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.
India Seeks Stronger Energy Ties With US; Asserts Russian Oil Purchases Stabilize Market
In the midst of geopolitical turbulence sparked by the Ukraine war, India has underscored the importance of its energy partnership with the United States, citing its strategic purchases of Russian oil as a stabilizing force in global crude markets. According to S&P Global Commodity Insights, Assistant Secretary of State for Energy Resources Geoffrey R. Pyatt revealed that discussions between US officials and India’s Petroleum Minister Hardeep Singh Puri highlighted India’s perspective on the matter during a recent online interaction with the media. Pyatt emphasized that India’s significant procurement of Russian oil served the dual purpose of curbing global crude prices and ensuring affordable fuel for its citizens. “On Russian oil, this was a big part of my conversation with Minister Puri. We both agreed – and I said the same thing at much greater length on my visit to India last year. India has played a key role in our effort to stabilize global energy markets in the face of the extraordinary destabilization caused by Vladimir Putin’s brutal invasion of Ukraine and the weaponization of his oil and gas resources,” Pyatt stated, echoing sentiments shared during his previous visit to India.
Supply and Demand Shocks Still Rocking Energy Markets
A year and a half after a renowned Harvard professor described the pandemic of 2020 as “the mother of all shocks” to energy markets, oil and gas prices are still being rocked by supply and demand shocks, with economic growth trends and geopolitical tensions offsetting or exacerbating them. “One reason why oil and gas prices are so volatile is that short-term demand for energy responds much faster to changes in growth than to price changes. So, when there is an energy shock, it can take a huge price change to clear the market,” Kenneth Rogoff, a Professor of Economics at Harvard University and former Chief Economist and Director of Research at the International Monetary Fund (IMF), wrote in an opinion piece in Project Syndicate in July of 2022. The big shock to energy markets that year was the impact of the Russian war in Ukraine on global oil and gas supply and prices. Yet, the pandemic of 2020 was “the mother of all shocks, bringing about the biggest sustained shift in demand since World War II,” Rogoff said. According to the economist, in the longer term, “Giant waves of supply and demand shocks will likely continue to roil energy markets and the global economy.” Shocks are always lurking around the corner in the energy markets. After the big Russian export destination shift, the geopolitical event of 2023 that disrupted flows again was the Hamas-Israel war, which started in the last quarter of the year. The market had just adjusted to Russia’s crude and oil products going to Asia, Africa, and South America instead of to Europe. Now, it’s grappling with trade route changes as tankers carrying oil and LNG have started to avoid the Suez Canal and the Houthi missile attacks in the Red Sea and are opting for two-week-longer routes via the Cape of Good Hope in Africa. These new shocks to global oil and gas markets have been largely offset by constant concerns about the state of the global economy and fears that recession hasn’t been avoided yet. According to Rogoff’s forecast, carried in Project Syndicate last month, 2024 could be a “rocky year for everyone.” The economist believes that the chances of a recession in the U.S. are still “probably around 30%, compared to 15% in normal years.” China still faces “several daunting challenges” to have its economy recover to 5% annual growth, while other emerging markets could be most at risk to withstand a crisis if the global economy falls short of expectations, Rogoff says. In oil markets, on the supply side, OPEC+ continues to cut production and exports in 2024, while non-OPEC+ producers have surprised to the upside with supply growth, offsetting some of the cartel’s cuts. The shock on the natural gas markets from 2022 and early 2023 after the Russian invasion of Ukraine was mitigated by a warmer 2022/2023 winter and industrial slowdown in Europe, as well as high LNG imports and a rush to replenish stockpiles, which were full to the brim ahead of this winter. After the pandemic, economic and geopolitical factors continued to surprise energy markets, leading to high volatility. Crude oil prices, which had tanked in the spring of 2020, surged to above $130 in the wake of the Russian invasion of Ukraine. Natural gas prices hit records in August 2022 when Russia cut off most pipeline gas supply to Europe. Still, shocks such as the Hamas-Israel war that would have pushed prices higher have been offset by continued concerns about the global economy. Demand has been resilient over the past year, but concerns about economies are keeping a lid on oil price spikes from the rising tensions in the Middle East, the world’s most important oil-exporting and oil trade route region. Weak economic data and the ongoing property crisis in China, plus a U.S. economy not out of the woods yet, have also contributed to a muted market reaction to OPEC’s cuts to supply. Following a short-lived spike in oil prices after the Hamas-Israel conflict began in early October, futures have traded in a narrow $75-$80 a barrel range, suggesting that economic and demand reduction shocks could outweigh in the near term supply shocks, unless a wider conflict in the Middle East cuts actual supply to the market.