BPCL signs initial pact to set up Compressed Bio Gas plants in Bhilai
An MoU was signed on Wednesday between BPCL, Chhattisgarh Biofuel Development Authority and municipal corporations of Raipur and Bhilai for the production of Compressed Bio Gas (CBG) in Chhattisgarh, officials said. As per the pact, BPCL- a central PSU, will set up CBG plants in Raipur and Bhilai with an investment of around Rs 1 billion and the capacity of each plant will be 100-150 tonne per day. The MoU was signed in the presence of Chief Minister Vishnu Deo Sai and Deputy CM Arun Sao here at the former’s official residence, they said. In his address, Chief Minister Sai said the establishment of CBG plants is a key step towards clean city, clean energy and zero carbon emissions. About 200-250 metric tonne of municipal solid waste will be used every day in the production of biofuel in the two CBG plants. BPCL will invest approximately Rs 1 billion for setting up the two plants, Sai said. The setting up of these plants will create about 60,000 man days of employment directly and indirectly every year. On production and sale at full capacity in these plants, the state will receive GST to the tune of Rs 4.5 million per year, he said. These plants will also yield organic fertilizer as a by-product which will help in organic farming in the state, he added. The MoU was signed by Chief Executive Officer of Chhattisgarh Biofuel Development Authority Sumit Sarkar, Chief General Manager of BPCL, Mumbai Anurag Saravagi, Commissioner of Raipur Municipal Corporation Avinash Mishra and Commissioner of Bhilai Municipal Corporation Devesh Kumar Dhruv, officials said.
Rising Gasoline Prices Bring Bad News for Biden
The recent rise in U.S. gasoline prices is driving up inflation higher than expected, complicating the Fed’s monetary easing plans and President Joe Biden’s task to convince voters his Administration is winning the fight on the economy front. The latest U.S. consumer price reading from Tuesday showed inflation rose more than anticipated on the back of a surge in gasoline prices. Granted, gas prices in the U.S. are now slightly lower than they were at this time last year. But they are a massive 60% higher now than they were in early November 2020, just before President Biden won the election. The rise in gasoline prices is typical for this time of year—summer-spec fuels are being rolled out, demand is inching up as Americans drive more with the warmer weather, and production overall has been lower because of seasonal refinery maintenance. But the jump in gas prices ahead of and during the summer is expected to reverse to a steady decline in the autumn with the end of the driving season, and ahead of the presidential election in November. Experts don’t see the average national price topping $4 per gallon this year. Nevertheless, higher gas prices pushing up inflation numbers in an election year can’t be good for President Biden, who is struggling to convince likely voters that the economy is doing well. The Administration doesn’t have many tools to lower gasoline and other energy prices, with the Strategic Petroleum Reserve (SPR) low. Moreover, gasoline and distillate fuel inventories in the United States are below the five-year seasonal averages, leaving prices exposed to upswings if sudden outages occur. Gasoline prices are set to fall ahead of the election, but by then, they may have done the damage of derailing President Biden’s showing of good economic performance coupled with lower consumer prices. Last week, gas prices rose for a second consecutive week. “Much of the seasonal rise that happens this time of year is a culmination of refinery maintenance, the switch to summer gasoline, and rising demand,” said Patrick De Haan, head of petroleum analysis at GasBuddy. The current rise in gas prices is normal for this time of year, but it is still being felt by consumers/voters. U.S. inflation rose by 3.2% over the last 12 months to February, data from the Labor Department showed on Tuesday. The rise in consumer prices was higher than expected, while gasoline and shelter contributed over 60% of the monthly increase in the index for all items. Core inflation – prices less gasoline and food – was 0.4% last month over January, suggesting still sticky inflation in the U.S. that is higher than the Fed would like. At a testimony to Congress last week, Fed chair Jerome Powell said the central bank would begin easing interest rates at some point this year if “the economy evolves broadly as expected.” “But the economic outlook is uncertain, and ongoing progress toward our 2 percent inflation objective is not assured,” Powell noted. Expectations of tighter crude markets in the spring and summer, and a tight global fuel balance amid shipping disruptions and slow new refinery startups could also put upward pressure on the price of diesel, which would lead to an uptick in the price of goods and services, boosting inflation. Gasoline prices may not come to the rescue of President Biden, who doesn’t have much time to convince likely voters that he is doing a good job with the economy. Ahead of Super Tuesday last week, a CBS News/YouGov poll found that 65% of registered U.S. voters rate the economy under President Trump as “good,” compared to 38% of registered voters who think that the economy has been good so far into President Biden’s term in office. Fortunately for President Biden, the election in early November coincides with a seasonal drop in gasoline demand and prices in the autumn.
India achieves 11.6% ethanol blend with petrol in first 4 months of 2023-24
India has achieved an average ethanol blending rate of 11.60 per cent in the first four months of 2023-24 supply year that started from November, against the 15 per cent target set by the government for the whole year. By 2025 supply year, the government has set the target of blending 20 per cent ethanol with petrol. This comes on the back of supplies of 1.8 billion litres of ethanol from both sugarcane-based molasses and also grains from November to February. The government had in December last year banned the use of sugarcane juice and sugar syrup for making ethanol in the 2023-24 supply year. But it has claimed that this ban would not cast a shadow on the blending target. ALSO READ: India’s perpetual sugar glut needs ethanol and export support. Data sourced from private players showed that between November to February, around 57 per cent of the contracted supply of ethanol has been delivered by the sugar mills and distilleries. So, according to industry experts, out of the 8.25 billion litres of ethanol supply tender opened by OMCs, bids equivalent to 5.62 billion litres were received from companies in the first offer (around 69 per cent of the tendered quantity). Of the 5.62 billion litres, around 2.69 billion litres of ethanol was to be supplied by the sugarcane industry, while the balance of 2.92 billion litres was to come from grains. In sugarcane-based molasses, around 1.35 billion litres would have come from sugarcane juice and 1.30 billion litres from B-heavy molasses, while a very small quantity from 0.04 billion litres from C-heavy molasses. Ethanol is produced largely from sugarcane-based molasses or grain-based sources as feedstock in India. In sugarcane, it is either through sugarcane juice or syrup, then B-heavy molasses and C-heavy molasses. There is a different procurement price for ethanol produced from each source.’
US trying to help India get lower prices for Russian oil, Joe Biden envoy says
The United States is trying to help India negotiate lower prices for Russian oil as it deepens sanctions on tankers carrying the petroleum above Western price caps, President Joe Biden’s energy envoy said on Tuesday. Washington imposed sanctions late last month on Russia’s leading tanker group Sovcomflot on the two-year anniversary of Moscow’s full scale invasion of Ukraine. It also designated 14 crude oil tankers as property in which Sovcomflot had an interest. That led to concerns in India of a potential dent in Russian oil sales to India, the biggest buyer of Russian seaborne crude, and that the fresh sanctions could complicate efforts by Indian state refiners to secure annual supply deals, Reuters reported late last month. “At the end of the day, my goal is not to take it off the market, I’m not looking to take these tankers, take the crude, the product, off the market,” Amos Hochstein, Biden’s energy and global infrastructure adviser, told Reuters on the sidelines of a conference. “I’m trying to get the Indians to negotiate better prices by forcing the tankers into a different direction. I think the Indians understand what we’re trying to do,” Hochstein said. Western sanctions on Russia, one of the world’s top energy producers, have shifted global oil markets, forcing the country to ship oil to new customers in India and China and away from traditional consumers in Europe. The sanctions and the $60 per barrel price cap imposed on cargoes of Russian oil that use Western-based maritime services such as insurance, transportation and flagging, have pushed dozens of tankers carrying Russian oil to swap flags from Liberia and the Marshall Islands that have registries based in Virginia, to flags from other countries, including Gabon. The tankers have swapped flags in an effort to avoid sanctions, but they could still be vulnerable to the measures if they carried oil above the price cap with the original flag. The goal of the price cap has been to reduce Russia’s revenues it can spend on the war in Ukraine while keeping oil flowing to global markets.
IEA, OPEC Divergence on Oil Demand Becomes Too Big To Ignore
Ever since the International Energy Agency switched from a pure-play information provider to an advocate of the energy transition, its forecasts about oil demand have shifted to increasingly reflect this advocacy. This has led to a growing divergence between the IEA’s and OPEC’s outlooks on the future of the commodity, increasing the risk of confusion among analysts and investors. The question “Who’s right?” has become a legitimate one. To begin with, it’s worth noting that neither authority is completely impartial. OPEC has a vested interest in stronger global demand, so there may well be an overestimation bias in its outlooks. The IEA, on the other hand, acts like it has a vested interest in the energy transition, which has led it to regularly underestimate oil demand, with its most marked departure from reality to date contained in the original Net Zero Roadmap. The document came out in May 2021. In that report, the IEA said there was no need for new oil and gas exploration as of that year because the energy transition was moving fast enough to make that redundant. But did not take long for the IEA to revise its view. In November of that same year, the agency called for more investment in new oil and gas exploration amid a risk of a supply shortage. Last year, the IEA began the year by forecasting oil demand growth at 1.9 million barrels daily. Over the next 11 months, it kept revising this, to end the year at 2.3 million bpd in global demand growth—a view it held over January this year as well, and a figure very close to OPEC’s forecasts during the year that all saw demand growing by over 2 million barrels daily. Related: Europe’s Secret Weapon In Its Energy War With Russia Reuters this week reported that the divergence between IEA and OPEC demand numbers is the largest in 16 years, based on the analysis of data going back to 2008. This divergence concerns the February oil demand forecasts of the two organizations, and the gap is indeed considerable, at over 1 million bpd. In its February Oil Market Report, the IEA forecast oil demand growth at a modest 1.2 million barrels daily this year, citing a deceleration in demand recovery after the pandemic lockdowns. OPEC, for its part, kept its 2024 oil demand growth forecast unchanged from previous months at 2.2 million bpd. There is also divergence over the longer-term prospects for oil demand, with the IEA last year predicting that it would peak before 2030, along with natural gas demand and coal demand. This prediction seems to have been the last drop for OPEC, which reacted with a sharp warning to the IEA to stop politicizing energy, accusing it of cheerleading for the energy transition and letting this affect the accuracy of its forecasts. “The IEA has a very strong perception that the energy transition will move ahead at a much faster pace,” a former official at the agency told Reuters. “Both agencies have boxed themselves in with a position, which is why they have this enormous gulf in demand forecasts,” Neil Atkinson, former head of the agency’s oil markets division explained. Some form of bias is almost unavoidable when it comes to predicting oil demand, and this is precisely because of the massive push for a transition that has seen a lot of money funneled into climate advocacy organizations that, among their advocacy activity, also deal in forecasting.
Another Russian Refinery Is Ablaze After Ukrainian Drone Attack
A fire erupted at an oil refinery in a region southeast of Moscow following a suspected Ukrainian drone attack in the latest such incident ahead of this weekend’s presidential election in Russia, in which Vladimir Putin is running unopposed and sure to win another six-year term in office. A drone attacked early on Wednesday an oil refinery in the region of Ryazan, whose main city of the same name is some 120 miles southeast of Moscow, the region’s governor Pavel Malkov wrote on the Telegram channel. The attack led to a fire and according to preliminary information, people have been injured, Malkov added. Wednesday’s drone attack is the latest in a series of such incidents since the beginning of the year, and follows several attacks by drones on Tuesday. A Lukoil refinery in western Russia caught fire after a drone attack early on Tuesday local time in what appears to be several coordinated attacks by drones from Ukraine on Russian refinery and fuel facilities. A crude processing unit at the refinery in Nizhny Novgorod is on fire after a drone attack was carried out on Tuesday morning, Gleb Nikitin, governor of Nizhny Novgorod, wrote on his Telegram channel. A few hours earlier, another energy facility in western Russia was also attacked by a drone. A drone attack was launched at a fuel and energy facility in the Oryol region, governor Andrey Klychkov said on Telegram. One of the fuel tanks caught fire as a result of the attack, a representative of the local authorities told Russian news agency TASS. Local officials in the capital city Moscow, as well as in the regions of Kursk, Tula, Voronezh, and Belgorod also reported drone attacks, without giving more details. Lower refining capacity in the second quarter, due to refinery maintenance and emergency repairs following the attacks, could be one of the reasons why Russia said it would focus on cuts to oil production instead of exports in its voluntary supply reduction as part of OPEC+ in the second quarter, analysts say.
US trying to help India get lower prices for Russian oil, Joe Biden envoy says
The United States is trying to help India negotiate lower prices for Russian oil as it deepens sanctions on tankers carrying the petroleum above Western price caps, President Joe Biden’s energy envoy said on Tuesday. Washington imposed sanctions late last month on Russia’s leading tanker group Sovcomflot on the two-year anniversary of Moscow’s full scale invasion of Ukraine. It also designated 14 crude oil tankers as property in which Sovcomflot had an interest. That led to concerns in India of a potential dent in Russian oil sales to India, the biggest buyer of Russian seaborne crude, and that the fresh sanctions could complicate efforts by Indian state refiners to secure annual supply deals, Reuters reported late last month. “At the end of the day, my goal is not to take it off the market, I’m not looking to take these tankers, take the crude, the product, off the market,” Amos Hochstein, Biden’s energy and global infrastructure adviser, told Reuters on the sidelines of a conference. “I’m trying to get the Indians to negotiate better prices by forcing the tankers into a different direction. I think the Indians understand what we’re trying to do,” Hochstein said. Western sanctions on Russia, one of the world’s top energy producers, have shifted global oil markets, forcing the country to ship oil to new customers in India and China and away from traditional consumers in Europe. The sanctions and the $60 per barrel price cap imposed on cargoes of Russian oil that use Western-based maritime services such as insurance, transportation and flagging, have pushed dozens of tankers carrying Russian oil to swap flags from Liberia and the Marshall Islands that have registries based in Virginia, to flags from other countries, including Gabon. The tankers have swapped flags in an effort to avoid sanctions, but they could still be vulnerable to the measures if they carried oil above the price cap with the original flag. The goal of the price cap has been to reduce Russia’s revenues it can spend on the war in Ukraine while keeping oil flowing to global markets.
IEA, OPEC Divergence on Oil Demand Becomes Too Big To Ignore
Ever since the International Energy Agency switched from a pure-play information provider to an advocate of the energy transition, its forecasts about oil demand have shifted to increasingly reflect this advocacy. This has led to a growing divergence between the IEA’s and OPEC’s outlooks on the future of the commodity, increasing the risk of confusion among analysts and investors. The question “Who’s right?” has become a legitimate one. To begin with, it’s worth noting that neither authority is completely impartial. OPEC has a vested interest in stronger global demand, so there may well be an overestimation bias in its outlooks. The IEA, on the other hand, acts like it has a vested interest in the energy transition, which has led it to regularly underestimate oil demand, with its most marked departure from reality to date contained in the original Net Zero Roadmap. The document came out in May 2021. In that report, the IEA said there was no need for new oil and gas exploration as of that year because the energy transition was moving fast enough to make that redundant. But did not take long for the IEA to revise its view. In November of that same year, the agency called for more investment in new oil and gas exploration amid a risk of a supply shortage. Last year, the IEA began the year by forecasting oil demand growth at 1.9 million barrels daily. Over the next 11 months, it kept revising this, to end the year at 2.3 million bpd in global demand growth—a view it held over January this year as well, and a figure very close to OPEC’s forecasts during the year that all saw demand growing by over 2 million barrels daily. Reuters this week reported that the divergence between IEA and OPEC demand numbers is the largest in 16 years, based on the analysis of data going back to 2008. This divergence concerns the February oil demand forecasts of the two organizations, and the gap is indeed considerable, at over 1 million bpd. In its February Oil Market Report, the IEA forecast oil demand growth at a modest 1.2 million barrels daily this year, citing a deceleration in demand recovery after the pandemic lockdowns. OPEC, for its part, kept its 2024 oil demand growth forecast unchanged from previous months at 2.2 million bpd. There is also divergence over the longer-term prospects for oil demand, with the IEA last year predicting that it would peak before 2030, along with natural gas demand and coal demand. This prediction seems to have been the last drop for OPEC, which reacted with a sharp warning to the IEA to stop politicizing energy, accusing it of cheerleading for the energy transition and letting this affect the accuracy of its forecasts. “The IEA has a very strong perception that the energy transition will move ahead at a much faster pace,” a former official at the agency told Reuters. “Both agencies have boxed themselves in with a position, which is why they have this enormous gulf in demand forecasts,” Neil Atkinson, former head of the agency’s oil markets division explained. Some form of bias is almost unavoidable when it comes to predicting oil demand, and this is precisely because of the massive push for a transition that has seen a lot of money funneled into climate advocacy organizations that, among their advocacy activity, also deal in forecasting. In itself, this bias is not a problem as long as the users of that information are aware of it. It becomes a problem, however, when biased forecasts begin to be shared and amplified, painting a distorted picture of, in this case, oil demand growth prospects and affecting investment decisions.
India’s crude imports from Russia up for second straight month in February
India’s crude oil imports from Russia appreciated for the second consecutive month in February hitting 1.54 million barrels per day (mb/d), accounting for around 33 per cent of the cumulative inbound shipments, aided by rising supply of Urals. According to energy intelligence firm Kpler, India’s crude oil imports from Russia rose marginally by 0.7 per cent M-o-M. However, on an annual basis, the shipments fell by more than 16 per cent from 1.84 mb/d clocked in February 2023. Russia’s flagship grade, Urals, which accounts for a major part of oil cargoes from the erstwhile Soviet Union, also rose for the second consecutive month in February. The cargoes rose 12 per cent M-o-M to 1.195 mb/d, but declined by 3 per cent Y-o-Y. Viktor Katona, Kpler’s Lead Crude Analyst, told businessline: “Indian imports of Russian crude came in at 1.54 mb/d in February, some 50,000 barrels per day (kb/d) higher compared to January and marking the second straight M-o-M increase for India’s refiners.” Overall, India’s crude oil imports stood at around 4.7 mb/d in February 2024, against 4.8 mb/d in January 2024 and 4.4 mb/d in December 2023. Urals shipments grow India being by far the largest buyer of Urals globally, the flow of the medium sour grade has been remarkably consistent over the past six months, trending around 1.1-1.2 mb/d, he added. “In February, it (Urals) moved to the upper limit of that range, the highest import figure since October (2023) for Urals,” Katona explained. Shipments from Russia continued via the Red Sea route without any major issues. “The past months’ consistent figure of 1.5 mb/d Indian imports passing through Red Sea remains unchanged, despite widespread Red Sea diversions, supply into India sees no change. All of this is coming from Russia flows that have found a new equilibrium in the 1.5-1.6 mb/d range. Urals deliveries to India are trending sideways around 1.1-1.2 mb/d, minimal change from one month into another,” Katona explained. India also imported 97,229 barrels per day (b/d) of Sokol in February, after the world’s third largest crude oil importer did not procure any cargoes of the light sweet crude grade during December 2023 and January 2024. “When it comes to Sokol, the main point of contention between Indian buyers and Russian sellers lately, there were four delivered Sokol cargoes from Sakhalin totalling 100,000 b/d, however not a single one to the usual buyer, Indian Oil Corporation (IOC). “Hindustan Petroleum Corporation (HPCL) bought three of those, two into Visakhapatnam and one into Mumbai, whilst the remaining one went to Nayara (Energy). Before February, the last Sokol delivery was on November 23, 2023, so there’s a partial recovery in flows after the IOC-Rosneft standoff,” Katona said.
India targets multi-billion-dollar green hydrogen export and import plans
India has targeted a leading role in the green hydrogen market, which could result in exports worth $3-5bn and import substitution worth $7-15bn over the next ten years, according to a report by Alvarez & Marshall. The move is part of the country’s plan to reduce its reliance on imported liquefied natural gas (LNG) and boost domestic GDP growth through sustainable energy sources. “For India, the case to aggressively support green hydrogen is strong,” said the report. “By moving early, we can stake a claim to a larger share of the global energy trade, substitute some of our imports, especially LNG, and spur domestic GDP growth.” “By 2030, this could lead to $3-5bn of exports and $7-15 of import substitution, opening the doors to a much larger opportunity in the decades ahead.” However, India could need to scale up its outlay to $4-12 cumulatively in the run up to 2030, depending on how quickly costs fall. “While this figure is large in absolute terms, it is small in the context of our economy and our oil import bill, which is estimated at a staggering $1-1.4 trillion over the same period.” The global green hydrogen trade is expected to be worth between $24-34bn by 2030, led by export-focused countries equipped with ample supply of renewable resources such as Argentina, Australia and Chile. The report also highlights the focus on green hydrogen imports within the EU as part of its REPowerEU plan, a strategy which targets the import of ten million tonnes of green hydrogen from other countries in 2030. Together with South Korea and Japan, Europe is expected to import 12m tonnes of low-carbon or green hydrogen by 2030. The US and China are expected to have over 14m tonnes of low-carbon and clean hydrogen demand by 2030. However, due to their significant internal demand, neither country is expected to play a major role in the hydrogen export market by 2030. According to the report, the green hydrogen suppliers countries will be key to bridging the supply of gas for importer countries. It suggests that the UAE, India and Saudi Arabia can provide low-carbon hydrogen at the lowest cost and will be competitively placed for supply in Europe, Japan and South Korea