India emerges as top buyer of Venezuelan crude oil in December, January
After a gap of three years India emerged as the top buyer of Venezuelan crude for two consecutive months of December 2023 and January 2024, as per shipping fixtures and ship tracking data. Indian refiners had stopped oil imports from the Latin American country in 2020 after the United States (US) imposed sanctions on Caracas. With Washington temporarily easing restrictions on Venezuela’s oil sector in October 2023, Indian refiners — mainly Reliance Industries (RIL) — are back in the market for Venezuelan oil that is likely available at a discounted price. Crude oil dispatches from Venezuela to India in December were almost 191,600 barrels per day (bpd), while in January, the loadings rose to over 254,000 bpd — nearly half of the Latin American nation’s total oil exports of almost 557,000 bpd for the month, according to data from commodity market analytics firm Kpler. The data shows that Venezuela last dispatched crude oil to the South Asian country in September 2020, with the last of the deliveries at Indian ports in November of that year. India — specifically private sector refiners RIL and Nayara Energy (NEL) — was a regular buyer of Venezuelan crude prior to imposition of US sanctions in 2019. Following the sanctions, oil imports from Venezuela stopped within a few months. As per India’s official trade data, Venezuela was New Delhi’s fifth-largest supplier of oil in 2019, providing close to 16 million tonnes of crude to Indian refiners. In October 2023, the US eased sanctions on Venezuela’s petroleum sector, authorising oil exports without limitation for six months. Venezuela, a member of the Organization of the Petroleum Exporting Countries (OPEC), has the largest proven oil reserves in the world. Petroleum Minister Hardeep Singh Puri has maintained for long that India is willing to buy Venezuelan oil if the economics are favourable. Given the volatility in the oil markets over the past nearly two years, the government has held the view that India will buy cheaper oil from the available sources.
BPCL to set up first-ever green hydrogen plant in an Indian airport
Indian refiner Bharat Petroleum Corp Ltd (BPCL) said on Wednesday it will set up the first-ever green hydrogen plant inside an airport in the country. BPCL said it would build and operate a 1,000-kilowatt green hydrogen plant inside Cochin International Airport, which will contribute land, water and green energy resources. The initial output will be used to power vehicles in the airport, which is in the southern part of the country, BPCL said. Green hydrogen, which is produced from water using renewable energy sources, is recognised as a future fuel and aligns with carbon-neutral strategies. Indian companies are investing billions of dollars to reduce emissions to meet the country’s goal of net zero emissions by 2070. India is also expanding the use of biofuel in its transport sector to achieve this goal. BPCL plans to invest $18.16 billion over the next five years to grow its oil business and expand its renewable energy portfolio as it aims for a 2040 net zero goal.
India’s oil & gas import bill likely to double in 15 years: PPAC
The country’s primary energy demand, which is projected to almost double to 38.5 million barrels of oil equivalent per day (mboe/d) by 2045, will see the growth percentage of renewables being the highest at 11.5%. However, the share of oil- and coal-based power will remain at the top at 30.1% and 33.2%, respectively, as per the report by the Petroleum Planning and Analysis Cell (PPAC). “While demand for all energy sources will increase during this period, oil will account for the largest part of the growth as the country’s demand for oil products will more than double from 5.1 mboe/d in 2022 to 11.6 mboe/d in 2045,” the report said. The country’s oil consumption is likely to jump to 305 million tonne of oil equivalent (Mtoe) in 2030 from 210 Mtoe in 2020, as per S&P Global Commodity Insights. Gas consumption will register a rise to 70 Mtoe in the same period against 53 Mtoe in 2020. As domestic supplies remain limited, the country’s oil imports will exceed 90% of demand by 2030 at 280 Mtoe and gas imports are projected to surpass 60% of supplies at 44 Mtoe, as per the PPAC data. India already spends more than $160 billion of foreign exchange every year on energy imports, according to government statistics. “The import bill is likely to double in the next 15 years without steps to reduce this import dependence. Higher imports will put a further burden on government finances,” the report said. Crude oil and products import bill till December of FY24 stands at $115.69 billion, as per the PPAC data. Moreover, the renewed interest in the country’s exploration and production field from international oil and gas companies is likely to have only a limited impact as these companies are seen reducing their investments in the oil and gas sector while transitioning to green energy. With limited investments and no major discoveries, the oil and gas sector remains under the shadow.
India’s petroleum products demand to increase mid-single-digit percentage in 2023-24: Fitch
India’s demand for petroleum products is likely to increase by a mid-single-digit percentage in the financial year ending March 2024, following a 10 per cent post-pandemic recovery in 2022-23, according to Fitch Ratings. Both petrol and diesel sales recorded robust 4-6 per cent increases in the first nine months of 2023-24, fuelled by heightened economic activities in the agriculture and power sectors, coupled with a surge in holiday travel and auto sales. Fitch said it expects Indian refiners’ gross refining margins (GRM) to moderate during 2024-25 from the strong levels expected in 2023-24, but remain above mid-cycle levels. By 2025-26, it foresees a shift closer to mid-cycle levels, but remaining resilient, bolstered by the escalating demand for end-products. “The gradual normalisation of the crude supply mix away from Russian imports is likely to narrow GRMs, although we expect margins to stay strong, supported by the rising demand for end-products,” the rating agency said. In the upstream segment, domestic oil and gas production has modestly increased, driven by a 5 per cent rise in gas production in the first nine months of 2023-24. “We expect production to continue to rise moderately as technological investments in enhanced oil recovery techniques will offset natural declines,” the rating agency said. Fitch forecasts the oil and gas sector’s high capex intensity to continue in the medium term, particularly with upstream companies investing in production enhancement. In the downstream segment, Hindustan Petroleum Corporation Limited should maintain higher capex due to planned investments by its subsidiary, HPCL Rajasthan Refinery Limited. The capex of other oil marketing companies, including HPCL-Mittal Energy Limited, should be minimal as they have completed their expansion projects, it said. India, the world’s third-biggest oil importer and consumer, is dependent on crude oil from various sources in the global market to meet its domestic demand.
India Calls For $1 Trillion Annual Climate Funding from Developed Economies
Developed economies need to provide at least $1 trillion per year to climate finance for developing countries to meet the national and global climate targets, one of the biggest developing economies and a major carbon polluter, India, said in a proposal to the United Nations. Developed countries have pledged to support developing economies with funding to address climate change and reduce emissions. Developing countries have been arguing for years that they cannot meet climate goals without substantial international mobilization of finance. In addition, the worst effects of climate change are being felt in many developing and very poor countries that don’t have the financial means to recover and build resilience amid extreme weather events and natural disasters. In the submission of the so-called New Collective Quantified Goal (NCQG) to the United Nations Framework Convention on Climate Change (UNFCCC), India wrote this week that “In line with the needs of developing countries, developed countries need to provide at least USD 1 trillion per year, composed primarily of grants and concessional finance.” These goals are expected to be discussed at the next climate summit, COP29, in Azerbaijan in November. At the end of last year, Climate Policy Initiative, an analysis and advisory organization, said in a report that annual climate finance flows exceeded $1 trillion for the first time in 2021, six years after the Paris Agreement was adopted in 2015. However, flows must increase by at least five-fold annually by 2030 to avoid the worst impacts of climate change, according to the organization. Future growth will need to come largely from private sources, while 51% of climate finance still comes from public sources, the report found. Moreover, the geographic distribution of climate finance is also uneven, as the ten countries most affected by climate change between 2000 and 2019 received less than 2% of total climate finance. “While crossing the 1 trillion dollar threshold is undeniably good news, it is important to emphasize that this represents just 1% of global GDP,” said Dr. Barbara Buchner, Global Managing Director at Climate Policy Initiative.
ATGL and INOX Partner for LNG in India
Indian city gas distribution company Adani Total Gas Ltd (ATGL) and INOX India Ltd have signed a mutual support agreement for a liquefied natural gas (LNG) partnership. Under the agreement, the two companies have designated each other “preferred partner” status for the delivery of LNG and liquefied compressed natural gas (LCNG) equipment and services. ATGL and INOX will also explore collaboration opportunities for “strengthening the LNG ecosystem in the country”, they said in a joint news release. ATGL will have certain inherent project level benefits, which include preferential treatment and access to advanced scheduling, and consideration for collaborative opportunities for establishing LNG/LCNG stations, LNG satellite stations, transitioning to LNG as a transport fuel, LNG logistics, as well as developing small-scale liquid hydrogen solutions for the industry, according to the release. The agreement covers the role and obligations of both parties to leverage expertise in developing LNG infrastructure, including small-scale LNG plants, LNG stations, bringing economy of scale for conversion of heavy vehicles to LNG, developing best practices towards HSE, fuel efficiency, high quality conversion, and services. “As our economy prepares to go [into] an overdrive, it is imperative that we also maintain a focus on ensuring that the transition happens in a sustainable manner”, Siddharth Jain, non-executive director for INOX, said. “We are, therefore, excited about our cooperation with ATGL, which would look to strengthen the LNG ecosystem and building and promoting LNG as a transport fuel. Our combined synergies, backed by expertise and scale of both the Parties will truly benefit the stakeholders in the economy in reducing emissions, and make significant contributions towards the green transition”.
India’s Natural Gas Consumption Set To Triple by 2050
India’s industry expansion and rising oil refining to meet higher fuel demand are set to drive a tripling of the country’s natural gas consumption by 2050, the U.S. Energy Information Administration (EIA) said on Wednesday. In 2022, India’s natural gas consumption amounted to 7.0 billion cubic feet per day (Bcf/d), with over 70% of the demand coming from the industrial sector. By 2050, India’s natural gas consumption is set to more than triple to 23.2 Bcf/d, according to EIA’s estimates. Among India’s five consuming sectors, the industrial sector’s share of gas consumption will grow the most, rising to 80% of total consumption, followed by the transportation sector rising to 10%. India’s gas consumption in oil refining is expected to grow significantly to keep up with India’s domestic demand for oil products, the EIA notes. By 2050, gas consumption will surge by more than 250% for the production of basic chemicals and by more than 400% for refining, with the two industries together accounting for about 79% of India’s industrial natural gas demand in 2050. India is boosting its refining capacity. The country should add 1.12 million bpd to its current total each year until 2028, a junior oil minister told India’s parliament at the end of 2023. Total Indian refining capacity is expected to increase by 22% in five years from the current 254 million metric tons per year, which are equal to around 5.8 million bpd, Rameswar Teli said. Per the EIA forecasts, India’s gas demand – buoyed by oil refining and other industrial production – is expected to grow at an annual rate of 4.4% by 2050, more than twice the 2.0% annual growth rate of gas consumption in China, the next-fastest-growing country. India’s economy is growing faster than all other major economies, and so is its demand for energy. All forecasters expect India to replace China as the biggest driver of global oil demand growth in the long term, which should happen before 2030.
Shell Lowers LNG Growth View as Demand Set to Peak in 2040s
Shell Plc said that demand for liquefied natural gas by 2040 will be slightly lower than previously forecast as the world is preparing for life beyond fossil fuels. The LNG market “will continue growing into the 2040s, mostly driven by China’s industrial decarbonisation and strengthening demand in other Asian countries,” Shell’s report said. Shell holds the largest gas liquefaction and marketing portfolio among global energy majors, servicing almost 20% of worldwide demand, according to Bloomberg Intelligence.
As U.S. Pauses New LNG Project Permits, Iran Moves Full Ahead On Its Own
Since Russia invaded Ukraine on 24 February 2022, liquefied natural gas (LNG) has become the world’s key emergency energy supply. It does not require the years of planning and construction as pipelined gas and oil, and it can either be secured readily through long-term contracts or bought immediately in the spot market if necessary and shipped anywhere quickly. As such, it has been ideally suited to make up the vast energy supply gaps created due to sanctions on Russian gas and oil. Despite its extremely elevated geopolitical importance – especially for Europe – the U.S. decided to pause permits for its new LNG projects, as analysed in full recently by OilPrice.com. By notable contrast, whilst simultaneously attempting to widen out the Israel-Hamas War into a new global energy emergency, Iran has decided to go full ahead on building out its own long-nascent LNG industry into a world-scale operation, according to recent comments from Tehran. As mentioned by Iran’s Petroleum Ministry at the end of January, the country intends as part of this new drive towards building up its LNG sector, to begin 1.5 million metric tonnes per year (mtpy) of production at a medium-sized plant at Asaluyeh in 2026. As exclusively related to OilPrice.com by a very senior figure who works closely with the Petroleum Ministry, much bigger plans are afoot much earlier. Iran has long been looking at further monetising its huge gas resources – and securing further geopolitical power – by becoming a top global exporter of LNG, as analysed in depth in my new book on the new global oil market order. Its neighbour, Qatar, with which Iran shares the world’s biggest gas reservoir – the North Field (on the Qatar side)/South Pars (on Iran’s side) side – had carved out a dominant position in the global energy market on the strength of those very gas supplies. In the run-up to, during, and since the invasion of Ukraine by Russia, Qatar has even more substantially leveraged its leading LNG exporter status into significant geopolitical influence, becoming a key supplier of China and of the U.S.’s key NATO security allies in Europe as well. A dramatic expansion of Iran’s gas production from the South Pars field to feed growing LNG production needs could well affect Qatar’s gas take from its North Field side of the entire reservoir over time. One of the reasons why Qatar lifted its self-imposed moratorium on North Field gas production in 2017 were confidential field reports over the previous year from the then-Qatargas detailing how “irresponsible drilling practices” by the Iranians posed risks to the long-term gas take for Qatar from the North Field. Just before the moratorium was lifted, the two sides met in Doha to discuss how they would approach their respective gas production operations so that both sides could maximise their overall gas take over the long-term, according to the Iran source. However, Iran could equally well decide in the current circumstances – in which Qatar is increasingly seen as a key ally of the U.S.’s – to revert to its previous gas production techniques at South Pars in order to disrupt Qatari gas flows. In the ‘zero-sum’ world of LNG exports, decreased supplies of LNG from Qatar to Europe, and increased supplies from Iran to China – inevitably given the all-encompassing ‘Iran-China 25-Year Comprehensive Cooperation Agreement’ analysed in depth as well in my new book on the new global oil market order – would be a major win for Beijing, and for Moscow as well. Although the Asaluyeh LNG project will start with just a 1.5 mtpy plant, the Iran source told OilPrice.com last week that it is to be built on the site of the original much-larger ‘Iran LNG Project’ around Tombak Port, around 30 miles north of Asaluyeh itself, focusing on gas from the North Pars gas field. Located 120 kilometres southeast of the southern Bushehr Province, the North Pars field has around 59 trillion cubic feet of gas in place, with a conservatively estimated recoverable volume of gas of approximately 47 trillion cubic feet. The first deal to operate this field had been approved in 1977 but, after the drilling of 17 wells and the installation of 26 offshore platforms, the development of North Pars was suspended due to the 1979 Islamic Revolution and the subsequent war with Iraq from 1980-1988. However, a study of the state of North Pars by Iran at the end of 2020 determined that the field was still in a highly workable state for a quick push to significant gas output. Specifically, it was established, at least 100 million cubic metres per day (mcm/d) of output could be achieved within less than 12 months of proper development – with all the gas recovered to be channeled into LNG production of at least 20 million mtpy. An early entrant to the original Iran LNG Project was the China National Offshore Oil Corporation (CNOOC), which signed a memorandum of understanding (MoU) in September 2006 with the National Iranian Oil Corporation (NIOC) to develop the North Pars gas field with a view to building out an LNG capability there. This deal was extended in December 2006 to incorporate the development of a four-train (LNG liquefaction and purification facility) complex with a 20 mtpy capacity, before slow progress on CNOOC’s part prompted the NIOC to suspend the deal. At that point, just before the U.S. and European Union (E.U.) ramped up sanctions against Iran in 2011/12, German chemicals giant Linde Group took over the main development of the Iran LNG Project. Within a relatively short time, Linde Group had 60 percent-completed the US$3.3 billion flagship LNG export facility that was set to produce at least 10.5 mtpy of LNG, with expectations that it would take less than a year to finish. Again, though, due to further later sanctions, progress on the Project stalled again. With US sanctions firmly back in place in 2018, Russia’s Gazprom which signed two MoUs with the NIOC concerning the rollout
Tankers Tied to the Russian Oil Trade Grind to a Halt Following US Sanctions
A chunk of the vast fleet of tankers that Russia uses to deliver its crude oil is grinding to a halt under the weight of US sanctions, a sign that tougher measures by western regulators might be starting to have tangible effects on Moscow About half of the 50 tankers that the US Treasury began sanctioning on Oct. 10 have failed to load cargoes since they were listed, according to a ship-by-ship tracking of each one by Bloomberg. The latest to be targeted — the Sovcomflot carrier NS Leader — performed an immediate U-turn off the coast of Portugal on Thursday when its owner was named by the US. It was sailing toward a Russian port in the Baltic Sea at the time. The Group of Seven imposed a $60-a-barrel price cap on crude in December 2022 that was meant to keep Russian oil gushing while at the same time depriving the Kremlin of petrodollars. Caps on refined products were introduced two months later. The system came in for heavy criticism last year as Moscow found workarounds and some western companies continued moving the nation’s oil — something they weren’t supposed to do once the barrels traded above the threshold. But the US responded by intensifying sanctions and investigating potential breaches of the price cap, a step that drove many Greek tanker owners out of the trade. The result has been ballooning freight costs and Russian oil that’s being trading at deeper discounts to international benchmarks, according to organizations including the International Energy Agency. Russian energy minister Alexander Novak said that the country’s barrels are going cheaper. The picture is still fragmented because the US Treasury imposed its sanctions in batches, meaning that some ships might not have gotten to the point of loading cargoes yet anyway. Of the 50 tankers sanctioned since early October, 18 have collected cargoes. Of those, nine were shuttle ships and nine appeared to collect consignments as normal since they were added to the list. One is still carrying a cargo it took on board before it was sanctioned. That leaves 31. Of those, seven had been idled even before sanctions and three may well load soon. That leaves 21 that haven’t loaded cargo since. Sanctioned Ships Eight individual vessels were named between Oct. 10 and Dec. 12. Another 24 tankers were then listed on Dec. 20, when the Treasury took measures against SUN Ship Management D Ltd., a company owned by Russia’s state-controlled shipping company Sovcomflot PJSC. Hennesea Holdings Ltd., a United Arab Emirates-based owner of 18 vessels was added to the sanctions list on Jan. 18. The 50th vessel, the NS Leader, was named on Thursday.