Russia Tries Again to Expand LNG Exports Upended by Sanctions
Russia is taking another crack at expanding exports of liquefied natural gas after US sanctions stalled efforts last year. An LNG vessel has docked at the Arctic LNG 2 export facility for the first time since October, according to ship-tracking data compiled by Bloomberg and satellite images. The facility was supposed to be a cornerstone of Moscow’s goal to increase LNG exports threefold by 2030, but has been idle for months after struggling to find buyers willing to break western restrictions. Russia has the pieces in place to meaningfully boost LNG exports as it expands its shadow fleet. Since the 2022 invasion of Ukraine, Russian gas pipeline exports to Europe have dwindled, and shipping more fuel via seaborne LNG tankers provides an attractive revenue stream to fill Moscow’s coffers. Shadow Fleet At least 13 ships, including those that can navigate icy waters, have been marshaled to potentially service Arctic LNG 2, with some changing management companies several times to help obfuscate the actual owners. According to ship-tracking data compiled by Bloomberg they include: “Russia does have more vessels at its disposal compared to the summer/fall of 2024,” Malte Humpert, founder of the Arctic Institute, a Washington-based think-tank, said in an email. “If it can find buyers, this small fleet should be sufficient to lift cargoes.” Eight shipments were exported from Arctic LNG 2 between August and October 2024, but never docked on foreign shores. Instead, the gas was offloaded into two Russian storage units in the Barents Sea and its Far East region. Large-scale production halted in October after ice built up around the facility and made transport by traditional vessels challenging. Russia’s first domestically built ice-class LNG tanker may come online in the second half of this year if it passes remaining sea trials, Interfax reported Wednesday, citing Sovcomflot Chief Executive Officer Igor Tonkovidov.
Middle East Oil Disruption Risk Plunges to 4%
The risk of crude oil supply disruption in the Middle East has dropped to just 4%, according to options traders, Goldman Sachs said in a new note, after Israel and Iran agreed to a ceasefire earlier in the week. The bank’s analysts reported that options traders now see a 60% chance for Brent crude to average between $60 and $70 over the next three months, with the chance of the benchmark topping $70 per barrel at 28%, Reuters wrote. Among the factors driving these expectations, Goldman listed the absence of any disruption during the latest military action in the Middle East, motivation in the U.S. and China to not let oil go much higher, and the prospect of a build in global oil inventories later in the year. Earlier in the week, Goldman Sachs warned that Brent could surge above $100 per barrel in case Iran blocks the Strait of Hormuz. The investment bank said this price could materialize if oil flows via the vital chokepoint were cut by half for a month and remained 10% lower than normal over the next 11 months. After the initial price shock under Goldman’s scenario, Brent would moderate to $95 per barrel over the final quarter of this year, the bank’s analysts also said on Monday. This was a substantial revision of an earlier forecast for oil prices made by the bank last week. Then, Goldman Sachs estimated a geopolitical premium of approximately $10 per barrel on Brent crude, though it suggested oil could exceed $90 if Iranian supply were disrupted. Now that the risk of such a severe disruption is largely gone, forecasts are once again being revised in a hurry. ING analysts said in a note today that they expected OPEC+ to agree the addition of another 411,000 bpd to combined output at its next meeting on July 6, boosting global supply.
Oil Prices Set For Weekly Loss as War Premium Evaporates
Crude oil prices were set to end the week lower than they started it as Israel and Iran stopped bombing each other, alleviating fears of a supply disruption in the Middle East. At the time of writing, Brent crude was trading at $68 per barrel, with West Texas Intermediate at $65.55 per barrel. That’s down from over $77 for Brent crude and $73 per barrel for WTI at the end of last week. Still, both benchmarks inched higher on Thursday this week, after the U.S. Energy Information Administration reported a draw in both crude oil and fuel inventories, and signs of strengthening demand and a ramp-up in refining activity. “The market is starting to digest the fact that crude oil inventories are very tight all of a sudden,” Phil Flynn, an analyst from Price Futures Group, told Reuters. ING analysts, meanwhile, noted that now that the risk of a Middle Eastern supply disruption was off the table, focus would return to tariffs. The U.S. is due to finalise trade agreements with 10 countries after reaching a deal with China earlier in the month. If the other ten deals are successful, which will likely be the case, the tariff threat will also be removed from the oil market, which may provide a boost for demand and, consequently, prices. A cheaper U.S. dollar should also help. The greenback slumped this week on reports President Trump was going to make his Fed chair pick early. Besides the tariff business, ING also noted OPEC+’s next meeting, due to be held on July 6, which the bank’s analysts expect will result in yet another 411,000-bpd production boost. “These supply hikes should ensure that the oil market moves into a large surplus towards the end of the year. This assumes we don’t see a re-escalation in the Middle East, which would lead to supply losses,” Warren Patterson and Ewa Manthey wrote.
ONGC well in Assam capped after 16 days of gas leakage: Hardeep Singh Puri
Union Minister Hardeep Singh Puri on Friday said ONGC has successfully capped the blowout of its crude oil well in Assam’s Sivasagar district after 16 days of gas leakage from there. He said the capping was done without any injury, casualty or fire. “ONGC has successfully capped the blowout of well RDS#147A at 1115 hours hrs today. This blowout started on 12th June and has been capped successfully within shortest possible time following all the best practices,” Puri said in a post on X. He said the crisis management team of Oil and Natural Gas Corporation (ONGC) along with the international well control experts “finally brought the curtains down on the gas well blowout through meticulous planning and concerted efforts in a safe manner, without any injury, casualty or fire, testifying the competency of crisis management”. The minister for Petroleum and Natural Gas also thanked Assam Chief Minister Himanta Biswa Sarma and state government officials for their support to the team on the ground. The blowout took place on June 12 at Well No RDS 147A of Rig No SKP 135 of Rudrasagar oil field of ONGC at Barichuk in Bhatiapar. A private firm, SK Petro Services, was operating the well on behalf of the state-run Maharatna company.
Domestic natural gas price to hit govt ceiling in July
Domestic natural gas price is set to rise to the government-set ceiling of $6.75 per mmbtu next month, from $6.41 currently, as the rate is linked to crude prices, which surged this month due to the Iran conflict. The Centre revises the Administered Price Mechanism (APM) rate every month based on the average crude price of the preceding month. The price is set at 10% of the price of the Indian crude basket, subject to a ceiling of $6.75 per mmbtu. At June’s average crude price of $70 per barrel, the effective rate for July will be $6.75 per mmbtu. CCrude prices have started softening after a ceasefire between Iran and Israel earlier this week, and are currently hovering around $68 per barrel. If the average slips below $67.50 in July, the APM rate for August could fall below the ceiling. Since the government introduced the new pricing formula in April 2023, linking domestic gas to crude oil, prices have mostly remained at the ceiling – first $6.50, and later $6.75 per mmbtu – except in June, when lower crude prices brought the rate slightly down. Prior to April 2023, there was no ceiling price for natural gas, allowing consumers to benefit from lower prices. Under the new regime, prices have generally been higher, squeezing margins for gas distributors and industrial users, while rewarding gas producers.
Reliance & other Indian private refiners dominate buying of main Russia oil grade
India has taken 80% of Russian seaborne exports of its flagship oil grade so far this year, with the country’s only two private refineries scooping up a growing portion of the cut-price crude. The South Asian nation has bought 231 million barrels of Urals in the year through June 24, according to data analytics provider Kpler. Reliance Industries Ltd. and Nayara Energy Ltd. alone took 45% of Russia’s shipments of the medium-sour variety. India’s increasing dominance as a buyer of Urals — it took 74% of exports of the grade in 2024 — highlights the country’s dependence on Russian energy, as well as its importance as a revenue generator for the Kremlin. Chinese independent refineries, known as teapots, have traditionally been enthusiastic buyers of Russian oil, but they’re getting squeezed by a stricter tax regime and weak local demand this year. The portion of Urals being purchased by the two private Indian refiners has been rising steadily over the last few years, and has jumped sharply so far in 2025. Reliance — which has taken 77 million barrels of the grade this year — is now the world’s single biggest buyer of Urals. The refiner, owned by Indian tycoon Mukesh Ambani, entered into a 10-year agreement with Russia to buy as much as 500,000 barrels a day of oil from January. Urals now makes up 36% of all of Reliance’s crude purchases, up from 10% in 2022, according to Kpler. The grade accounts for a whopping 72% of Nayara’s oil buying, compared with 27% three years ago. India’s major state-owned refiners — Indian Oil Corp., Bharat Petroleum Corp. and Hindustan Petroleum Corp Ltd. — haven’t entered into any term deals with Russia and are more constrained in the currencies they can use to buy their crude.
Shell Addresses BP Merger Speculation
Shell said on Thursday it hasn’t actively considered an offer for BP and has no intention of making such a bid, after a media report earlier this week rekindled speculation about a giant energy tie-up of the two UK-based rivals. On Wednesday, BP shares jumped by nearly 7% before paring the bulk of those gains after The Wall Street Journal reported that Shell is in early-stage discussions to acquire its British rival. Shell on Wednesday dismissed the Journal’s report as “market speculation.” Shell then put out a statement on Thursday, in which it said “In response to recent media speculation Shell wishes to clarify that it has not been actively considering making an offer for BP and confirms it has not made an approach to, and no talks have taken place with, BP with regards to a possible offer.” Under UK market rules, Shell confirmed it has no intention of making an offer for BP and by confirming this, Shell will be bound by the restrictions in the rules not to make an offer for BP in the next six months. “We remain focused on delivering more value with less emissions through performance, discipline and simplification,” Shell said. The supermajor, however, left the door slightly open to an offer in the future if a third party announces a firm intention to make an offer for BP, or “if there has been a material change of circumstances.” BP’s weak first-quarter results and stock underperformance over the past year have rekindled speculation that the UK-based supermajor could be a target of a blockbuster acquisition. Speculation about another oil giant taking over BP is not new—such rumors have been swirling for over a decade, particularly ones suggesting that Shell could be the bidder for a merger with BP. Shell’s CEO Wael Sawan told analysts on the Q1 earnings call last month that “before we ever look at a sizable inorganic, we have to have our own house in order.” “I’ve said in the past we want to be value hunters. Today value hunting, in my view, is buying back more Shell,” Sawan said. Still, market analysts and investment banks have started to run the numbers on how big a Shell-BP oil and gas giant could be.
ONGC deploys 200-ton crane at Assam gas leak site as well capping preparations advance
Oil and Natural Gas Corporation Limited (ONGC) has commissioned a 200-tonne crane with an 80-metre boom at the site of well RDS#147A in Assam’s Rudrasagar field, the company said on Tuesday. “This marks a significant advancement in the preparatory phase leading to the well-capping operation,” a statement issued by ONGC said. The oil major said that it “continues to make measured and strategic progress in the well control operations at RDS#147A, despite persistent rainfall and challenging site conditions.” The crane is now fully operational and is actively supporting critical tasks at the site. Its deployment follows extensive stabilisation work to ensure safe use amid persistent rainfall and challenging ground conditions. “Several site stabilisation and preparatory activities were undertaken to ensure the safe deployment and operation of the heavy-duty crane,” ONGC said. “ONGC teams responded promptly, reinforcing the location to maintain momentum in the ongoing operations,” it added.
Iraq Accelerates This Oil Megaproject To Meet 7 Million Bpd Production Target
Even before the latest potentially game-changing developments began involving its longtime financial, political, and military ally Iran, it was clear that Iraq needed to focus more on the independent development of its own resources — most notably in energy — for its future. In the weeks leading up to the Western-backed Israeli attacks on Iran, the U.S. removed the longstanding waivers that allowed Iraq to keep importing electricity and gas from its neighbour to power 40% of its grid and rolled out new sanctions aimed at cutting Baghdad’s support for Tehran. For years, Iraq has been talking about increasing its oil production to various figures – 6 and bit million barrels per day (bpd), 7 and a bit million, 8 and a bit million– whatever; they have all amounted to nothing. Now though, Baghdad will need to start doing something to achieve these increases. So, can it meaningfully increase its oil production, and will it do so? Theoretically, Iraq has the natural resources to increase its oil production to way above the current average of just over 4 million bpd. Iraq officially holds 145 billion barrels of proved crude oil reserves (nearly 18% of the Middle East’s total, and the fifth biggest on the planet). Unofficially, it likely holds much more oil than this, with the Oil Ministry stating in October 2010 that its undiscovered resources amounted to around 215 billion barrels. This number had independently been arrived at back into 1997 by highly respected oil and gas firm, Petrolog. That said, the figure did not include the parts of northern Iraq in the semi-autonomous region of Kurdistan. With conservative estimates for these included, the International Energy Agency underlined that Iraq’s ultimately recoverable resources totalled about 246 billion barrels of crude and natural gas liquids. Given this, the ‘Integrated National Energy Strategy’ (INES) report of 2012 that was funded and developed by the World Bank, with further assistance from management consultancy firm then-Booz & Company, identified three realistic future oil production scenarios, as analysed in full in my latest book on the new global oil market order. These showed how the country could increase its oil output to either the ‘Low Production’ scenario of 6 million bpd by 2025, the ‘Medium Production’ scenario of 9 million bpd by 2020, or the ‘High Production’ scenario of 13 million bpd by 2017. A combination of indolence on the part of some of those in charge of Iraq’s oil strategy and corruption from others in the corollary political apparatus meant years of little tangible progress being made on any of these scenarios. It also eventually resulted in the withdrawal of many Western firms from Iraq that could effect such significant oil output increases, as repeatedly detailed by OilPrice.com. At that point onwards, it had become increasingly clear that the intention of the Federal Government of Iraq in Baghdad (and its key backers China and Russia) was to push the West out of a unified Iraq, having subsumed the northern semi-autonomous Kurdistan region into the rest of the country. However, given this scenario, the U.S. and its allies have pushed back with the opposite agenda, as also analysed in full in my latest book. To put it plainly: the U.S. and its key allies ultimately want to the northern Kurdistan region of Iraq to terminate all links with Chinese, Russian and Iranian companies connected to the Islamic Revolutionary Guards Corps over the long term. This could then be used as a bridgehead to reassert the West’s influence in the rest of Iraq through big investment deals firstly and then related infrastructure developments. On the other side of the equation, China and Russia have long been behind the idea of rolling the Kurdistan Region into the wider Iraq and keeping the West out forever. As a senior political source in Moscow exclusively told OilPrice.com many months ago: “Iraq will be one unified country and by keeping the West out of energy deals there, the end of Western hegemony in the Middle East will become the decisive chapter in the West’s final demise.” The West’s recent strategic push in this context has seen not just the US$25bn five-oil field development by the U.K.’s BP in the north of the country around the Kurdistan Region announced but also the US$27 billion four-pronged deal by France’s TotalEnergies in the south of the country as well. Several other deals by Western firms are in the making too, all of which are aimed at preventing the final move of Iraq into the China-Russia sphere of influence and eventually reversing it. Indeed, May 19 saw two deals signed by U.S. firms HKN Energy, and WesternZagros, to develop two fields – the Miran gas field and the Topkhana oil and gas field — in the Kurdistan area. U.S. Energy Secretary Chris Wright made it very clear about the deeper intention behind these deals, saying that they align with the administration’s broader strategy of striking commercial deals with allies to counter Iran’s influence. By extension, given the extremely strong links between Tehran and Beijing and Moscow, this also means countering China’s and Russia’s influence across Iraq as well. More recently in this precise regard was the announcement that the Iraqi Drilling Company (IDC) is making steady progress on its project to drill 15 oil wells in the North Rumaila oil field, alongside the U.S.’s Halliburton and the Basra Energy Company, with the latter being wholly owned by BP and also PetroChina, for the time being at least. The entire Rumaila field – split into North and South — lies around 30 kilometres north of Iraq’s southern border with Kuwait and, together with Kirkuk, has produced around 80% cent of Iraq’s cumulative oil production to date. BP has long been in talks with Iraq’s Oil Ministry to push production up to 2.1 million bpd from the current circa-1.2 million bpd which, given the field’s estimated 17 billion barrels in proven reserves, should not be difficult. However, there is a catch – and this
Iran-Israel War Prompts China to Reconsider Russia’s Gas Pipeline Proposal
The war between Israel and Iran has spark worry about energy supply security in Beijing, and a greater interest in the Power of Siberia 2 pipeline—a project proposed by the Russian side, on which the Chinese side has been in no hurry to make a decision. The Wall Street Journal reported the news, citing unnamed sources close to the government in Beijing. The latter has been in two minds about the Power of Siberia 2, first, because it has been hard to agree with the Russian side on things like ownership and pricing and second, because China does not want to become over-reliant on a single source of oil and gas. Now, these concerns appear to have taken the back seat in the face of a fresh dose of Middle Eastern instability and energy supply uncertainty—especially in gas. Almost a third of China’s gas imports come as LNG from Qatar and the United Arab Emirates, the WSJ noted in its report, citing Rystad Energy figures. Russia, in turn, is China’s third-largest supplier of LNG, after Australia and Qatar. But it is China’s biggest pipeline supplier, via the Power of Siberia 1, with flows this year set to reach 38 billion cu m, according to S&P Global. This is the maximum capacity of the Power of Siberia 1, but the POS 2 will have a capacity of 50 billion cu m. This is a lot of gas with no geopolitical risk that could lead to spikes in prices. As for diversification, China also imports quite a lot of natural gas via pipeline from Turkmenistan. Russia also appears set to benefit from the risk to oil supply from the Middle East and more specifically Iran, the WSJ report suggested. China, which is essentially the only buyer of Iranian crude, is now reconsidering this reliance as well, following the latest developments in the Middle East. One way of reducing said reliance is by boosting oil purchases from Russia, according to analysts. Russia currently accounts for some 20% of China’s oil consumption.