Indian oil PSU’s have global presence with net investments of $40.6 billion, across 21 countries, says Hardeep Puri
These Indian PSUs have established a significant presence globally, with a total of 45 assets spread across 21 countries. They have a cumulative investment of about US$ 40.6 billion, said Puri. This substantial investment highlights India’s strategic efforts to secure energy resources and ensure energy security by diversifying its sources and establishing a global footprint. The Minister said, “By assessing performance and exploring new opportunities, we can ensure sustainable growth and energy security for India under the leadership of PM Narendra Modi Ji”. ONGC Videsh Ltd (OVL), the overseas arm of Oil and Natural Gas Corporation (ONGC), is a key player in this domain, with investments in various oil and gas assets worldwide. Indian Oil Corporation Ltd (IOCL) has also been active in expanding its international presence, securing crucial energy supplies and collaborating on refining and petrochemical projects. Similarly, Oil India Ltd (OIL) and Bharat PetroResources Ltd (BPRL) has invested in exploration and production assets overseas, contributing to India’s energy security. GAIL, known for its role in natural gas processing and distribution, has been involved in international projects, securing LNG contracts and participating in pipeline projects. Prize Petroleum Corporation Ltd (PPCL), a wholly-owned subsidiary of HPCL, focuses on upstream exploration and production activities. The International Cooperation Division of the Ministry of Petroleum and Natural Gas facilitates Indian oil and gas Public Sector Undertakings (PSUs) to aggressively pursue opportunities for acquiring quality oil and gas assets overseas. The division also encourages the companies to diversify oil and gas sources to maintain a balanced portfolio.
Seasonal Demand and Production Cuts Drive Oil Rally
Oil bulls have a narrow window for bullish bets as driving season and weather disruptions create a prime opportunity for a market rally. With the driving season in full swing and weather-related production disruptions upon us, now may be the best chance for a market rally this year. It is a pivotal moment for bulls, with the tide expected to change after this quarter when the driving season ends. Despite its presumption that global oil demand growth is on a long-term downward trend, even the International Energy Agency (IEA), often criticized for its anti-fossil fuel leanings, estimates that global crude oil inventories will draw down at an average rate of 800,000 barrels per day (bpd) between June and September—the height of driving season. This, despite Q2 global oil demand growth slowing to its weakest in more than a year. Of course, that’s merely a prediction. But the reality paints a similar picture. In the last three weeks alone, U.S. crude oil inventories have drawn down by more than 20 million barrels, according to the Energy Information Administration’s (EIA) Weekly Petroleum Status Report. And while U.S. production is at its highest levels ever at 13.3 million bpd according to weekly EIA estimates, that was prior to storms that we know interrupted activities in some parts of the country. Globally, the production scenario is more bullish. OPEC+ has extended its oil production cuts into next year, and Russia just this week said it would cut production even more than its OPEC+ quota dictated because it has pumped above its quota for months. It plans to cut additional production in the warm seasons of this year and next. But Russia will not be curbing additional production beyond its quota in the colder months due to technical issues related to the geology of its oilfields and climate—not to mention it simply requires more oil for domestic use in the colder seasons. A Shift to Strength The second quarter was weak for crude prices as the market worried about weak demand. Now, however, a new narrative is taking shape—one that speaks of a forecasted deficit. According to EIA’s 4-Week Average U.S. Product Supplied—a proxy for demand—20.9 million barrels of petroleum were consumed in the week ending July 5. This is the highest level since last September. The latest data, issued this week on Wednesday, estimates that weekly petroleum product supplied fell back to 20.488 million bpd. Although those are high levels, they are seasonal, and this bullish reality is expected to shift after driving season, with the IEA expecting global crude oil inventories to level out as oil demand growth generated from China slows. China, China, China Two things have been happening in China. First, China has been reducing crude oil imports. Crude oil imports averaged 11.05 million bpd in the first half of the year—a figure that is 2.9% shy of the first half last year, highlighting the weak oil market in China. In June, China’s refiners had 15.67 million bpd of oil for processing—11.30 million bpd from imports, and 4.37 million bpd from domestic production. China’s refineries have seen a slowdown as well, only processing 14.19 million bpd on average in June. This mismatch in refining vs. imports has created a surplus of crude oil in the country, leading to the second thing: China has likely been stockpiling crude oil for the better part of this year. If the world’s largest oil importer is building inventory, only a strong recovery in economic growth in that importer will turn the tide. Of course, this hasn’t stopped OPEC from forecasting robust oil demand growth in China. In 2024, OPEC still sees China’s oil demand growth rising by 760,000 bpd—and this is a figure that OPEC just revised up for its July report. The IEA, as one would expect, had a different view, with its demand growth estimates for China coming in at 500,000 bpd for the full year 2024. Self-Fulfilling Prophecy Traders and banks have a different view, and that’s one of strong consumption. Increased demand for gasoline and diesel due to the driving season has already boosted global oil prices by drawing down crude oil inventories in the world’s most transparent oil market—the United States. That bullish outlook is often a self-fulfilling prophecy when it comes to market pricing. Brent crude is currently trading above $85 per barrel—a nearly $10 hike from the beginning of the year. As driving season in the world’s largest oil consumer comes to a close, one would expect inventories to begin building in the United States as well, and traders may anticipate the shift from bullish to bearish. And when it comes to market speculators, just the anticipation can make it so, even if inventories fail to build.
India ups LNG imports in June
The country imported about 2.64 billion cubic meters, or about 2 million metric tonnes of LNG, in June via long-term contracts and spot purchases, a rise of 11.4 percent compared to the same month in 2023, PPAC said. In May this year LNG imports dropped compared to the previous year, while in April this year LNG imports rose year-on-year. In March LNG imports dropped slightly following a year-on-year rise in January and February, PPAC’s data previously showed. During April-June, India took some 7.79 bcm of LNG, or about 5.9 million metric tonnes, up by 0.6 percent compared to the same period last year, according to PPAC. India paid $1.1 billion for June LNG imports, up compared to $1 billion in June last year, and the country paid $3.2 billion in the April-June period, down from $3.4 billion in the same period last year, PPAC said. As per India’s natural gas production, it reached about 2.99 bcm in June, a rise of 2.9 percent compared to the corresponding month of the previous year. Natural gas production of 9.05 bcm in April-June was up by 5.7 percent compared to the same period in 2023. At the moment, India imports LNG via seven facilities with a combined capacity of about 47.7 million tonnes. These include Petronet LNG’s Dahej and Kochi terminals, Shell’s Hazira terminal, and the Dabhol LNG, Ennore LNG, Mundra LNG, and Dhamra LNG terminal. The Chhara LNG import terminal in Gujarat should also receive its commissioning cargo later this year after it failed to unload the cargo from the 2015-built 159,800-cbm, Maran Gas Mystras. India’s Hindustan Petroleum, a unit of state-owned ONGC, aims to launch its delayed Chhara LNG import terminal by October this year, according to its management. During April-May this year, the 17.5 mtpa Dahej terminal operated at 107.2 percent capacity, while the 5.2 mtpa Hazira terminal operated at 38.3 percent capacity, PPAC said. The 5 mtpa Dhamra LNG terminal operated at 25 percent capacity, the 5 mtpa Dabhol LNG terminal operated at 73.8 percent capacity, the 5 mtpa Kochi LNG terminal operated at 20.6 percent capacity, and the 5 mtpa Ennore LNG terminal operated at 25.8 percent capacity, it said. In May, Petronet said it expects a 15 percent rise in the country’s imports of LNG during this financial year. The company’s executives said during the company’s earnings call that Petronet expects India’s LNG imports to rise to 27 millions tonnes in the fiscal year 2025/2026 which ends in March next year.
Oil Minister Hardeep Puri says India offers Rs 100 bn investment opportunities in explorations & productions
While addressing the ‘Urja Varta 2024’ , Union Minister for Oil and Gas Hardeep Singh Puri said on Thursday that India offers an investment opportunity of at least 100 billion by 2030 in the Exploration and Production of energy. Despite the progress in exploration, Puri asserted that the potential still lies untapped within India’s 26 sedimentary basins. “Despite our progress much of our exploration and production potential still lies untapped within India’s 26 sedimentary basins. Despite the abundant geological resources available to us Our efforts in past have been far short of what needs to be done” said the Oil Minister. For now, only 10 per cent of India’s sedimentary basin is under exploration. However, it will soon increase to 16 per cent, said Puri. “Only 10 per cent of sedimentary basin is currently under exploration today, after the award of the blocks under the forthcoming event when it rounds, it will increase to 16 per cent by 2024” said the minister. The minister also stated during the global turmoil the oil prices would have shot up to very high if India had not changed its oil supplier. On using scientific technology in the exploration the minister said that the government is spending heavily on promoting scientific data-driven exploration and an investment of Rs 75 billion is going into the acquisition of new data.
Honeywell to acquire Air Products’ LNG biz for $1.81 bn
Automation, aviation and energy transition company Honeywell has acquired US-based Air Products’ liquefied natural gas (LNG) process technology and equipment business for $1.81 billion in an all-cash transaction, representing around 13x its estimated 2024 EBITDA. Honeywell says the acquisition will allow it to offer customers a comprehensive, top-tier solution for managing its energy transformation journey. This is the fourth acquisition Honeywell has announced this year as part of its disciplined capital deployment strategy. The acquisition covers natural gas pre-treatment and state-of-the-art liquefaction, utilising digital automation technologies unified under the Honeywell Forge and Experion platforms. Honeywell says the new offerings will enable efficient, reliable and optimised management of natural gas assets. Currently, Honeywell provides a pre-treatment solution to its LNG customers globally. Air Products’ LNG process technology and equipment business consists of a comprehensive portfolio, including in-house design and manufacturing of coil-wound heat exchangers (CWHE) and related equipment.
BPCL Likely To Set Up Its New Refinery In Machilipatnam
In a major development, Andhra Pradesh is likely to get two big ticket projects soon. While Bharat Petroleum Corporation Limited (BPCL) is looking at Andhra Pradesh to establish a new refinery, VinFast, an electric vehicle manufacturing company Vietnam, expressed interest to invest in Andhra Pradesh. BPCL’s refinery would fetch Rs 60,000 to Rs 700 billion investment and likely to bring up to 25,000 direct and indirect employment opportunities. BPCL was considering Gujarat, Madhya Pradesh and Andhra Pradesh for its new refinery but after the meeting with chief minister N Chandrababu Naidu on Wednesday, they have zeroed in on AP, said sources. BPCL chairman and managing director (CMD), M Krishna Kumar along with other representatives of the company met Naidu at his office in Amaravati on Wednesday. During the recent visit to Delhi, Naidu held talks with union minister for petroleum and natural gas, Hardeep Singh Puri on BPCL refinery. Following his discussions with Hardeep, BPCL representatives called on the chief minister to take the talks further. Krishna Kumar told Naidu that it would require 4-5 thousand acres of land to establish oil refinery and petrochemical corridor. Naidu responded in affirmative and asked them to come up with a detailed project report. He promised to give complete cooperation from the state govt in acquiring the land and in providing other infrastructure. He asked them to come up with a feasibility report in next 90 days. The proposal is to establish the refinery at Machilipatnam. This project will become game changer for one of the oldest municipalities in the country, where population is on the decline. As Machilipatnam port is under construction, a refinery would give more impetus to industrial growth of the city. On the other hand, a delegation of VinFast India led by its CEO Pham San Chau met chief minister Naidu to discuss about possible investment opportunities in Andhra Pradesh. Naidu also explained the benefits of investing in the state and offered them complete support from the govt.
BP Predicts Global Oil Demand Will Peak In 2025
British Oil & Gas giant BP Plc (NYSE:BP) has predicted that global oil demand will peak next year while wind and solar capacity will continue to grow rapidly. In its latest edition of its annual Energy Outlook, BP has published a study of the evolution of the global energy system to 2050. BP has modeled its predictions on two key scenarios: The Current Trajectory and Net Zero. The Current Trajectory scenario is based on climate policies and carbon reduction pledges already in place while the Net Zero scenario assumes the world sticks to the 2015 Paris climate agreement to cut carbon emissions by around 95% by 2050. BP has predicted that oil demand will peak by 2025 at around 102 million barrels per day (bpd) under both scenarios. However, the rate of decline thereafter will be determined primarily by the pace of falling oil use in road transport. In the Current Trajectory, BP sees oil consumption gradually declining over the second half of the outlook to around 75 million bpd in 2050. The drop is, however, much more pronounced in Net Zero, with demand falling to just 25 million-30 million bpd by 2050. Regarding general energy demand, in the Current Trajectory scenario, BP has predicted that primary energy demand will continue rising up to the mid-2030s before broadly plateauing amid continuing growth in energy consumption in emerging economies, excluding China, broadly offset by declines in developed economies and eventually in China. In this scenario, global energy demand will only be 5% higher than in 2022. In contrast, the Net Zero scenario sees energy demand peaking in the middle of the current decade before entering a terminal decline phase. In this scenario, BP sees energy demand around 25% lower in 2050 compared with 2022. BP’s dire predictions align with those by Bloomberg, which last year predicted that global demand for road fuel will peak in 2027 at 49 million barrels per day driven by rapid adoption of electric vehicles, ever-improving fuel efficiency and shared mobility.
India eyes energy deals with Rosneft and other Russian companies
India wants to strengthen its energy ties with Russia and could seek deals with Rosneft and other leading Russian oil firms as part of a broader push to boost bilateral trade, Foreign Secretary Vinay Mohan Kwatra said on Tuesday. Indian Prime Minister Narendra Modi and Russian President Vladimir Putin have set a target of increasing bilateral trade to $100 billion by 2030 from about $65 billion at present, Kwatra told a news conference after the two leaders met in Moscow. “The two leaders when they spoke of cooperation in the (energy) sector, they did focus on how exactly to strengthen that partnership,” Kwatra said. “(And) in the similar vein, how exactly India in particular through the government-to-government route could also build partnerships with Rosneft and other energy entities,” he added. India has emerged as the biggest buyer of Russian seaborne oil sold at a discount as Western entities shun purchases due to a raft of sanctions imposed on Russian over its February 2022 invasion of Ukraine. Russia is the top oil supplier to India, the world’s third biggest oil importer and consumer. After Putin and Modi’s meeting, the two countries in a joint statement outlined nine key areas of cooperation for the $100-billion trade target. India is keen to boost its exports to Russia to fix its trade balance, tilted in favour of Moscow. The two nations want the elimination of non-tariff trade barriers and will continue to work for a Free Trade Agreement between Russia-led Eurasian Economic Union and India, the joint statement said. Energy cooperation included areas such as nuclear energy, oil refining and petrochemicals, partnership in energy infrastructure, technologies and equipment. Russian entities including Roneft have a majority stake in private refiner Nayara Energy, while Indian companies hold stakes in Russian oil exploration and production projects in the far east. India’s ONGC Videsh is seeking a formal approval from the Russian authorities to retain its stake of 20% in the Sakhalin 1 oil project in Russia. Beyond energy, Kwatra said India is a key buyer of Russian fertilisers and want to “consolidate and build” its relations with Moscow for security of crop nutrients. Modi and Putin also agreed to develop a bilateral settlement system using national currencies, the statement said.
India’s clean air target at risk as gas plan caught in regulatory minefield
If India is serious about more than doubling the share of natural gas in the country’s energy mix by 2030, justifying the billions of dollars of investments being made by the state in a national gas grid, and charting a path towards less polluting fuels, then it needs to review recent actions that threaten to shackle the gas industry and impact energy security. New Delhi’s ambitious targets to clean its air by decarbonising its energy sector will be underpinned by its success in building its nascent natural gas segment — rarely has any large nation directly made the leap from coal to renewables. The road to net zero passes through the gas grids.
Untether the fuel nozzle: What India’s oil & gas sector needs from Modi 3.0
When Narendra Modi took the prime ministerial office for the first time in 2014, he set clear goals for the oil and gas sector. Strong policy support and close oversight helped boost fuel access in a decade Households’ access to cooking gas has since become nearly universal. Network of petrol pumps has expanded by about three-fourths, and cooking gas distributors by about 80%. Households’ access to cooking gas has since become nearly universal. Network of petrol pumps has expanded by about three-fourths, and cooking gas distributors by about 80%. While access to fuels has risen, consumer affordability is lower than a decade earlier due to a decline in subsidies, increase in taxes and higher margins of oil companies. In Delhi, petrol is a third more expensive than it was in June 2014. Diesel is 50% dearer. Most cooking gas consumers no longer receive subsidies and end up paying double the price they did in 2014. Despite the PM’s call in 2015 to cut oil and gas import dependence by a tenth by 2022, it has risen in a decade to 88% from 77% in oil, and to 46% from 29% in gas. Domestic production has dropped by about a fifth for crude oil and risen barely 3% for natural gas in a decade. Meanwhile, consumption of refined products has increased by about half and that of natural gas by about a third. Foreign investors have shown little interest in the Indian exploration sector despite policy reforms. Set in the first term of the government, the goal of increasing the share of natural gas in the energy mix to 15% by 2030 from 6% hasn’t gotten nearer. The share is below 7%. The plan to build a $44 bn refinery with Saudi Aramco hasn’t happened. And the jury is still out on the benefits of building a mega state oil company by getting ONGC to acquire HPCL. GoI’s determination to build a competitive fuel retail market suffered a setback in the early days of the Ukraine war as the goal of providing affordable fuels powered the instinct to keep a tight control on domestic prices. GoI has since shown little sign of loosening its grip. Failure to find a buyer for state refiner BPCL further diminished the chances of a larger role for the private sector. Now in its third term, the BJP-led NDA government should focus on the following: Curb demand Officials often interpret rising domestic oil demand as a recognition that the economy is being managed well. Expanding economies need energy, not necessarily oil whose heavy import makes our economy vulnerable to global market shocks and geopolitics. The country needs massive investments in electrified public transport, and big incentives for faster adoption of EVs. China’s roaring success – 38% of new cars sold were electric in 2023, up from a mere 5% in 2018 – shows how quickly consumers can shift to EVs. Cut exploration uncertainty Reform laws or licensing contracts to assure explorers that their return from a project will not be affected by future government action. This is essential to draw in investors scared by retrospective and windfall taxes. Reform gas sector Include natural gas in GST, unbundle carriage and content, and end marketing exclusivity of city gas distributors where it’s due. Rules for energy emergency Bring in practical rules to deal with special situations, such as the one witnessed in the early days of the Ukraine war when global supply became difficult and prices skyrocketed. End price control Wars are still raging, but the energy market has stabilised. A genuinely competitive market would serve people better than the ones dependent on the state. Stop vacillating on SPRs Allocate funds to help build new strategic petroleum reserves (SPRs) and to fill them up, as it’s important for managing short-term supply problems.