Numaligarh Refinery partnered with Assam Gas Company Limited
Yet another Landmark Moment. Numaligarh Refinery Limited has partnered with Assam Gas Company Limited by Signing of Sales Purchase Agreement on 27th of March 2024 at Corporate office of NRL in presence of Shri Bhaskar Jyoti Phukan, Managing Director, NRL, Shri Nikunja Borthakur, Sr. CGM (Corp. Affairs), MD, AGCL, Shri Gokul Chandra Swargiary along with other officials from both the organisation. Assam Gas Company Limited has ventured into the retail domain of MS & HSD. AGCL will be commissioning their retail outlets in Assam and other NE States from this Financial Year and NRL will be supplying MS and HSD to all their proposed retail outlets.
Transporting crude oil from Russia to India offers huge margins
Discounted seaborne crude oil flowing from Russia to India, which accounts for more than one-third of New Delhi’s overall imports, has opened up avenues to make huge margins — sometimes to the tune of $23 a barrel — from transporting the critical commodity. he findings form part of a report by the Oxford Institute for Energy Studies (OIES), released on Monday, on the outlook for Russia’s oil and gas production and exports, which said “the biggest beneficiary of this new trade at discounted prices has been India”. The report pointed out that there is an “obvious logic” on increased Indian purchases of Russian oil due to the large discount on Urals Blend to Brent, but it needs to be remembered that this is based on the FOB price in the Baltic Sea. “The discount has not only offered cheap oil to India but has also opened a huge margin to be made in the provision of transport and ancillary services to deliver the oil from northern Europe to Southern Asia,” the OIES study said. Analysing the delivered price of Russian oil to the west coast of India with the FOB price at Primorsk during 2023, the study said that although the differential narrowed significantly over the last eight months (till August 2023) the margin has ranged from a high of around $23 per barrel to the current $8 per barrel. “This has tempted traders and tanker owners to get involved with the trade in Russian crude not only to India but also to other Asian destinations where similar margins have been on offer and has helped to facilitate the liquidity of the global oil market. This has underpinned the decline in the oil price from its high of over $122 per barrel in May 2022 to the current level of around $84 per barrel (October 5, 2023),” it added.
Indian refiners buy more US crude amid tighter sanctions on Russian oil
More than 250,000 barrels per day of U.S. crude is set to arrive in India next month, the highest in more than a year, ship tracking data showed, amid tighter enforcement of sanctions on Russian crude. India, the world’s third-biggest oil importer and consumer, is looking to diversify its oil supplies as fresh U.S. sanctions on Moscow threaten to dent Russian oil sales to India, the biggest buyer of Russian seaborne crude. About 7.6 million barrels of oil, or 256,000 barrels per day (bpd), were headed to India on three very large crude carriers and three Suezmax vessels, according to ship tracking firm Kpler. The ships, which were largely headed to India’s west coast, were chartered by Reliance Industries, Vitol, Equinor and Sinokor, among others, according to data from financial firm LSEG. India was the top buyer of Russian oil last year after other groups retreated from purchases following Western sanctions on Moscow for its invasion on Ukraine in February 2022. Last month, the U.S. tightened efforts to reduce Russia’s oil trade adding sanctions on state-owned shipping firm Sovcomflot and 14 crude oil tankers involved in Russian oil transportation. India’s Reliance, operator of the world’s biggest refining complex, will not buy Russian oil loaded on tankers operated by Sovcomflot after recent U.S. sanctions, sources told Reuters last week. More Indian refiners plan to shun Sovcomflot vessels, which may weigh on imports of Russian oil and leave Russia with fewer outlets for its flagship product, sources saIf.
LNG importers rush to buy spot cargoes as price hits 3-year low
Power companies and refineries are doubling down on spot liquefied natural gas (LNG) as prices have hit a three-year low, according to industry officials aware of the development. LNG importers Gail, Gujarat State Petroleum Corporation (GSPC), Torrent Gas, Bharat Petroleum Corp (BPCL) and Indian Oil Corp (IOC), among others, are buying spot cargoes as the Asia spot LNG price has declined between $8.3 and $9 per million British thermal units (mmBtu) due to weak demand and high inventory in both Asia and Europe, giving these companies room to expand sourcing and sales to the power, fertiliser, refining and other sectors. During the same period last year, spot LNG prices averaged $18.75 per mmBtu. In 2022, spot LNG prices touched a record $70 per mmBtu on the back of the Russia-Ukraine war. LNG is mostly traded through long-term contracts of 20-25 years and in the spot market. The price of spot LNG is higher than long-term LNG. “This price drop in LNG is aiding power units, refineries, petrochemical and fertiliser plants,” said one of the persons cited above. “Reliance Industries and HPCL (Hindustan Petroleum Corp) have sought cargoes from GSPC, and Indian Oil is also procuring LNG cargoes for its refineries.” As demand for power rises amid higher temperature, power companies including Torrent Power and NTPC are also buying more LNG. India has 25,000 MW of installed gas-based power capacity. While NTPC owns 5,000 MW, the rest is with private as well as state government entities. “The government wants power generation companies to buy gas and commission their stranded power units. We are anticipating record power demand this summer,” he said. The Central Electricity Authority (CEA) has said power demand may see a spike between March and June.
LNG imports increase 37.5% in February 2024
INDIA’s imports of liquefied natural gas (LNG) are up 37.5% in February 2023 over the corresponding period of the previous year, according to a monthly report by the Petroleum Planning Analysis and Cell (PPAC). The total LNG import in February 2024 was 2,522 million standard cubic meters (MMSCM) against last February’s 1,834 MMSCM. According to an S& P report, India is anticipating an upswing in LNG imports in 2024, with projections suggesting a substantial 7-8% year-on-year increase. “Total imports of LNG (provisional) during the month of February 2024 was 2,522 MMSCM (an increase of 37.5 % over the corresponding month of the previous year),” reads the report. India is trying to increase its LNG import capacity to lift the share of natural gas in its energy mix to 15% by 2030 from the current level of 7%. The move is to lower the dependence on dirtier fossil fuels such as coal and oil. India’s gas production in February was up 11.1% from the same month in 2023, at 2,947 MMSCM. The total consumption in February this year was 5,650 MMSCM (provisional). Major consuming sectors were Fertilizer (28%), City Gas Distribution (20%), Power (12%), Refinery (10%) and Petrochemicals (4%). The total natural gas available for sale during February 2024 was 4935 MMSCM (an increase of 22.5% over the corresponding month of the previous year). Meanwhile, India is also trying to cut down its import and increase production. According to a report by CareEdge Ratings, India’s reliance on imported liquefied natural gas (LNG) is projected to decrease to around 45% by FY26, down from 53% in FY21. This change is attributed to an increase in domestic natural gas production, with nearly 30 MMSCM per day of new production added over the past three years.
French Bank Pulls Funding for Two LNG Projects
French lender Credit Agricole has declared it will no longer finance the Rovuma LNG project in Mozambique and the Papua LNG project in Papua New Guinea. The bank cited its commitments to reduce exposure to the oil and gas industry as the basis for its decision, according to a Reuters report on the news. Rovuma LNG and Papua LNG are two of the largest liquefied natural gas projects in progress, with the companies involved including Exxon, TotalEnergies, Eni, and Australia’s Santos. Environmentalists welcomed the decision, commenting that it would be challenging for the energy companies to find an alternative bank to step in. Exxon, the leader on the Rovuma project was expected to make the final investment decision on the project next year but this could change now. TotalEnergies, which leads the Papua LNG project had also planned on making the FID on the venture next year. Credit Agricole is moving away from LNG just as demand forecasts for the superchilled fuel brighten, with Shell recently forecasting demand will surge by 50% in the next 16 years. Africa has abundant but underdeveloped gas resources that projects such as Rovuma and Papua were going to tap, helping the economies of Mozambique and Papua with a new and potentially huge revenue stream. Credit Agricole, however, announced last December it was going to stop funding new oil and gas ventures in line with its net-zero commitments. The bank also said it would triple the amount of money it invests in transition-related technologies. Plans are to boost its exposure to alternative sources of energy by 80% over this year and next, expanding it to $13.3 billion euro. “We need to massively invest in renewable energy and the energy sobriety in order to decarbonize the economy,” the bank’s chief executive Phillippe Brassac said at the time.
Russia Demands Oil Producers Slash Output for OPEC+
Russia’s government has ordered oil companies to lower their output in the second quarter so that the country can meet its OPEC+ production target of 9 million barrels per day (bpd) by the end of June. Previously, Russian Deputy Prime Minister Alexander Novak announced that Russia would cut oil output and exports by an extra 471,000 barrels per day (bpd) in the second quarter, in tandem with production cuts by other OPEC+ members. The country will then gradually ease the export cuts and focus on only reducing output. Although Novak is yet to provide the targeted level for output, Reuters has calculated that production would drop to almost 9 million bpd in June if the country proceeds with the planned production cut. Private sources not authorized to speak publicly have told Reuters that Moscow has given specific targets to each oil company, an indication of its commitment to keep its OPEC+ pledge in a bid to support international oil prices. Russian oil and gas condensate production fell from an annual peak of 11.7 million bpd in 2019 to around 10.8 million currently due to production cuts. The country has not disclosed production or export data ever since it started the war in Ukraine. Production has also suffered in the current year due to unplanned outages as well as drone attacks by Ukraine. Novak’s statement did not include a six-month ban on Russian gasoline exports that kicked in from March 1. Russian crude oil and fuel trade has been under Western sanctions ever since Russia launched the Ukraine war two years ago, while the United States has imposed more sanctions on Russia’s leading tanker group Sovcomflot. Bloomberg has, however, reported that Russia is experiencing a drilling boom despite concerted efforts by the U.S. and its allies to limit technology transfer. The withdrawal of major Western oil-service companies from Russia has left their local subsidiaries to fill their void, which they have so far done successfully. “Only some 15% of the nation’s domestic drilling market depends on technologies from so-called unfriendly nations,” Daria Melnik, vice-president for exploration and production at Rystad Energy, has revealed.
Russia Delivers Oil to North Korea in Defiance of UN Sanctions
Russia has supplied oil directly to North Korea this year as both regimes are openly defying UN sanctions on sales of petroleum to Pyongyang in response to its nuclear weapons tests, satellite images shared exclusively with the Financial Times have shown. North Korea has been under UN Security Council sanctions since 2017, but Russia is said to have supplied and smuggled oil to the country since then. In August 2018, The Asian Institute for Policy Studies said while most of the sanction-bypassing oil trade with North Korea is thought to be originating from China, oil sales from Russia to Kim Jong-Un’s regime may be much larger than official figures suggest, as shell companies have been set up for illicit oil flows to Pyongyang. With a suspected oil-for-weapons deal with North Korea, Russia appears to have boosted its oil deliveries to Kim Jong-Un in exchange for munitions and other military equipment from North Korea to use in its war in Ukraine. Now the satellite images, which UK think-tank Royal United Services Institute has shared with FT, have shown that in March alone, at least five tankers of North Korea have traveled to load petroleum products from the Vostochny Port, the biggest port in Russia’s Far East. These deliveries are the first documented direct seaborne shipments of oil from Russia to North Korea since the UN sanctions were imposed in 2017, FT notes. “These oil deliveries constitute a full-frontal assault against the sanctions regime, which is now on the brink of collapse,” Hugh Griffiths, a former coordinator of the UN panel monitoring North Korea sanctions, told the British newspaper. The Russian and North Korean regimes have grown closer in recent years and have been exchanging supplies to help each other. Last month, South Korea’s Defense Minister Shin Won-sik said that some factories in North Korea are working full-time to produce weapons for Russia in exchange for food and other supplies. “While North Korea’s arms factories operate at 30 percent capacity due to shortages of raw materials and power, certain factories are operating at full capacity, which primarily produce weapons and shells for Russia,” Shin said at the end of February, as carried by South Korean news agency Yonhap.
ONGC’s Bihar mission to strike oil & gas riches
Oil and Natural Gas Corp (ONGC) is set to drill a well in Bihar this year, aiming to uncover potential oil and gas reservoirs. This venture not only marks Bihar’s entry into India’s oil domain but also heralds exploration across the vast Ganga basin, spanning Bihar, Uttar Pradesh, and Punjab. Sushma Rawat, ONGC’s exploration director, revealed plans for drilling two exploratory wells after acquiring 3D seismic data for 300 sq km in Samastipur, Bihar. With an estimated cost of ₹300-350 million, the first drilling phase aims to pave the way for further exploration in the region. The success of this venture could revolutionize Bihar’s energy landscape and foster local industrial growth, propelling the state towards a brighter, more sustainable future.
Red Sea Crisis Adds 100,000 Bpd to Global Oil Demand
The threat of attacks by Yemeni Houthis on vessels crossing the Red Sea have added 100,000 bpd to global oil demand as ships choose to divert to a longer route around Africa. This is according to the chief executive of commodity trading major Vitol, Russel Hardy, who said that “We have had to re-orientate so much all over,” because of the crisis. Speaking at a panel at CERAWeek, as quoted by Reuters, Hardy noted that because of the situation in the Red Sea, the total distance traveled by ships now is about 3% more than it was before the Houthis began to attack vessels in the Red Sea. Analysts have been warning that the diversion of ship traffic from the Suez Canal to the Cape of Good Hope would tighten oil markers as it adds more than a week to the average journey between Asia and Europe. Earlier this year, one unnamed expert told Reuters that the rerouting had increased demand for oil by 200,000 barrels daily. This was also one reason why the International Energy Agency revised its oil demand outlook higher in its latest Oil Market Report. Calling the development “unexpected”, the IEA wrote that demand for oil was seen rising 1.7 million bpd in the first quarter of the year, “on an improved outlook for the United States and increased bunkering.” The oil market generally dismissed the effect that the situation in the Red Sea was having on oil demand, focusing on OPEC’s spare capacity, boosted recently by collective output cuts. However, the mood is beginning to change as the cuts get extended and Russian supply gets squeezed from Ukrainian drone attacks on refineries. With threats to supply elsewhere, the additional demand that the Red Sea situation may attract more attention and possibly serve to help oil climb higher still as there seems to be no resolution to it in sight for the time being.