ONGC eyes crude-to-chemicals projects; fossil fuels priority for next three decades
India’s ONGC Ltd. is actively looking to widen its upstream portfolio, as it believes that oil and gas will be a major component of the country’s energy mix for the next three decades while pursuing new crude-to-chemicals projects to prepare for the changing energy landscape, its chairperson Arun Kumar Singh said at the India Energy Week in Goa. Singh said the Indian government’s move to release no-go areas in the Indian Exclusive Economic Zone for exploration and production operations covering a total area of 1 million sq km offshore areas in west coast, east coast and the Andaman and Nicobar Islands will provide renewed vigor to the country’s exploration vision. “Oil and gas will remain crucial to the Indian economy over the following three decades despite the ongoing transition,” Singh said. ONGC contributes around 74% of India’s crude oil and around 63% of its natural gas production. The company is deepening its technical and operational expertise in deepwater E&P and is increasingly assessing the prospect of high pressure-high temperature and ultra-deepwater plays in India. The company plans to undertake drilling and exploration in about 500,000 sq km area in the next 4-5 years. Threefold exploration strategy “We are focusing on a threefold exploration strategy — revisiting mature basins, solidifying emerging basins, and exploring potential new frontiers. The company is incessantly striving to bring in other non-producing sedimentary basins into the production fold with extensive exploratory efforts in data generation and interpretation,” Singh said. India’s petroleum consumption is growing at a rate higher than the average global growth rate, Singh said. “Energy demand is anticipated to rise even more as India rushes to meet its economic objectives. The key to grow amid a shifting energy landscape is to explore quickly and produce quickly,” Singh added. ONGC aims to achieve 2.2 million boe/d of hydrocarbon output by 2040 — approximately 1.4 million boe/d of domestic production and 800,000 boe/d of production from international operations. Domestic oil and gas output in fiscal year 2022-23 (April-March) was more than 800,000 boe/d, while its output from overseas operations was 195,000 boe/d. According to S&P Global Commodity Insights, ONGC’s upstream spending is growing again after peaking in 2019. Domestically, in 2015-2019, more than 50% of total capital expenditures was directed to exploration drilling and project development. From 2018, the capex growth was driven by a rise in spending of projects, reflecting the start of development of KG-DWN-98/2 deepwater project in the east coast. Since 2018, ONGC’s investment focus has been on the development of KG-DWN-98/2 and maintaining production from major fields such as Mumbai High, Neelam Heera and from Bassein and Satellite assets. In addition, the company is investing in EOR/IOR techniques to enhance production from mature fields, according to S&P Global. Crude-to-chemicals focus Many Indian refiners are looking to expand their petrochemicals footprint to prepare for a scenario in which rising electric vehicles sales takes away a part of the demand for transport fuels. “ONGC is collaborating with other entities to explore opportunities in oil-to-chemicals, refining and petrochemicals,” Singh said. “Growing India needs both conventional energy and renewables. As a national energy company in India, ONGC has to briskly walk both the ways, conventional and renewables.” ONGC is looking to set up two crude-to-chemicals projects in the country — one in the northern region and another in the south. Singh said that global oil demand is currently inflated and not the true reflection of real demand. “We would like to see global crude prices range from $60-$75/b. In 2024, we expect crude prices to range from $70-$80/b,” Singh said. “Global demand is a manufactured demand and it is not the real demand. That is why this shows up in oil prices,” Singh added. Commenting on the turbulence in the Red Sea, Singh said, the oil market has been oversensitive on the issue. Many ships are avoiding the Red Sea and Bab al-Mandab Strait after a spate of attacks by Yemen’s Houthi militants, threatening the strategic chokepoint for global seaborne trade. Many shippers, tanker owners and some oil companies have suspended voyages through the area.
‘World is grateful’: India keeps oil prices cheaper by buying from Russia, Indian oil minister says
India keeps global crude prices affordable by buying oil from Russia, India’s energy minister said. “The world is grateful to India for buying Russian oil. It’s not that they don’t want us to buy Russian oil,” India’s Minister of Petroleum and Natural Gas Hardeep Singh Puri told CNBC’s Sri Jegarajah on the sidelines of the India Energy Week conference in Goa. “If we start buying more of the Middle Eastern oil, the oil price will not be at $75 or $76. It will be $150,” he added. Since Russia’s invasion of Ukraine in February 2022, India’s refiners have been snapping up discounted Russian oil. Moscow has since become India’s leading source of crude oil, accounting for about 36% of the South Asian nation’s crude imports. Consequently, India’s imports of Middle Eastern oil fell to a record low. Oil prices have been under pressure in spite of rising tensions in the Red Sea and fears of a widening conflict in the Middle East. Such uncertainty would typically push energy prices higher but gains have been limited amid record output from the U.S., and an ongoing global economic slowdown. The Indian minister said he was not “unduly worried” about whether there will be a spike in prices as a result of a lack of availability or affordability of the oil. “The fact of the matter is half the work is in recession,” he said, adding that higher oil prices will invariably end up becoming a “self fulfilling prophecy” where higher prices will curtail demand.
HPCL to commission Barmer refinery by January 2025: Co exec S Bharathan
Hindustan Petroleum Corporation Ltd (HPCL) will commission the country’s newest oil refinery at Barmer in Rajasthan by January next year that will help meet rising fuel demand in the north India, a senior company executive said. “The 9 million tonnes a year refinery is 76 per cent mechanically complete and will be completed by year end or so. First product from the refinery will flow in December or January next year,” HPCL director for refineries S Bharathan told reporters on the sidelines of India Energy Week here. The project is part of India’s target of having an installed capacity to turn 450 million tonnes of crude oil into fuels such as petrol and diesel to meet the energy needs of the world’s fastest growing major economy. India’s current refining capacity is a shade under 254 million tonnes. He said the Barmer refinery will operate at 75 per cent to 80 per cent of the capacity in the first year as various units get commissioned. “The full capacity will be reached by 2027.” HPCL currently operates two refineries at Mumbai and Vizag in Andhra Pradesh. It also has a joint venture refinery at Bhatinda in Punjab. The Vizag facility has just been expanded to 15 million tonnes from 8.33 million tonnes previously. The company sells more fuel than it currently produces and the Vizag expansion as well as Barmer refinery will bridge the gap. It controls roughly a fourth of petrol pumps in the country but just 13 per cent of the refining capacity. The Barmer refinery will also have a petrochemical complex, which will be commissioned a little later, he said. The refinery-cum-petrochemical complex is being built by joint venture company HPCL Rajasthan Refinery Ltd (HRRL), where HPCL holds 74 per cent stake and the Rajasthan government the remaining 26 per cent. The project was conceived in 2008 and was initially approved in 2013. It was reconfigured and work commencement was done in 2018. It will produce BS-VI grade petrol and diesel as well as petrochemical products like polypropylene, butadiene, linear low-density polyethylene (LLDPE), high-density polyethylene (HDPE), benzene and toluene and is slated to cater to the increased demand of petroleum and petrochemical products in the northern, western and central parts of India. The refinery-cum-petrochemical complex will cost Rs 72,937 crore.
“Enough oil in the world”: Oil Minister Hardeep Puri says India not concerned about OPEC+’s output cuts
Union Oil Minister Hardeep Singh Puri on Friday stated that India’s stance on OPEC+ production cuts and Saudi Arabia’s decision not to expand output capacity remains firm. “There is enough oil in the world and new suppliers are coming in,” Bloomberg quoted Puri as saying on the sidelines of India Energy Week in Goa. “You decide, you want to sell it or you want to keep it in the ground,” he added. During his address, Puri stressed the necessity of a structured transition to cleaner energy sources while maintaining access to traditional fuels for India. He rejected the demonization of fossil fuels, underlining the significance of affordable energy alongside sustainability goals. Puri highlighted the challenge of ensuring a smooth transition to renewable energy without compromising access to traditional fuel sources, reported ANI, citing to S&P Global Commodity Insights. “The challenge is to make sure transition is done in an orderly manner so that we have access to traditional fuel and making predictable transition to cleaner fuel. Balanced and realistic dialogue is needed and not vilification of fossil fuel,” ANI quoted him as saying, underlining the importance of affordability in India’s energy landscape. The International Energy Agency’s recent report predicts significant expansion in India’s role in global oil markets over the coming decade, driven by economic growth, population dynamics, and demographic shifts. Puri said, “Energy transition is important, but not over affordability. And energy sustainability comes after that,” he added. Puri underscored the importance of recent energy sector reforms in India, which have helped stabilize petrol and diesel prices domestically, even amidst global fluctuations. Leading Indian CEOs echoed Puri’s sentiments, emphasizing the need for a diverse energy mix and public-private partnerships to address India’s future energy needs. Vartika Shukla, Chairperson and Managing Director of Engineers India Ltd., stressed the importance of considering price points and leveraging partnerships to facilitate energy growth. “We need to grow all kinds of energies for the needs of India tomorrow. We need to look at the price point of these energies, where the public private partnership can play a very important role,” said Shukla. Arun Kumar Singh, Chairman of India’s ONGC Ltd., highlighted the necessity of balancing conventional energy with renewables to meet India’s evolving demands. Singh said, “As a national energy company in India, ONGC has to briskly walk both the ways, conventional and renewables.” However, concerns were raised regarding potential policy backlashes and the necessity of continued investment in fossil fuel production. Haitham al-Ghais, Secretary-General of OPEC, emphasized the importance of multiple pathways in energy transition and the continued need for investment in fossil fuels to meet growing demand. Ghais said, “This is how we should look at energy transition. At OPEC we continue to invest, and we need hundreds of billions of investments over the next 20 years. We need to invest as demand is likely to continue to grow.” Similarly, Qatar’s Energy Minister Saad Sherida Al-Kaabi cautioned against dismissing fossil fuels entirely, noting their ongoing importance in meeting global energy needs. Kaabi said, “Renewable sources of energy do not completely solve the global energy needs. “It is not responsible to say we do not use fossil fuel. It is like humanity shooting itself in the foot”. In a different perspective, Vickram Bharrat, Guyana’s Minister of Natural Resources, highlighted the hydrocarbon discoveries offshore Guyana as a pathway to prosperity. Bharrat said, “The new hydrocarbon find offshore Guyana has made the world notice us. Our policy is very simple. Get hydrocarbons out of the ground as fast as possible and use that to build traditional sectors. The window on oil is closing, not so much for gas.” He emphasized the country’s commitment to responsible and sustainable hydrocarbon development, foreseeing significant oil production growth in the coming years. As discussions around energy transition continue, the conference provided a platform for global stakeholders to address the complexities of balancing traditional and renewable energy sources while ensuring affordability, sustainability, and continued investment in the energy sector.
Russian oil: India’s state oil refiners in talks with Rosneft to secure Russian crude for long term
All three of India’s state oil refiners are in talks with Rosneft Oil Co PJSC to secure long-term supplies of Russian crude, an effort to move away from one-off purchases that have left them vulnerable to competition. Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp are in discussions, said people familiar with the matter, but talks have been drawn out as the buyers are seeking clauses to protect them from exits and penalties, should payment issues delay cargoes. In total, Indian refiners want to lock in about 500,000 barrels per day of Russian crude supplies, said the people, who could not be identified as negotiations are private. India, the world’s third-largest crude importer, has long leaned on Middle Eastern nations for its supply of feedstock. The country’s imports from Russia only surged after the invasion of Ukraine in 2022, when New Delhi saw an opportunity to secure cheaper barrels. The flow of Russian oil has dropped off in recent months, though, because of narrowing discounts as well as more frequent payment and other issues, as the US ramps up enforcement of a $60-a-barrel price cap. Aside from India, China is one of the world’s top buyers of Russian crude. The North Asian country was recently quick to pick up extra cargoes of a grade known as Sokol, when India was unable to take delivery of several shipments. Indian Oil signed its first term contract with Rosneft in 2020 as part of the country’s effort to diversify its crude supply. The deal only became economically attractive in 2022, with the two companies agreeing to substantially increase flows in 2023. BPCL and HPCL don’t have existing long-term contracts with Rosneft. This week, the South Asian nation is hosting an annual oil and gas gathering in Goa with a far smaller Russian presence as compared with last year. Rosneft’s Chief Executive Igor Sechin, initially listed on the program line-up as a participant in a panel discussion, was later removed as Moscow sought to keep a low profile. Indian Oil, Bharat Petroleum and Hindustan Petroleum didn’t immediately respond to requests for comment.
IndianOil-Adani Gas JV to invest Rs 2,500 crore to double gas sales
IndianOil-Adani Gas Pvt Ltd will invest 25 billion rupees ($301.24 million) over four years as it looks to double gas sales to small industries and households in India, a company executive said on Friday. The company, an equal joint venture of refiner Indian Oil Corp and Adani Total Gas, daily sells about one million standard cubic metres of gas through its 300 retail outlets, said S.K. Jha, a director in the joint venture. The joint venture aims to double gas sales in four years and strengthen infrastructure to more than 600 retail outlets during the period to meet India’s rising gas demand, Jha added.
India to overtake China as oil demand growth centre in 2027: IEA
India will overtake China as the biggest driver of global oil demand in 2027 as transportation and industry consumption in the world’s fastest-growing major economy will drive growth despite a big push for clean energy and electrification, the International Energy Agency said on February 7. The Paris-based agency, in a special Indian Oil Market Outlook to 2030 report released at the India Energy Week in Goa, said the country’s oil demand will rise from 5.48 million barrels per day in 2023 to 6.64 million bpd in 2030. China currently is the biggest driver of oil demand and India ranks second in growth. The numbers given by IEA in the report seem to talk of crude oil processed into fuel for domestic use as well as for exports. The domestic consumption as per the Oil Ministry data is around 5 million barrels per day (bpd). “India’s oil demand will grow at a rapid pace by 2030 despite accelerated green energy moves,” IEA director of energy markets and security Keisuke Sadamori said. “Growth in India will surpass that of China in 2027.” However, demand in India will still lag China’s even in 2030 in absolute terms. “As oil demand slows in developed countries and China, India becomes the largest source of growth,” said Toril Bosoni, head of oil industry and markets division, IEA. India currently is the third largest consumer of oil behind the US and China. It imports 85% of its oil needs and this dependence is likely to rise as domestic production falls. Diesel, she said, accounts for about 50% of Indian gains and 20% of global demand growth
India to be largest global oil demand growth driver through 2030 -IEA
India is expected to be the largest driver of global oil demand growth between 2023 and 2030, narrowly taking the lead from top importer China, the International Energy Agency (IEA) said on Wednesday. The world’s third-largest oil importer and consumer is on track to post an oil demand increase of almost 1.2 million barrels per day (bpd), accounting for more than one-third of the projected 3.2 million bpd global gains, the IEA said in a report released at the India Energy Week in Goa. The agency forecast India’s demand would reach 6.6 million bpd in 2030, up from 5.5 million bpd in 2023. “India will become the largest source of global oil demand growth between now and 2030, while growth in developed economies and China initially slows and then subsequently goes into reverse in our outlook,” it added. To meet this demand, India is expected to add 1 million bpd of new refining capacity over the seven-year period and this will increase its crude imports further to 5.8 million bpd by 2030, the IEA said. Among products, diesel will be India’s single largest source of oil demand growth on the back of massive industrial expansion, accounting for almost half of the rise in the nation’s demand and more than one-sixth of total global oil demand growth through to 2030, the IEA said. Jet fuel is poised to grow at 5.9% annually on average but this will be from a low base compared with other countries, it added. The electrification of India’s vehicle fleet will lead to a more muted 0.7% annual growth average for gasoline, the IEA said. New electric vehicles and energy efficiency improvements in India will avoid 480,000 bpd of extra oil demand from now to 2030, it added.
India to invest $67 bn in 5-6 years for developing gas sector: PM Modi
Prime Minister Narendra Modi on Tuesday said India will witness a USD 67 billion investment in the natural gas supply chain in 5-6 years as part of “unprecedented” investments flowing into the energy sector to meet the needs of the world’s fastest growing major economy. Speaking at the second edition of the India Energy Week here, he said reforms by his government are leading to a rise in domestic natural gas production as part of the wider aim to increase the share of the fuel in the energy basket to 15 per cent by 2030 from current 6.3 per cent. Natural gas is seen as a transition fuel in India’s march towards net zero carbon emission by 2070. Gas, which is used to generate electricity, make fertiliser or turn into CNG for running automobiles as well as for cooking, is considered less polluting fuel than other fossil fuels such as coal. Modi said India’s world-beating economic growth rate is fuelling a surge in energy needs. “India is the world’s third largest energy, oil and LPG consumer. It is the fourth largest LNG importer and refiner as well as the fourth largest automobile market,” he said, adding the nation’s energy demand is estimated to double by 2045
Mahanagar Gas may raise prices if subsidised supply drops more
India’s city gas distributor Mahanagar Gas said it will consider hiking gas prices for customers if a shortfall in subsidised supply persists, a company executive said. Companies including Indraprastha Gas, Gujarat Gas, Mahanagar Gas have seen their margins squeezed because the allocation of natural gas sold under government-set Administered Pricing Mechanism (APM) has fallen because of lower output at domestic wells. To make up the shortfall, the companies have to buy gas on the more expensive open market. APM allocations are expected to further decline as explorer Oil and Natural Gas Corp slashed its peak output from the KG-D6 basin in January. “In December, we have seen some disruptions in APM gas allocations and eventually as the gas demand increases, the allocations will come down,” said Ashu Shinghal, managing director of Mahanagar Gas. “Right now we are absorbing costs, if APM allocations go down further we will take a call on price hikes,” Shinghal said. Shinghal expects the company’s gas demand to rise by 6% to 7% from a year ago in the fiscal year 2025. Demand from the industrial, commercial sector has been good and Asian liquefied natural gas prices are expected to be stable, Shinghal added.