Proposed 5% Biogas Blending With Natural Gas Can Cut LNG Imports Worth USD 1.17 Billion: IBA
The proposed 5 per cent blending of biogas with natural gas supplies in the country can cut LNG imports worth USD 1.17 billion annually, says a study by the Indian Biogas Association (IBA). The study comes against the backdrop of the government’s recent mandate to blend one per cent biogas with piped natural gas (PNG) supplies in the country from April 1, 2025 under the compressed biogas blending obligation (CBO) scheme. The biogas blending is proposed to be further increased to 5 per cent by fiscal year 2028–29. According to the study, this blending initiative gels well with the government’s macro-level move to make India a gas-based economy, with a target to increase the current share of gas in the energy mix from 6 per cent currently to 15 per cent by 2030. The IBA estimates show that 5 per cent blending of biogas with natural gas can reduce LNG imports worth USD 1.17 billion. This can also bring down per capita CO2 emissions by two per cent, benchmarked to the 2019 figure, which was 1.9 metric tonne of CO2 per person in India. Additionally, the body says preventing organic waste going to landfills can bring innumerable benefits. The CBO scheme shall encourage investment of around Rs 375 billion and facilitate the establishment of at least 750 compressed bio gas (CBG) projects by 2028–29, as per government estimates. This is going to improve India’s energy security, as it is currently heavily reliant on imported natural gas to meet its energy needs. Blending biogas with PNG and CBG can help reduce this dependence, which is invaluable. Biogas blending has the potential to demonstrate a positive correlation with agricultural income growth too, which is the case with ethanol as well. Every additional large-scale plant can ensure that almost 1,000 acre of nearby biogas plant area can be converted into organic agriculture. Biogas can be produced from various organic waste sources, such as agricultural waste, municipal solid waste, and food waste. his can create new economic opportunities for farmers, waste management companies, and other stakeholders involved in biogas production. Blending of biogas with natural gas will streamline the market for biofuels, making it more investor-friendly by reducing capital and operational costs, the body says. It also needs to be emphasised that selling biofuels in the market will become smoother, and the ecosystem will benefit from increased investor confidence, IBA stated.
Govt’s green hydrogen push to cut fossil fuel imports by INR 1 trillion
The mission aims to reduce dependence on imported fossil fuels and feedstock and create export opportunities for Green Hydrogen and its derivatives to help the world fight climate change. Green Hydrogen is considered a promising alternative for enabling India’s transition to renewable energy and achieving Net Zero emissions by 2070. Hydrogen can be utilized for long-duration storage of renewable energy, replacement of fossil fuels in industry, clean transportation, and potentially also for decentralized power generation, aviation, and marine transport. The Mission outcomes projected by 2030 are: * Development of green hydrogen production capacity of at least 5 MMT (Million Metric Tonne) per annum with an associated renewable energy capacity addition of about 125 GW in the country * Over Rs. 8000 billion in total investments * Creation of more than 0.6 million jobs * Cumulative reduction in fossil fuel imports worth over Rs 1000 billion * Abatement of nearly 50 MMT of annual greenhouse gas emissions At present, India has only two hydrogen refuelling stations – one each at Indian Oil’s R&D Centre, Faridabad, and the National Institute of Solar Energy, Gurugram. NTPC is going to start the operations of India’s first public green hydrogen fuelling station this month in Ladakh, which will be used to supply fuel to five hydrogen fuel cell buses India’s first hydrogen fuel bus was launched in Ladakh in August this year and has been carrying out trial runs in the region. In January 2023, the Union Cabinet approved Rs 197.44 billion for the National Hydrogen Mission. The amount included Rs 174.90 billion for the Sustainable India Green Hydrogen and Technologies (SIGHT) programme, Rs 14.66 billion for pilot projects, Rs 4 billion for research and development, and Rs 3.88 billion for other mission components.
Russia Takes Control of Iraq’s Biggest Oil Discovery for 20 Years
Preliminary estimates suggested that Iraq’s Eridu oil field holds between 7-10 billion barrels of reserves. Senior Russian oil industry sources spoken to exclusively by OilPrice.com last week said the true figure may well be 50 percent more than the higher figure of that band. In either event, the Eridu field – part of Iraq’s Block 10 exploration and development region – is the biggest oil find in Iraq in the last 20 years, and Russia wants to control all of it, alongside its chief geopolitical ally, China. This is in line with Moscow and Beijing’s objective of keeping the West out of energy deals in Iraq to keep Baghdad closer to the new Iran-Saudi axis and to “end [the] Western hegemony in the Middle East [that] will become the decisive chapter in the West’s final demise,” as exclusively related to OilPrice.com. The approval last week by Iraq’s Oil Ministry for Inpex – the major oil company of key U.S. ally Japan – to sell its 40 percent stake in the Block 10 region that contains the huge Eridu discovery leaves the way clear for Lukoil to take total control of the entire oil-rich area. Lukoil had held a 60 percent stake in the entirety of Block 10, with the remainder held by the Japanese firm. However, from March it has been looking for ways to push Inpex out of the Block, and with it the last remnants of Western influence in the area. March saw Iraq’s state-owned Dhi Qar Oil Company (DQOC) formally approve the development of Block 10’s reserves, including for the whole Eridu field. Block 10 lies in the southeast of Iraq, approximately 120 km west of the key oil export route from Basra, and just south of the huge oil fields in and around Nassirya. The contract for Block 10 awarded to Lukoil and Inpex back in 2012 in Iraq’s fourth licensing round gives a relatively high remuneration per barrel rate of US$5.99, although at that point the vast Eridu field had not been discovered. In 2021, after some preliminary testing, Iraq’s Oil Ministry said it expected peak production of at minimum 250,000 barrels per day (bpd) from Eridu by, at that point, 2027. The senior Russian oil industry sources exclusively spoken to by OilPrice.com last week, believe peak production could run at least 100,000 bpd higher than the previous figure, contingent on whether the new reserves estimates are correct, although given delays in development since 2021, the date at which that will be achieved is now toward the end of 2029. Back in 2021 – at least before the U.S. formally withdrew from Iraq by ending its ‘combat mission’ there at the end of December – it was clear that Washington knew what Russia and China were up to long term in the country, and how the U.S. was being manipulated by Iraq. In a moment of insight, the then-U.S. Deputy Assistant Secretary of Defense, Dana Stroul, said: “It’s […] clear that certain countries and partners would want to hedge and test what more they might be able to get from the United States by testing the waters of deeper co-operation with the Chinese or the Russians, particularly in the security and military space.” This view could equally have been aimed, not just at Iraq, but also at most other countries in the Middle East at that time – most notably Saudi Arabia, and the UAE. That said, this profound insight had no effect on Washington at that point, and posed no impediment at all to either Russia or China’s continued drive to entirely push the U.S. out of the Middle East, as analysed in depth in in my new book on the new global oil market order. For Iraq, the endgame has been apparent from Russia’s effective takeover of the oil and gas industry of the country’s troublesome semi-autonomous region of Kurdistan in the north. This occurred in the chaos that followed the brutal put-down of the region after 93 percent of its inhabitants voted for full independence from Iraq in September 2017. Russian control over Iraqi Kurdistan was secured via the state’s corporate proxy, Rosneft, through three means, as also analysed in full in my new book. Subsequent to this, Russia has manipulated the region into such a toxic standoff with the central Iraq government in Baghdad that the final stage of the plan to effectively incorporate the Iraqi Kurdistan region into the rest of Iraq, is now proceeding at full throttle. Given this, Russia and China are now moving to secure their dominance over the rest of Iraq, with the removal of Inpex from the vast Eridu field being only the latest example of their broader strategy at work. Multiple field exploration and development deals, plus countless lower-profile ‘contract-only’ agreements, with Russian and Chinese firms allow the two countries plenty of scope to leverage these out into a harder geopolitical presence across the country, including into the very fabric of its key infrastructure. At a recent Iraq Cabinet meeting, it was agreed that the country should now give its full support to rolling out all aspects of the wide-ranging ‘Iraq-China Framework Agreement’ signed in December 2021, but agreed in principle more than a year before that. This agreement is very similar in scope and scale to the all-encompassing ‘Iran-China 25-Year Comprehensive Cooperation Agreement’, as first revealed anywhere in the world in my 3 September 2019 article on the subject and fully examined in my new book. A key part of both deals is that China has first refusal on all oil, gas, and petrochemicals projects that come up in Iraq for the duration of the deal, and that it is given at least a 30 percent discount on all oil, gas, and petrochemicals it buys. Another key part of the Iraq-China Framework Agreement is that Beijing is allowed to build factories across the country, with a corollary build-out of supportive infrastructure. This includes – importantly for its ‘Belt and Road Initiative’ –
IOC raises Panipat refinery expansion cost by 10 per cent, pushes completion deadline by a year
Indian Oil Corporation (IOC), the nation’s top oil firm, has revised the estimates of cost of expanding the Panipat refinery in Haryana by 10 per cent to Rs 362.25 billion and pushed back completion deadline by more than a year to December 2025. IOC is expanding its 15 million tonnes a year refinery, about 100-km north of New Delhi, to 25 million tonnes. In a stock exchange filing, the firm said its board has approved “revision in cost of the project for capacity expansion of Panipat Refinery from Rs 329.46 billion to Rs 362.25 billion and revision in completion schedule of the project from September 2024 to December 2025.” Besides expanding the capacity to turn crude oil into value-added fuels such as petrol, diesel and ATF, IOC is also setting up a polypropylene unit and a catalytic dewaxing unit. Polypropylene is used in packaging, plastic parts for various industries including the automotive industry, and textiles. Catalytic dewaxing is used in base oil production IOC owns and operates nine of the country’s nearly two-dozen refineries. The total capacity under its operations is 70.1 million tonnes per annum. In its latest annual report, the firm says, “By 2026, our approved projects will significantly increase our crude oil refining capacity from the current 70.05 million tonnes per annum to 87.9 million tonnes.” In August, the company had awarded a contract to McDermott International Ltd to provide a suite of services for further expansions of olefins and polymers production at Panipat refining and chemical complex.
GAIL seeks $1.8 bn from former Gazprom unit
State-owned Gail India on Friday said it has initiated legal proceedings against a former unit of Russian energy giant Gazprom for non-delivery of LNG and has sought USD 1.817 billion in damages. In a stock exchange filing, the gas utility said it has filed an arbitration claim before the London Court of International Arbitration for “non-supply of LNG cargoes under long-term contract.” GAIL in 2012 signed a 20-year deal to buy as much as 2.85 million tonnes per annum of liquefied natural gas (LNG) with Russian energy giant Gazprom. The deal was signed with Gazprom Marketing and Singapore (GMTS), which at the time was a unit of Gazprom Germania, now called Sefe. The Russian parent gave up ownership of Sefe after Western sanctions were imposed on Moscow over its invasion of Ukraine last year. Sefe had stopped supplying LNG to the Indian company in June last year to meet its own demand. GAIL in the filing said it has sued “SEFE Marketing & Trading Singapore Pte Ltd (erstwhile Gazprom Marketing and Trading Singapore Pte Ltd)” and has sought “up to USD 1.817 billion and alternative relief including non-monetary reliefs.” The claim was filed on Friday, the filing added. Originally, GAIL had signed up with the German subsidiary of Gazprom, and a step-down company based in Singapore for sourcing of gas. After the invasion, the German government took over the company and the supplies got hindered as the German government debarred the company from picking up any cargo from Russia. GAIL believes the contract was a portfolio contract and supplies cannot be stopped in anyway. If there were problems in sourcing from Russia, the supplier should have arranged for the cargo from other destinations. Sefe resumed normal supplies in April this year. GAIL signed a 20-year deal with Gazprom Marketing and Singapore (GMTS) in 2012 to buy 2.85 million tonnes per annum of LNG. Supplies started in 2018 and the full volume was to reach in 2023. GMTS had signed the deal on behalf of Gazprom. GMTS was moved to Gazprom Germania, now called Sefe. But in early April last year, Gazprom gave up the ownership of the German unit without giving a reason and placed parts of it under Russian sanctions. This followed the West slapping sanctions on Russia for its February 24 invasion of Ukraine. It invoked force majeure and stopped supplies to India from June 2022.
India, Africa to be major contributors to 112 million barrel/day of peak global crude oil demand in 2030: S&P
The global demand for crude oil is expected to see its peak in 2030 at 112 million barrels a day mark with India and Africa to be major contributors, according to S&P Global Commodity Insights. The current global demand of crude oil is at 103 million barrels per day, Pulkit Agarwal, head of India Content at S&P Global Commodity Insights, said on Thursday. The global demand for crude oil will peak to stay in the range of 112 million barrels a day in 2030 from the present level of 103 million barrels a day, he told PTI at S&P Global Commodity Insights: Media Roundtable Outlook 2024. India and Africa will be the major contributors to the 8.73 per cent increase in demand by 2030 as industrial activities will pick up in the region, Agarwal said. There will be increased use of clean cooking, automotives and setting up of refinernies by various economies, he said. However, the demand for crude oil in India will see its peak in 2040 to reach 7.2 million barrels a day from 5.2 million barrels a day at present, he said. On the price outlook he said, “In our base case, oil prices will likely hover above USD 80/barrel and can inch closer to USD 90/barrel by Q3 2024.” Gauri Jauhar, Executive Director, Energy Transitions & CleanTech Consulting, S&P Global Commodity Insights, said as India grows, it will also transition at a sustainable pace based on an underlying economic transition of mobility, urbanization and a desire for reliability. An energy transition will inevitably be a technology transition to reduce emissions, and the cleaner technology spectrum offers a range of near-term, medium-term and long-term solutions. These cleaner technologies will need financing and policy support, globally and in India, to reach giga scale, she said. Stuti Chawla, Associate Director, India/Middle East Chemicals Pricing, S&P Global Commodity Insights, said India is expected to remain a bright spot in Asia for petrochemical demand in 2024, given its strong economic growth and resilient industrial production. Greater demand, however, is unlikely to bring much relief to domestic producers struggling with pressure on margins, as prices of key bulk chemicals are expected to remain suppressed due to ample supplies and new capacities coming on stream. The market for chemical commodity products in India is expected to grow at around 7 per cent in 2023 and 8 per cent in 2024. The robust demand growth is being driven by a sharp pickup in India’s economic activity after it emerged from COVID-19 lockdowns. Elvis John of S&P Global Commodity Insights said India imposed a slew of restrictions on grains trade in 2023 amid rising domestic prices, fear of El Nino affecting crop production, and ahead of state elections and general elections in 2024. Domestic prices of non-Basmati rice moderated slightly with export curbs in place and arrival of new crop. However, market participants do not see a sharp fall in prices in the short term as they expect the government to be active in procurement ahead of numerous state elections and general election in 2024, he said.
PSUs’ petrol sales up 7.5%, diesel down 7.5% in November
State-run companies’ petrol sales rose 7.5% year-on-year in November while diesel sales fell by an equal percentage point. State companies sold 6% more jet fuel year-on-year in November and 1% less cooking gas, according to the provisional sales data provided by these companies. The oil ministry publishes consolidated sales data for the industry, including for the private retailers, by the tenth of every month, which gives a more accurate picture of the fuel demand in the country. State-run companies control around 90% of petrol pumps in the country but have been losing share in the countrywide sales of diesel and petrol this year after gaining market share last year. This is why their standalone sales growth figures aren’t indicative of overall industry growth. The festive season, which spreads over the last quarter of the calendar year in the country, is usually marked with higher sales of transportation fuels as people travel and shop more than usual, pushing up long-haul transport and factory activity. Record-high vehicle sales have also been boosting fuel demand. Compared to the November of 2019, petrol and diesel sales by state companies are up 25% and 1%, respectively.
India shows some reliance on Venezuelan oil after 3-year hiatus as US sanctions ease
India is set to restart imports of Venezuelan oil after a three-year hiatus, according to brokers and shipping fixtures, as it rushes to take advantage of a US move to ease sanctions on the South American nation. Private refiner Reliance Industries Ltd has booked two supertankers, C. Earnest and C. Genuine, which are scheduled to load crude cargoes from Venezuela between December to early January. Another fixture showed Very Large Crude Carrier Eucaly was also hired to transport Venezuelan crude to India in early December, again for Reliance. Together, the three could hold up to 6 million barrels of crude. A separate Petróleos de Venezuela SA report, however, indicated Eucaly could be sailing to China. India, the world’s third-biggest oil importer, was a major buyer of Venezuelan crude before sanctions were imposed by Washington, forcing its refiners to cede ground to Chinese competitors from 2021. Oil traders have been watching for a resumption of purchases since a temporary rollback of US sanctions on the South American producer’s oil industry in October. A spokesperson at Reliance did not respond to an email seeking comment on the matter. Tankers C. Earnest and C. Genuine are both Liberia-flagged and built in 2022, while Eucaly is older, built in 2005 and carrying a Panama flag, according to data compiled by Bloomberg. Shipbrokers cautioned the final destination could still change. The reappearance of India as a buyer is bad news for Chinese refiners, eager consumers of cheap Venezuelan crude. Discounts offered to China have narrowed over recent weeks, said traders participating in the Chinese crude market, in large part because of India’s return. Private refiners, mostly clustered in China’s northern Shandong province, have been the most resilient customers of Venezuelan oil for the past four years — but they haven’t been active in the market since the second half of October, the traders said, declining to be named as they are not authorized to speak publicly. India imported an average of around 10 million barrels per month from Venezuela before sanctions began, according to data from analytics company Kpler. Reliance purchased a monthly average of five supertankers from the Latin American producer in 2018-2019, Kpler’s crude analyst Viktor Katona said.
Petrol, diesel price revision only when oil price stabilises below USD 80
State-owned fuel marketing companies are likely to revert to daily revision in prices of petrol and diesel only when international oil prices stabilise below USD 80 per barrel on a sustained basis, industry officials said. Three state-owned fuel retailers — Indian Oil Corporation Ltd (IOCL), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) — which control roughly 90 per cent of the market, have kept petrol and diesel prices on freeze for a record 20th month in a row. This is despite the raw material (crude oil) cost surging last year, leading to heavy losses in the first half of 2022-23 fiscal year before easing rates propelled them to profitability. “There is considerable volatility in the international oil market and prices fluctuate wildly,” an official said. “Oil companies can cut prices by Re 1 per litre and everyone will applaud. But when international oil prices go up, will they be allowed to raise rates remains in doubt.” India is the world’s third largest oil consuming and importing nation. It imports more than 85 per cent of its oil needs and hence domestic pricing is linked to international rates. The basket of crude oil that India buys has averaged USD 83.42 per barrel in November, down from USD 90.08 of October and USD 93.54 of September. While at current prices, oil companies are making some money on petrol, diesel — the most consumed fuel accounting for almost 40 per cent of all petroleum products consumed in the country — but it has been in a “touch-and-go” scenario in recent weeks, another official said. “On some days there is profit on diesel but on other days there is loss. There is no consistent trend.” Three retailers had been recouping losses they incurred for holding rates when crude oil prices shot through the roof last year. In May, international oil prices and retail pump rates had come at par, but the subsequent surge widened the gulf between cost and price realised. “For oil companies to revert to daily market based price revision, oil prices will have to come below USD 80 on a sustained basis,” an official said. Petrol and diesel prices have been on a freeze since April 6 last year. Petrol costs Rs 96.72 a litre in the national capital and diesel comes for Rs 89.62 per litre. The three firms made bumper profits in April-September — first half of the current fiscal — but considering the low earnings of last year, they are yet to recoup all losses, officials said. Consider this, IOCL posted a net profit of Rs 26,717.76 crore this year as compared with a full year profit of Rs 8,241.82 crore in 2022-23 (April 2022 to March 2023). In 2021-22 (considered a normal year), the company had posted a profit of Rs 21,762 crore for the full year. Considering that to be a normalised earnings, for two years (2022-23 and 2023-24), it should make about Rs 42,000 crore. In one-and-half years (April 2022 to March 2023 full fiscal and April 2023 to September 2023), the company earned about Rs 35,000 crore. Similar is the situation with BPCL and HPCL. “Not all of the losses have been recouped,” an official explained. “When prices were high in the immediate aftermath of Russia’s invasion of Ukraine, there were huge losses. These losses were trimmed in the second half of 2022-23. In the current year, the losses are being recouped by making profits when oil prices are low.” International oil prices have firmed up since August, leading to margins of three retailers turning negative again. The OMCs’ marketing margins — the difference between their net realised prices and international prices — have already weakened significantly from the high levels seen in the quarter ended June 30, 2023 (Q1 fiscal 2024). Marketing margins on diesel turned negative since August while margins on petrol have narrowed considerably over the same period as international prices increased.
Oil Prices Retreat As OPEC+ Cuts Another 684KBPD, Brazil Joins OPEC+
Oil prices began to retreat on Thursday afternoon as it became clear that OPEC+ members were agreeing to voluntary cuts beginning in the new year, and that those cuts would be announced only by each member country instead of by the group as a whole. OPEC+ announced during the full OPEC+ meeting on Thursday that because all the cuts agreed to today were voluntary, they would be announced not by the group, but by the individual member states. Immediately following the meeting’s kickoff, it was also announced that Brazil would join the OPEC+ group effective in January. Three weeks ago, OPEC’s Secretary General HE Haitham al-Ghais said that the group’s door was open should Brazil wish to join. Brazil has a goal of substantially increasing its crude oil production to become the world’s fourth-largest producer by 2030. In September, Brazil exported $3.92 billion in crude oil, while importing $681 million, according to OEC data. This level of exports is a 13% increase year over year, with China as the primary destination. Brent crude oil prices, which had been trading up around 1.5% during the JMMC meeting, sank to +0.16% on the day in the absence of an announced production strategy from the group’s leadership. WTI slipped into the red with a loss of 3.43% on the day following the full meeting. The specifics of what was agreed to for the first quarter of 2024 among the OPEC+ members: Algeria agreed to cut oil production by another 51,000 bpd Kazakhstan agreed to reduce oil output by an additional 82,000 bpd Saudi Arabia agreed to extend its 1 million bpd output cut Russia’s Deputy Prime Minister Alexander Novak said that it would deepen voluntary oil export cuts by 300,000 bpd, and said it would roll over the existing 500,000 bpd vountary production cuts Oman will cut another 42,000 bpd Iraq will voluntarily cut 211,000 bpd Kuwait will cut 135,000 bpd The UAE will cut 163,000 bpd Angola not only didn’t announce an additional voluntary cut, but it publicly rejected its current quota, and reiterated its proposal for a 1.18 million barrel quota beginning in January. It added that it will not stick to the new OPEC quota. Not including cut extensions from Saudi Arabia and Russia, the additional voluntary cuts beginning in January and carrying through to the end of March is 684,000 bpd. All together, the total voluntary cuts for the first quarter is 2.184 million bpd. The next OPEC+ meeting is scheduled for June 1, 2024.