Oil and Natural Gas Corporation Limited Approves Formation of Wholly Owned Subsidiary for Green Energy and Gas Business
The Board of Directors of Oil and Natural Gas Corporation Ltd. at its meeting held on January 23,2024 has inter-alia, considered and accorded approval for formation of a wholly-owned subsidiary company. The proposed name of the company is “ONGC Green Limited” subject to approval of the Ministry of Corporate Affairs, Govt. of India. The wholly-owned subsidiary company shall be engaged into the business of value-chains of energy business viz. Green Hydrogen, Hydrogen blending, Renewable Energy (Solar, Wind and Hybrid etc.), Bio-fuels/Bio-gas business and LNG.
India starts bidding for Jammu-Srinagar natural gas pipeline
India’s Petroleum and Natural Gas Regulatory Board (PNGRB) has started the bidding process for the 325-km Jammu-Srinagar natural gas pipeline. The pipeline’s initial capacity will be 2 million cu m/day (MMcmd). Bids for construction, operation, and future expansion work are due May 13, 2024. The Jammu-Srinagar pipeline will extend GAIL (India) Ltd.’s 2-MMcmd Gurdaspur-Jammu pipeline. GAIL last year won the license to build the 175-km pipeline linking Punjab with Jammu and Kashmir (OGJ Online, June 23, 2023)
China Takes Advantage of Lower Oil Prices to Build Inventories
China is taking advantage of the slide in oil prices, which began in October, to ramp up its stockpiling of cheaper crude. In December alone, China is estimated to have sharply boosted the volume of crude going to storage for the highest rate of stockpiling in six months, according to estimates by Reuters columnist Clyde Russell. China does not report commercial or strategic inventories, so analysts are trying to estimate the volume of stockpiling by deducting the amount of processed crude from all available crude coming from imports and domestic crude production. Per Russell’s estimates, China added in December the highest flows to storage since June 2023. The rate of stockpiling last month, estimated at around 1.39 million barrels per day (bpd), jumped from an estimated crude inventory build-up of about 20,000 bpd in November. Considering the time lag of around two months between crude purchases and nominations and the arrival of the crude in China, it could be concluded that Chinese refiners have continued to buy more oil when prices were falling. The imports and very low flows to stockpiles in November, for example, were likely the result of lower volumes of crude purchased in September, when oil hit its highest level for 2023 at over $95 per barrel Brent. With the drop in prices in the fourth quarter of 2023, China resumed the higher import levels and higher inventory builds, as evidenced in Russell’s estimates for December. Related: Tadawul Group’s Move Ignites Competition in Commodity Trading via DME Investment In the full-year 2023, flows to Chinese crude inventories are estimated at around 760,000 bpd, up from 740,000 bpd for the previous year. China imported a record-high volume of crude oil last year, beating the previous annual record from 2020, as fuel demand rebounded after the Covid restrictions were abandoned in early 2023. Chinese crude oil imports jumped by 11% year-on-year to 11.28 million bpd in 2023, according to data from the General Administration of Customs. The 2023 crude imports topped the previous record level of 10.81 million bpd from 2020 when China took advantage of the plunging oil prices to import large volumes of cheap crude. China’s crude oil imports in December 2023 alone rebounded from the low levels in November and averaged 11.39 million bpd. That was much higher than 10.33 million bpd of crude imports in November, when Chinese crude oil intake dropped by 9.2% year-over-year, marking the first annual decline in crude arrivals since April 2023. Imports in December accelerated as prices slid, and as a result, the rate of crude stockpiling also accelerated. China’s crude oil purchases and estimated inventory builds had slowed significantly in October and November in response to the 2023-high oil prices hit at the end of September. The high levels of the December stock builds are likely to continue early this year as demand and oversupply concerns keep oil prices below $80 per barrel. With oil prices now down by around 20% from the 2023 high of $98 per barrel, Chinese refiners could have more incentives to import larger volumes of crude at the start of this year, especially at prices around $75 a barrel. China’s refiners are looking to stock up on below-$80 crude early in the year in anticipation of a surge in fuel demand in the second half, analysts and trading sources told Reuters this week. “They snap oil from all over the world, except for the U.S. due to high freight rates,” an oil trader at a Chinese refiner told Reuters. New crude import and fuel export quotas allocated to refiners would also incentivize more crude imports, refinery throughput, and fuel exports to the rest of Asia early this year, analysts say. China has also just allocated a massive batch of crude oil import quotas to refiners, raising the allowances from early last year by around 60% and allocating full-year quotas to some. The early allocation of a large volume of import allowances would help refiners better plan their crude purchases in 2024, according to analysts.
Reliance to commission new energy giga complex this year
Billionaire Mukesh Ambani’s Reliance Industries Ltd will commission a new energy giga complex in Gujarat in the second half of 2024, the company said in an earnings statement and investor call. Reliance is building a giga complex spread over 5,000 acres in Jamnagar in Gujarat. The complex comprises five giga factories for photovoltaic panels, fuel cell system, green hydrogen, energy storage and power electronics.
Russia Tops List of China’s Oil Suppliers in 2023
Russia became China’s largest oil supplier last year, selling it a record 107.02 million tons of crude, according to Chinese customs data, as cited by Reuters. The total amount equaled a daily import rate of 2.14 million barrels, far ahead of Saudi Arabia, whose oil exports to China slipped to a daily average of some 1.7 million barrels last year, the data also showed. In June 2023, Russian exports to China hit an all-time high of 2.57 million barrels daily. The Western sanctions on Russian crude were instrumental in this development. The sanctions—in the form of a price cap on Russian oil shipments abroad—prompted previous buyers to shun Russian oil but China was only too happy to take more in, as was India. The price discount that the sanctions caused was a big reason for that, even though it narrowed with time, as Russian oil prices moved in sync with global prices. The same developments turned China into Russia’s largest oil customer last year. Deputy Prime Minister Alexander Novak said earlier this month that half of Russia’s crude oil exports went to China, which made it the biggest buyer of Russian oil. “The main partners in the current situation are China, whose share has grown to approximately 45-50%, and, of course, India,” Novak said, as quoted by VOA News. “Earlier, there basically were no supplies to India; in two years, the total share of supplies to India has come to 40%.” India was the other country that saw Russia turn into its largest oil supplier last year, while the share of Europe in Russian oil imports dropped from around 45% to about 4-5% as the European Union imposed an embargo on Russian oil and petroleum product purchases in December 2022 and February 2023. Together, China and India took in some 90% of Russia’s oil exports in 2023.
OIL, GMC sign MoU to convert municipal solid waste into CBG
In a move towards environmental sustainability and cleaner energy solutions, Oil India Limited (OIL) and Guwahati Municipal Corporation (GMC) have inked a memorandum of understanding (MoU) on Saturday to collaborate on the transformation of municipal solid waste (MSW) into compressed bio gas (CBG). The MoU has been signed by NRL’s Managing Director Bhaskar Jyoti Phukan representing OIL and GMC’s Commissioner Megha Nidhi Dahal (IAS) representing the Guwahati Municipal Corporation in the presence of OIL’s Chairman & Managing Director (CMD) Dr Ranjit Rath, Director (Operations) Pankaj Goswami and Director (HR) Ashok Das at the NRL Corporate Office, Guwahati.
India defers $602 million plan to fill parts of strategic petroleum reserve
India has deferred a 50-billion-rupee ($601.78 million) plan to fill parts of its strategic petroleum reserve, keeping in mind emerging trends in oil markets, the finance ministry said on Saturday. In the federal budget for 2023-24, the government had outlined a plan to purchase crude oil worth Rs 50 billion for caverns in the southern cities of Mangalore and Visakhapatnam India, the world’s third-biggest oil importer and consumer, imports over 80 per cent of its oil needs and has built strategic storage at three locations in southern India to store over 5 million tonnes of oil to protect against supply disruptions.
Petroleum exports fall in Jan on Red Sea tensions, may see steeper decline
India’s export of petroleum products to Europe has declined substantially in January so far owing to the rising tensions in the Red Sea, dropping to just 100 thousand barrel a day (kbd) from 350-400 thousand barrel a day in November and December. Many tankers have instead opted for the longer route via the Cape of Good Hope for the delivery which has resulted in increased shipping costs. “Even if they export to Europe, Indian refiners prefer circumnavigating Africa,” said Viktor Katona, lead crude analyst at Kpler. “In January so far, there have been three cargoes departing from India to Europe, one diesel seemingly will try the Bab el Mandeb strait, whilst two jet fuel cargoes (Doric Courage from Jamnagar and Pacific Julia from Nayara) have opted for the longer route around the Cape of Good Hope.” India’s export of petroleum products to Europe has declined substantially in January so far owing to the rising tensions in the Red Sea, dropping to just 100 thousand barrel a day (kbd) from 350-400 thousand barrel a day in November and December. Many tankers have instead opted for the longer route via the Cape of Good Hope for the delivery which has resulted in increased shipping costs. “Even if they export to Europe, Indian refiners prefer circumnavigating Africa,” said Viktor Katona, lead crude analyst at Kpler. “In January so far, there have been three cargoes departing from India to Europe, one diesel seemingly will try the Bab el Mandeb strait, whilst two jet fuel cargoes (Doric Courage from Jamnagar and Pacific Julia from Nayara) have opted for the longer route around the Cape of Good Hope.” The escalating threats to cargo vessels at the Red Sea has changed India’s export destinations of petroleum products as the country has started supplying more to East Asia and Africa now compared with its supplies to Europe. As per the Delhi-based Research and Information System for Developing Countries (RIS), India could see a nearly 7% drop in exports in FY24, amounting to around $30 billion as higher container shipping rates might prompt exporters to hold back on shipments, reports have suggested. India exports a variety of goods via the Red Sea including petroleum products. The country’s export of petroleum products fell by 7.5% in November last year to $7.48 billion compared to $8.08 billion in November 2022, as per the latest government data. The exports were 15% down during the first eight months of the current fiscal at $65.23 billion. “For standalone refiners such as RIL, MRPL, and CPCL, there could be some margin hit on the crude side, while on the product side, exports to EU could be impacted,” Madhavi Arora, lead economist with Emkay Global Financial Services Ltd had earlier said in a note. Arora noted that freight rates from Asia have spiked 53% in a month and container shipping giants including oil supermajor BP have halted transit via the Red Sea or the Suez Canal.
India raises windfall tax on crude by Rs 1,000; removes taxes on diesel, ATF
Windfall tax: India has sharply raised the windfall profit tax on crude oil to Rs 2,300 per tonne from Rs 1,300. However, New Delhi removed the tax on diesel and aviation turbine fuel, and it will also continue with no windfall taxes on petrol The windfall tax on diesel, ATF have been removed, as against windfall taxes of 50 paise per litre and one rupee per litre earlier. The new rates are effective from January 2, 2024. On December 18, the tax, levied in the form of Special Additional Excise Duty or SAED, on domestically produced crude oil was cut to Rs 1,300 per tonne from Rs 5,000 a tonne. Further, the SAED on the export of diesel was reduced to 50 paise per litre from Rs 1 a litre. India first imposed windfall profit taxes on July 1, 2022,, joining a growing number of nations that tax supernormal profits of energy companies. At that time, export duties of Rs 6 per litre (USD 12 per barrel) each were levied on petrol and ATF and Rs 13 a litre ($26 a barrel) on diesel. The tax rates are reviewed every fortnight based on average oil prices in the previous two weeks. A windfall tax is levied on domestic crude oil if rates of the global benchmark rise above USD 75 per barrel. Export of diesel, ATF and petrol attract the levy if product cracks (or margins) rise above USD 20 per barrel.
India dials Saudi as Russian oil purchases hit 11-month low in December
India increased imports of Saudi oil in December as payment problems drove its Russian oil buys to an 11-month low, with at least five cargoes of the sweet Sokol variant heading to other locations, data from vessel tracking agencies showed. Indian Oil Corp, which was set to get the Sokol oil, had to withdraw from its inventory and buy from the Middle East to make up the shortfall, sources told Reuters last month. Top refiner IOC is the only state-run firm with an annual deal to buy a variety of Russian grades, including Sokol, from Russian oil major Rosneft. India’s oil imports from Russia in December declined between 16% and 22%, according to Reuters calculation on the basis of data from flow tracking agencies Vortexa, Kpler and LSEG. Its imports of Saudi oil, rose by about 4%, however, data from Kpler and Vortexa showed. LSEG data shows India’s monthly Russian oil imports declining by 22% to 1.21 million barrels per day (bpd) in December, while Kpler shows a drop of 16% to 1.39 million bpd. “Perhaps it’s still too early to write off India’s appetite for the Sakhalin grade (Sokol),” said Viktor Katona, lead crude analyst at Kpler, adding that three new Sokol cargoes on the NS Antarctic, Jaguar and Vostochny Prospect were heading for India. Aframax ships NS Century, NS Commander, Sakhalin Island, Lityny Prospect and Krymsk; and a very large crude carrier Nellis carrying Russian Sokol oil for IOC were sailing for the Strait of Malacca, Kpler and LSEG ship tracking data showed. The NS Century faced sanctions imposed by the United States in November for the sale of Russian oil at a price above the cap of $60 a barrel fixed by the G7 grouping of nations and had been floating near Colombo since. “China appears to be the final solution for some cargoes,” said Katona.