Equinor signs 15-year LNG deal with India’s Deepak Fertilisers
Norway’s Equinor EQNR.OL said on Monday it had signed a 15-year agreement to supply liquefied natural gas (LNG) to Indian fertiliser and petrochemical company Deepak Fertilisers DPFE.NS from 2026. The agreement covers an annual supply of around 0.65 million tons (around 9 terawatt hours) and will be used mainly as a feedstock for production of ammonia at Deepak’s newly commissioned fertilisers and petrochemicals plant, Equinor said. “Deepak’s new ammonia plant has created new gas demand in the growing Indian market,” said Equinor’s head of Gas & Power, Helge Haugane in a statement. The LNG will come from Equinor’s global portfolio which is based on its plant at Melkoeya island just outside the Arctic town of Hammerfest, and supply sourced mainly from the United States, it said.
Fall in energy prices brings down India’s oil, gas import bill despite growth in volumes
India’s net oil and gas imports in value terms for April-January of fiscal year 2023-24 (FY24) declined by nearly a fifth on a year-on-year (YoY) basis to $101.3 billion due to relatively lower prices of crude oil, natural gas, and petroleum products in the international market, as per latest data from India’s Ministry of Petroleum & Natural Gas. This decline in the value of oil and gas imports came despite a rise in import volumes, suggesting that the fall in prices was significant enough to offset the volume growth. In the first 10 months of the previous financial year, 2022-23 (FY23), India’s net oil and gas import bill was $124.8 billion. Oil, natural gas, and refined petroleum products had seen extreme price volatility in the last financial year following Russia’s February 2022 invasion of Ukraine. In the initial few months of FY23, international prices of these commodities were overheated. Their prices in the current financial year have been relatively softer and far less volatile. The average price of the Indian basket of crude for April-January of FY24 was $82.4 per barrel, but in the first 10 months of FY23, it was $96. Oil and gas imports have the highest share in India’s overall merchandise import bill. Petroleum product exports are among India’s top merchandise exports in value terms. According to provisional data from the Petroleum Planning & Analysis Cell (PPAC) of the petroleum ministry, India imported crude oil worth $110.5 billion in April-January of the ongoing fiscal, against $136.2 billion a year ago. However, in volume terms, oil imports for the period were higher by 0.9 per cent at 194.2 million tonnes. Apart from generally lower prices of crude oil globally, India has also benefited from ramping up imports of discounted Russian crude. Although the discounts are not as high as last year, the volume of oil imported from Russia has gone up notably. In April-December of FY23, Moscow had a share of nearly 18 per cent in New Delhi’s overall oil imports (by volume), as per India’s official trade data. In the first nine months of the current fiscal, Russia accounted for a whopping 37 per cent of India’s oil imports. The government has so far not released country-wise trade data for January. As for natural gas, which is imported into India in the liquefied form, import value for the first 10 months of FY24 was $10.9 billion, down over 26 per cent from a year ago. On the other hand, liquefied natural gas (LNG) import volumes for the period were higher by 15.4 per cent at 25,305 million standard cubic metres (mscm). The country’s petroleum product imports in April-January declined almost 15 per cent year-on-year to $19.2 billion, while petroleum product exports were down nearly 20 per cent to $39.2 billion.
GAIL seeks four LNG cargoes for March-October delivery
India’s largest gas distributor GAIL (India) Ltd has issued a tender to buy four cargoes of liquefied natural gas for delivery between March to October, said two industry sources on Monday. The cargoes are sought on a delivered ex-ship (DES) basis to the Dahej and Hazira terminals, with delivery windows of March 1-10 or 26-31, June 4-11, Aug. 21-28 and Oct. 21-30. The tender closes on Feb. 19.
Adani-Total Gas betting big on LNG to fuel growth
With quicker adoption of liquified natural gas (LNG) becoming a centre point in government’s gas policy and to control greenhouse gas (GHG) emissions, leading city gas distributor (CGD) Adani Total Gas Ltd has identified this super-chilled fuel to fuel its growth. Adani Total Gas Ltd (ATGL) is aiming to increase the adoption of LNG as the primary fuel for long-haul commercial vehicles, replacing diesel, through an ecosystem approach, a senior company official said. This includes strategic tie-ups with various stakeholders like auto ancillaries, Original Equipment Manufacturers (OEMs), fleet operators, end-use industry, and retrofitment players to advocate for quicker adoption of the fuel. “The biggest challenge of LNG is distribution. Currently we have only a handful of LNG dispensing stations and hence it is a chicken and egg situation. Fleet operators are unwilling to invest in switching over till the distribution network comes up, and till the demand builds up, oil marketing companies (OMCs) are not expanding the number of LNG outlets. “To address this, we are engaging with all stakeholders in the ecosystem for a quicker adoption of this green fuel,” said Suresh P Manglani, CEO, ATGL. Over the last two months, ATGL has signed MoUs with alternative fuel system manufacturer Shigan, cryogenic liquid storage, distribution and re-gas solutions provider INOX CVA, and Adani Cement, which engages a large number of fleets for logistics. The company said over the coming months, more such partnerships will be stitched up. ATGL, which already has a network of over 500 CNG retail outlets nationwide, plans to set up 50 LNG dispensing stations across national highways over the next couple of years, and is already in the process of setting up five stations in the vicinity of Adani portfolio companies in cement and mining sector to make their logistics greener, he said. The first LNG station is expected to be commissioned at Dahej in Gujarat by the first quarter of the next financial year, he said. Of India’s total diesel consumption of around 80 million tonnes in a year, roughly 50 million tonnes is consumed by the medium and heavy commercial vehicle (M&HCV) segment. Given fuel accounts for the lion’s share – up to 60 per cent – of a truck operator’s cost, LNG offers about a 20 per cent cost advantage over diesel. Additionally, natural gas engines run at lower vibration and do not require diesel exhaust fluid (mandatory for emission control), all of which results in lower overall operating cost. As LNG is stored in high pressure, a specialized cryogenic tank needs to be fitted, which is the single biggest retrofit cost. The company hopes that with increased demand, and an ecosystem approach, retrofit costs will come down in the future. “A fully-loaded truck with a tankful of LNG can cover 600-700 kms, similar to diesel. Hence the ‘range anxiety’ can be overcome by placing filling stations every 400 kms on highways, which is our plan,” Manglani said. A report recently published by the Energy Transition Advisory Committee, formed by the Ministry of Petroleum and Natural Gas, has strongly recommended LNG as a transition fuel for replacing diesel over the next 10 to 15 years. LNG has higher calorific value and burns much cleaner than diesel. Using LNG results in reduction of CO2 emission by 30 per cent, particulate matter (PM) by 80 per cent, and SOx by 100 per cent. “What differentiates us is as a CGD (city gas distribution) entity, we have the required expertise in handling LNG, which has very specialized storage, transportation and dispensing requirements. “And unlike for PNG and CNG, which require us to operate in our license areas only, LNG is license free, which means we can set up dispensing units anywhere we want,” he added.
Iraq follows Russia as second largest oil supplier to India
Data issued by the Indian Ministry of Commerce and Industry revealed that Iraq was the second-largest oil supplier to India, after Russia, in December 2023. According to the figures, the cost of Russian crude oil exported to India decreased to $77.82 per barrel, compared to $79.34 per barrel for oil shipments imported from Iraq. Iraq and Russia are considered the largest suppliers to India, which is the third largest oil-consuming country in the world. Oil refineries in India have been rushing to buy low-priced Russian oil since early 2022, when the invasion of Ukraine caused some buyers to avoid buying Russian oil. Oil shipments exported from Russia have become relatively more expensive since the middle of 2023, trading at levels very similar to shipments exported from Iraq. Oil imported from Saudi Arabia, the third-largest supplier to India, is considered the most expensive among these countries. The average price of crude oil exported from Saudi Arabia reached $87.19 per barrel in December 2023.
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.