India ramps up crude oil supply from Russia in the last two months; Iraq, Saudi lag behind
In CY24, India has sourced the maximum crude oil from Russia in the last two months, while supplies from its traditional suppliers Iraq and Saudi Arabia have depleted to the lowest level in the same period, according to energy cargo tracker Vortexa. In June, at 1.93 million barrels per day (bpd), Indian imports of crude oil from Russia were the highest, while in July it was 1.81 million bpd. The rise in Russian oil supply to India comes despite narrowing discounts from the country. Russia has become the biggest supplier of crude to India since war broke out between Ukraine and Moscow in 2022. The country has been providing crude at discounted rates to India after the West imposed sanctions on it. However, in recent months, the discounts have reduced as more countries are accepting Russian oil. Meanwhile, imports from Saudi Arabia and Iraq slumped to their lowest this year in June and July 2024. In June, Saudi Arabia supplied 4,54,000 bpd of crude to India, while in July it supplied 6,06,000 bpd. From Iraq, India imported 8,01,000 bpd in June and 6,03,000 bpd in July. “Even if we get only a few dollars worth of discount on Russian crude, it is still attractive to Indian refiners. Right now, GRMs (gross refining margins) have come down globally, so it makes economic sense for refiners to keep buying Russian crude even when discounts have gone down,” said Prashant Vasisht, VP and Co-Head, Corporate Ratings, ICRA.
As Vaidya’s exit looms, Indian Oil getting ready for a new leadership
In the coming weeks, Shrikant Madhav Vaidya’s extended tenure as chairman of Indian Oil Corp Ltd (IOCL) will wrap up, and the search for his successor is already in full swing. Last week, a three-member search-cum-selection committee, led by Mallika Srinivasan, chairman of the Public Enterprises Selection Board (PESB), including petroleum secretary Pankaj Jain and former HPCL chairman M.K. Surana, interviewed about a dozen candidates to find the right fit. The selection process, held at Shastri Bhawan — the heart of the ministry of petroleum and natural gas — saw a mix of internal candidates from IOCL and at least one strong external contender. While early signals suggest a frontrunner has emerged, it might be a while before we know for sure who will take the helm of this Fortune 500 giant. Notably, when a search-cum-selection committee (SCSC) steps in, it has the authority and discretion to choose the best candidate for the job. Mr Vaidya, originally set to retire on August 31 last year, was granted a one-year extension, pushing his retirement to this month-end, on a re-employment and contract basis. Rumour has it that he might stay on for a few more weeks to ensure a smooth transition, pending the final nod from the Appointments Committee of the Cabinet (ACC).
Indian govt plans 5% ethanol blending in diesel
The government is evaluating a plan to blend 5% ethanol in diesel (ED-5) as it nears its goal of achieving 20% ethanol blending in petrol within the next two years, according to ToI. A meeting on this new proposal took place last week at the Prime Minister’s Office with all relevant ministries in attendance, souces told ToI. The ethanol blending initiative aims to enhance environmental benefits and reduce crude oil import costs. In May, the average ethanol blending in petrol exceeded 15% for the first time. This was made possible through increased purchases from biofuel producers who have expanded their production capacity significantly in recent years.
Why state-run oil companies are spending billions on petchem capacity
In the boardrooms of Indian state refiners and in the halls of the oil ministry, there is a buzz surrounding an esoteric term: The Petrochemical Intensity Index (PII). Indian oil companies plan to produce more of value-added chemicals from processing crude oil while reducing the volume of fuels, whose demand is expected to eventually extinguish as the world shifts to cleaner energy. Until now, many of these chemicals, the building blocks of plastics and paint used in homes, hospitals, and industries came from China. India depends on imports to meet 19 per cent and 30 per cent of polypropylene and polyethylene, respectively, the basic commoditised chemicals, and 67 per cent and 81 per cent on PVC and Toluene, which are value-added substances, shows CareEdge data.
Government Allows ONGC, Oil India To Price Gas From New Wells At 20% Premium
The Union government allowed Oil & Natural Gas Corp. and Oil India Ltd. on Monday to price domestically produced natural gas at 20% premium over the administrative price mechanism in a bid to make new gas development projects viable. In the context of India’s oil and gas sector, the APM refers to a government-controlled pricing system that is used to determine the price of petroleum products. The Ministry of Petroleum and Natural Gas notified the allocation of gas produced from new wells or well interventions from nominated fields of ONGC and Oil India at 20% premium over the APM price. The enhanced price for new gas will make the new gas development projects viable and help ONGC to augment the production of natural gas from nominated fields in challenging areas that require higher amount of capital and technology, the company said in a statement. Under the domestic gas pricing guidelines, the APM price is set at 10% of the Indian crude basket price, as announced monthly by the Petroleum Planning and Analysis Cell. The guidelines specify that gas produced from new wells or well interventions in ONGC and Oil India’s nomination fields will be priced at a 20% premium over the APM prices, making it a total of 12% of the Indian crude basket price for new gas. The APM gas price as of June is $8.44 per million British thermal unit. The ONGC board recently approved the Daman Upside Development project in its nominated field of Mumbai High at a cost of around Rs 78 billion for increasing the domestic gas production. The peak production envisaged from this project is around 5 million metric standard cubic metres per day. It has also approved another project integrated development of four contract areas under DSF-II at a project cost of Rs 60 billion with a peak production of around 4 mmscmd of gas where the government has already allowed pricing and marketing freedom.
GAIL head Sandeep Gupta in the race for Indian Oil Corp’s new chairman
Nearly a dozen candidates on Sunday appeared for interview before a search-cum-selection panel that is looking to appoint the new chairman of Indian Oil Corporation (IOC), the nation’s largest oil firm, sources said. While 10 out of the nearly 60 candidates who applied were called for interviews, GAIL chairman and managing director Sandeep Gupta is being considered a wild card Gupta had not applied but was called for the interview, three sources aware of the matter said. “They had invited 10 of the candidates who had applied. Gupta was the 11th person to be interviewed,” one of them said. Gupta, 58, was director (finance) in IOC before he was appointed the CMD of gas utility GAIL in October 2022. Those interviewed on Sunday included two directors on IOC board – Satish Kumar Vaduguri (Director-Marketing) and Arvind Kumar (Director-Refineries).
Oil India reports 6% increase in Q1 crude oil production
State-run Oil India Ltd’s crude oil production for the April-June quarter stood at 871,000 tonnes, 6.2% higher on a year-on-year (y-o-y) basis Its crude oil production in the corresponding period of the last fiscal was 820,000 tonnes Further, the public sector energy company’s natural gas production rose nearly 10% to 818 million cubic meters. “Oil India Ltd (OIL), registers phenomenal growth in its crude oil and natural gas production with an increase of 6.22% in crude oil while the natural gas production is up by 9.80% in Q1 FY25 vis-a-vis Q1 FY24,” said a company statement. The increase in production comes at a time when the Centre is looking at increasing India’s oil and gas production in a bid to reduce import dependence. India imports about 85% of its energy requirement. For the first quarter of FY25, Oil India had reported a consolidated turnover of ₹93.5089 billion, nearly 45.9% higher than ₹64.0876 billion in the same quarter of the last fiscal. Its consolidated net profit rose 44% to ₹20.1630 billion in the quarter ended June from ₹13.9949 billion in the corresponding quarter of FY24.
Indian refiners cornered over one-third of Russia’s crude oil exports in H1 2024
India, the world’s third largest crude oil consumer, accounted for more than one-third of Russia’s cumulative crude oil exports in the first half of the current calendar year. Besides, India coupled with China and Turkey bought more than 90 per cent of the crude oil shipped out of the erstwhile Soviet Union during January-June 2024. According to the Energy Comment series by the Oxford Institute for Energy Studies (OIES), Russian crude exports to China, India, and Turkey accounted for 93 per cent of the total in H1 2024 Calendar Year (CY). India and China accounted for the lion’s share at 48 per cent and 34 per cent, respectively, the commentary, by Bassam Fattouh and Andreas Economou, added. As per the data from energy intelligence firm Vortexa, India’s crude oil imports from Russia during H1 2024 averaged at around 1.6 million barrels per day (mb/d) compared to roughly 1.7 mb/d imported in the year-ago period. Particularly for India, the Energy Comment pointed out that the transformation has been “phenomenal”. Prior to the 2022 sanctions on Russian oil, India’s largest annual intake of Russian crude was 52,000 barrels per day (b/d) in 2017. In 2023, India’s imports of Russian crude averaged nearly 1.8 mb/d accounting for nearly 40 per cent of the country’s total imports, while on a monthly basis they reached as high as 2.2 mb/d,” it added. There are reports that India’s state-owned refineries are considering entering into long-term oil supply agreements with Russia. But this has not been without its challenges, the latest Energy Comment said. For instance, it said that “payment issues” have caused the diversion of some Russian cargoes away from India. “Russia has recently announced that it has accumulated billions of rupees that it hasn’t yet found a use for. Also, the US and its allies have stepped up the enforcement of sanctions creating difficulties for buyers of Russian oil and idling many tankers used in the transport of Russian oil,” it added.
Govt approves ONGC’s Rs.183.65 billion additional investment proposal in OPaL to increase petrochemical presence
The government has approved ONGC’s proposal to additionally invest Rs.183.65 billion in ONGC Petro-additions Limited (OPaL), the oil and gas giant announced in a statement on Firday, August 9, 2024, and added that this would increase ONGC’s stake in OPaL from 49.36% to 95.69%. ONGC’s total investment in OPaL so far will also thus, add up to Rs.227.28 billion This move is to increase ONGC’s presence across the downstream and petrochemical value chain. ONGC’s total investment in OPaL so far will also thus, add up to Rs.227.28 billion. What os OPaL? OPaL is a petrochemical complex based in Dahej, Gujarat, which was commissioned in 2017. It has the largest standalone dual feed cracker in South-East Asia. A dual feed cracker converts naphtha and offgases from refining into polymer grade ethylene and propylene using a process which is known as thermal cracking. Thermal cracking can also produce byproducts such as benzene, butadiene, gasoline, and toluene. OPaL has the capacity to produce up to 1.5 million metric tonnes per annum (MMTPA) of polymers and 0.5 MMTPA of chemicals and has a 12% market share in India’s polymer segment. The deal can also make OPaL be able to get a sustained supply of gaseous feed from ONGC at a premium of up to 20% over the government’s Administered Pricing Mechanism (APM) gas price. ONGC is currently allowed a premium of up to 20% over the APM price.
Swan Energy plans to sell FSRU
India’s infrastructure firm Sean Energy plans to put its Vasant 1 FLoating Storage And Regasification Unit ( FSRU) up for sale the company informed the stock exchange