in turn market prices, especially this year.” Norway supplies about 30% of Europe’s natural gas, becoming the biggest supplier after the halt of most Russian gas flows. Right now, there is a risk of a suspension in remaining flows passing through the Ukraine after the latter’s incursion into Russian territory, which would tighten supply even further. Bloomberg points out that an extension to Norway’s gas field maintenance season would not be unusual due to the complexity of the work involved in those operations. “The repairs involve careful balancing of pipeline pressure, while the complexity of the facilities and the North Sea’s harsh environment means it’s not unusual for additional work to be discovered,” Bloomberg explained. “You will always see a shift from what was planned; something will take longer or less time and that has ripple effects across the rest of the work,” a senior executive from Norway’s gas pipeline operator Gassco told Bloomberg. Earlier this month, Saxo Bank’s head of commodity strategy, Ole Hansen, noted that the European Union’s gas inventories were at 86.7% full and the expected slowdown in filling rates due to Norway’s maintenance season should not really affect final targets before heating season. The EU has a target of 90% full gas storage before winter begins. “However, any major disruption in the coming months would heighten the need for alternative supplies, primarily via LNG, driving up prices as Europe competes with Asia and South America,” Hansen added at the time.
Why Lack Of Government Support On LPG Loss Could Hit Oil Firms Hard
Oil marketing companies saw weaker earnings in the first quarter of fiscal 2025, mainly on the back of loss on cooking gas sales ranging from Rs 20 billion to Rs 40 billion. At the run-rate seen in the April-June quarter, companies like Indian Oil Corp., Bharat Petroleum Corp. and Hindustan Petroleum Corp. could record losses from liquified petroleum gas sales to the tune of Rs 80 billion to Rs 164 billion, as per NDTV Profit’s calculations. This is why the LPG subsidy provided by the government of India in fiscal 2025 is important for the profitability of these oil companies. Why Are Companies Incurring Losses On LPG? Currently, LPG prices in India are subsidised to ensure affordability for domestic consumers. Oil companies like Indian Oil, Bharat Petroleum and Hindustan Petroleum not only produce their own LPG, but also import it from international sources and sell them domestically. Thus, higher production costs, as well as import costs, exert pressure on the companies’ profitability in the segment as the domestic selling prices remain capped. Government Support The government of India has provided oil marketing companies one-time subsidies as a part of a buffer mechanism. In fiscal 2023, when LPG losses of companies swelled up to around Rs 250 billion in the quarter, due to rise in international LPG prices, the government of India announced a one-time budget subsidy of Rs 220 billion to cover the loss. While a similar subsidy announcement was expected in the 2024 Union Budget, no provision of the same disappointed the street.
Why U.S. Refiners Are Worried About Canada’s New Oil Policy
Gasoline prices in the United States have recently dipped, with diesel prices falling to their lowest in 900 days. While this offers temporary relief for consumers, a looming change in Canada’s oil policy could disrupt the supply chain, particularly for U.S. refineries dependent on heavy crude oil imports. Canada’s Emissions Cap Proposal Prime Minister Justin Trudeau has proposed a cap on emissions for the oil and gas industry to align Canada’s environmental policies with its climate commitments. This cap is anticipated to limit production and raise operational costs for Canadian oil producers. A Deloitte report, commissioned by Alberta, suggests that without a cap, Canadian oil production could continue to rise, but the cap may stall or reduce output, affecting the overall supply. U.S. Refining Capacity The U.S. Energy Information Administration (EIA), pegs total U.S. oil refining capacity at 18.4 million barrels per day. The U.S. is the world’s largest refiner, and Canadian crude oil accounted for 24% of all its refinery throughput in last year, and is essential for U.S. energy security. U.S. Dependence on Canadian Crude Canada plays a crucial role in supplying crude oil to the United States, especially for refineries in the Rocky Mountain and Midwest regions. In fact, many U.S. refineries are specifically tooled to process the heavy oil found in Canada’s oil sands. The refineries in these specific regions, according to the U.S. Energy Information Administration (EIA), continue to process heavier grades of crude oil, which are becoming less prevalent in other regions due to the trend toward lighter crude oil processing. This reliance is evident in the crude oil import data, where Canada consistently tops the list of U.S. suppliers, providing over 3.8 million barrels per day according to annual EIA data. Global Heavy Crude Oil Sources Apart from Canada, other significant heavy crude oil suppliers include Venezuela, Brazil, and Iraq. However, geopolitical and logistical challenges make these sources less reliable. Venezuela faces sanctions and infrastructural challenges, while Brazil and Iraq have fluctuating production rates and export capabilities. Thus, Canada’s stable and politically secure oil supply is critical for U.S. refineries. Venezuela, Russia, and Iraq—all producers of heavy oil—pose logistical, security, and optical challenges for the United States. In Venezuela’s case, sanctions, industry mismanagement, and corruption have impeded its ability to produce and export its heavy crude. Russia’s crude oil exports are limited by a Western-imposed price cap. Iraq’s oil industry is still wildly unstable. Implications of Reduced Heavy Crude Supply A reduction in Canadian heavy crude supply could lead to increased competition for heavy crude from other sources, driving up prices and impacting refinery margins. This might lead to higher gasoline and diesel prices in the U.S. market. A shortage could also compel refineries to adapt their operations or invest in infrastructure to process lighter crude, which could be costly and less efficient. Heavy crude oil is essential for producing a range of refined products, including gasoline, diesel, and jet fuel, as well as lubricants and petrochemicals. Processing heavy crude requires specialized equipment and expertise, which many U.S. refineries have invested in over time. These upgrades provide a competitive advantage but also come with significant costs. The potential curtailment of Canadian oil production poses not only an economic threat but also raises environmental concerns. A decrease in heavy crude oil supply could lead to an increased reliance on lighter crude, which may not align with current refinery setups. Going lighter would also result in lower profitability as lighter crude comes with a higher price tag. Moreover, this shift could affect the global oil market, influencing pricing and supply dynamics. The U.S. refineries’ need to secure heavy crude oil could lead to heightened geopolitical tensions as they vie for resources in a tightening market. The resulting high refiner costs would then trickle down to industry. Canada’s proposed emissions cap on the oil and gas sector presents a complex challenge for U.S. refineries and the broader oil market. As Canadian production potentially dwindles, U.S. refineries must prepare for a shift in supply dynamics that could disrupt operations and affect the national economy.
The World’s Biggest Gas Reservoir Is At A Tipping Point
Iran is embarking on a US$70 billion investment programme of measures to attempt to halt a dramatic decline in output from its crucial South Pars gas field. A failure to do so will result in the loss of 40 percent of the country’s petrol output from the Persian Gulf Star gas condensate refinery, and the addition of up to US$12 billion a year of petrochemical costs, according to Iranian Gas Institute forecasts. “South Pars’ gas output provides nearly 80 percent of the our [Iran’s] total gas production, so it is vital to all segments of business and society that this does not drop significantly,” a senior energy industry source who works closely with Islamic Republic’s Petroleum Ministry exclusively told OilPrice.com last week. In broad terms, the South Pars site spans 3,700 square kilometres and holds an estimated 14.2 trillion cubic metres (tcm) of gas reserves plus 18 billion barrels of gas condensate. In addition to generating 78 percent of the country’s gas production, it also accounts for around 40 percent of Iran’s total estimated 33.8 tcm of gas reserves (mostly located in the southern Fars, Bushehr, and Hormozgan regions). Crucially in the current context as well is that it is one part of the two that constitute the world’s biggest gas reservoir by far, with 51 tcm of reserves. The other part is Qatar’s 6,000 square kilometre North Dome (or ‘North Field’), which is the foundation stone of its world-leading liquefied natural gas (LNG) exporter status. Iran split South Pars into 24 phases for development, with broad production targets ranging from around 28 million cubic metres per day (mcm/d) to about 57 mcm/d – the latter being a target for the perennially controversial Phase 11. After the Joint Comprehensive Plan of Action (‘JCPOA’, or colloquially ‘the nuclear deal’) had been implemented on 16 January 2016, France’s then-Total renewed its 2009 commitment to develop the Phase, which had been dropped in 2012 as the E.U. ramped up sanctions against Iran. The French oil and gas giant held a 50.1 percent stake in the Phase 11 project, ahead of the 30 percent stake of the China National Petroleum Corporation and a 19.9% holding by Petropars, a wholly owned subsidiary of the National Iranian Oil Company. Total quickly invested around US$1 billion in the Phase and made progress on the site, until in May 2018 came the withdrawal by the U.S. from the JCPOA, as analysed in full in my new book on the new global oil market order. Given the size and scope of Phase 11, it became a focal point of Washington’s attention in the aftermath of the withdrawal, and it put the French under extreme pressure to pull out of the project. Under the terms of the contract, CNPC then took charge and little progress has been made since then. This provides a microcosm of what has happened to Iran’s oil and gas sector since then. The key problem in the substitution of leading Western oil and gas firms with Chinese ones has been that the latter lack the latest technology available to the former. The same is now true of Russian oil and gas firms which have been denied much of the same technology through various sanctions since it invaded Ukraine’s Crimea region in 2014. According to assessments from Iran’s own National Development Fund, the country’s gas production will fall by at least 25 percent within the next 10 years due to falling pressure in the fields, with South Pars seeing a 30 percent decline. To attempt to redress this, March saw Iran’s Petroleum Ministry agree to a US$20 billion programme with various local firms to build 28 massive platforms to boost pressure on the South Pars site. However, little progress has been made on these, as neither the domestic companies nor their Chinese and Russian backers have the required technology and know-how. The latest programme to be announced by the Petroleum Ministry – the drilling of 35 new wells across the South Pars site – appears geared towards maximising production from the field while it still can, rather than addressing the fundamental causes of the reduction in pressure and attempting to slow them down. Indeed, according to official Petroleum Ministry statements, the new drilling is intended to boost output over the site by 35 million mcm/d over the next three years. “Part of the problem is the geology of the site, with a natural drift towards the Qatari side in several places rather than the Iranian one,” the Iran source told OilPrice.com last week. “But another part has been the many clumsy attempts by local contractors at optimising extraction over the years with no thought of the longer-term consequences,” he added. “There are multiple examples of the wrong areas being drilled, which has weakened the surrounding structures, so drilling 35 new wells having done this is only likely to make situation worse,” he said. Given this, Iran is looking to China to increase its pressure on Qatar to take a more cooperative approach to developing the two halves of the supergiant gas reservoir, the source added. “Qatar had a moratorium on gas production from its own North Dome field from 2005 to 2017, during which time it often accused Iran of drilling activity that reduced pressure on this side, and asked China to intervene on its behalf with Iran, which it did,” the source told OilPrice.com. “At that stage in early 2017, the two sides [Qatar and Iran] sat down and agreed to work together to ensure the sustainability of the site, so Iran wants the same assurance now from Qatar,” he added. This is even more urgent on Iran’s side, as Qatar is now embarked on its own drive to dramatically increase its production from the North Dome. The Emirate’s expansion program will see six major new developments in the North Field East (NFE) and North Field South (NFS) to 2029. Four new ‘trains’ (production facilities) – each with 8 million metric tonnes per annum (mtpa)
EIL and IndianOil completes RCC Chimney at SGU of P-25 Project in Panipat
Engineers India Limited along with Indian Oil Corporation successfully completed the RCC Chimney Shell Casting using the advanced Slip Form Technique at the Steam Generation Unit (SGU) of the P-25 Project in Panipat. This decision to opt for an RCC chimney over a traditional metal one is driven by several key advantages including its superior durability in handling the high moisture content of flue gases, reduced maintenance requirements, extended service life and more cost-effective initial investment. The Slip Form Technique, known for its efficiency and safety, was crucial in accelerating the construction process. This continuous, round-the-clock casting method not only ensures a faster completion time but also enhances the structural integrity of the chimney, solidifying EIL’s reputation as a leader in innovative project execution.
Petronet signs deal with with Sri Lankan company to supply LNG to Colombo
Petronet LNG Ltd, India’s biggest gas importer, on Tuesday (August 20) said it has entered into a Memorandum of Understanding (MoU) with LTL Holdings Ltd (LTL) of Sri Lanka to supply liquefied natural gas (LNG) to LTL’s dual-fueled power plants in Kerawalapitiya, Colombo. “…we wish to inform that Petronet LNG Limited (PLL) has entered into a Memorandum of Understanding (MoU) with LTL Holdings Limited (LTL) of Sri Lanka on August 20, 2024, at Colombo, Sri Lanka for the supply of LNG to LTL’s dual-fuelled Power Plant(s) in Kerawalapitiya, Colombo,” according to a stock exchange filing. Under this MoU, both parties will collaborate to develop a comprehensive LNG supply chain from PLL’s Kochi LNG terminal to LTL’s power plants in Colombo, using LNG ISO tank containers and a multi-modal transport system. The initial term of the LNG supply is set for five years, with provisions for extension based on mutual agreement.
Oil Giants IOC, HPCL And BPCL Eye LPG Supply Contract With Norway’s Equinor: Report
An Indian consortium of state-run oil marketing companies is in talks with Norway’s Equinor for long-term liquefied petroleum gas (LPG) contracts. This move is seen as an attempt to diversify sourcing away from traditional Middle Eastern suppliers amid escalating regional tensions. What Happened: The consortium includes Indian Oil Corporation Limited (IOCL), Hindustan Petroleum Corporation Ltd (HPCL), and Bharat Petroleum Corporation Ltd (BPCL), Mint reported. This strategic move is in response to the escalating tensions in West Asia, which could potentially disrupt energy prices and supplies. The NSE has sought clarification on the report from BPCL and HPCL. Currently, the United Arab Emirates, Qatar, Saudi Arabia and Kuwait are the top LPG suppliers to India. The talks with Equinor are crucial as LPG makes up about 62% of all cooking fuels used in Indian households, with over 60% of LPG being imported. Equinor’s potential entry into India’s LPG market follows previous discussions on topics such as Equinor’s participation in India’s strategic petroleum reserves (SPR) and long-term deals for the supply of liquified natural gas (LNG) from Equinor’s extensive portfolio in the US and Qatar. The Indian LPG market has witnessed significant growth in recent years, with consumption in FY24 increasing 3.7% year-on-year to 29.6 million tonnes. To cater to this growing demand, India imported 4.5 million tonnes of LPG in the first quarter of FY25, a 17.7% increase from the same period last fiscal.