Govt planning performance review of CGD networks, gas pipelines, petroleum product pipelines
India’s downstream Oil & Gas regulator, Petroleum and Natural Gas Regulatory Board (PNGRB), is planning a thorough performance review of the country’s City Gas Distribution (CGD) networks, natural gas pipelines, and petroleum product pipelines. The idea is to study the natural gas infrastructure from the point of view of demand, supply and gaps in performance, with the larger aim of ramping up the share of natural gas in the country’s energy basket from the 6 per cent currently to 15 per cent. The Petroleum and Natural Gas Regulatory Board (PNGRB) is in the process of appointing an agency to conduct a study focused on the demand, supply, and feasibility of developing the natural gas infrastructure in India. This move comes as part of the government’s broader effort to assess and potentially refine the nation’s energy infrastructure. The designated agency will be responsible for reviewing various CGD networks and pipelines across the country. Engaging with all CGD, NGPL, and PPPL entities will be crucial, with the aim being to gather comprehensive data on natural gas pipelines, petroleum product pipelines, and existing CGD projects throughout India Further, the research will encompass policy, regulatory norms, and macroeconomic trends that influence the energy sector. Policy guidance, business model suggestions for city gas distribution and pipelines, and the creation of frameworks to balance the demand and supply of natural gas in India will also be within the purview of the selected agency. To facilitate this extensive review, the PNGRB has highlighted the need to have two dedicated professionals stationed at their New Delhi office for a span of two years. The Petroleum & Natural Gas Regulatory Board (PNGRB), established under “The Petroleum & Natural Gas Regulatory Board Act, 2006”, serves to regulate refining, processing, storage, transportation, distribution, marketing, and sale of petroleum, petroleum products, and natural gas, barring the production of crude oil and natural gas. Its aim is to protect the interests of consumers and entities involved in specific activities related to petroleum, petroleum products, and natural gas.
U.S. Oil Price Hits Highest Level In 13 Months
The benchmark U.S. oil price rose early on Thursday to the highest level since August 2022, extending Wednesday’s surge as U.S. commercial inventories continue to decline more than expected. WTI Crude prices exceeded $95 per barrel in early Asian trade on Thursday, hitting the highest price level in 13 months. The international benchmark, Brent Crude, also jumped and touched a new high for 2023 after topping $97 per barrel. Despite the continued strengthening of the U.S. dollar, oil rallied on Wednesday and early on Thursday in Asian trade as U.S. crude inventories continued to fall. The Energy Information Administration (EIA) reported on Wednesday a crude oil inventory draw of 2.2 million barrels for the week to September 22, far exceeding expectations of a draw in the low hundreds of thousands of barrels. In addition, the level of stocks at the Cushing hub has fallen to its lowest since July 2022, further boosting the U.S. benchmark oil price. Cushing, Oklahoma, is the delivery point for the NYMEX crude oil futures contract. Crude inventories at Cushing dropped by 943,000 barrels from the prior week to 22 million barrels, which is close to the operational minimum. The low stocks at Cushing and the falling trend in U.S. commercial crude inventories add to tightening supplies elsewhere as the market has started to feel the impact of the OPEC+ production and export cuts. “Stocks are drawing while demand keeps growing. We are still far away from a price level causing demand destruction,” Stefano Grasso, a senior portfolio manager at 8VantEdge in Singapore, told Reuters. On Wednesday, Craig Erlam, senior market analyst at OANDA, commented on oil’s resumed rally, “I think what we’ve seen over the last week or so is a little profit-taking and the fact it’s already on the march higher is potentially a sign of how bullish traders still are.”
Oil prices rise as supply concerns outweigh demand fears
Oil prices rose on Friday as concerns that a Russian ban on fuel exports could tighten global oil supply outweighed fears that further possible U.S. interest rate hikes could dent fuel demand, but they were still headed for a weekly loss in four. Brent futures for climbed 21 cents, or 0.2%, to $93.51 a barrel by 0103 GMT, while U.S. West Texas Intermediate crude (WTI) futures gained 23 cents, or 0.3%, to $89.86. Both benchmarks were on track for a small weekly drop after gaining more than 10% in the previous three weeks amid concerns about tight global supply as the Organization of the Petroleum Exporting Countries and allies (OPEC+) maintain production cuts. “Trading remained choppy amid a tug-of-war between supply fears that were reinforced by a Russian ban on fuel exports and worries over slower demand due to tighter monetary policies in the United States and Europe,” said Toshitaka Tazawa, an analyst at Fujitomi Securities Co Ltd. “Going forward, investors will focus on whether the OPEC+ production cuts are being implemented as promised and whether the rise in interest rates will reduce demand,” he said, predicting WTI to trade in a range of around $90-$95. Russia temporarily banned exports of gasoline and diesel to all countries outside a circle of four ex-Soviet states with immediate effect to stabilise the domestic fuel market, the government said on Thursday. The shortfall, which will force Russia’s fuel buyers to shop elsewhere, caused heating oil futures Hoc1 to rise by nearly 5% on Thursday. The U.S. Federal Reserve on Wednesday maintained interest rates, but stiffened its hawkish stance, projecting a quarter-percentage-point increase to 5.50-5.75% by year-end. That buoyed fears that higher rates could dampen economic growth and fuel demand while boosting the U.S. dollar to its highest since early March, making oil and other commodities more expensive for buyers using other currencies. The Bank of England mirrored the Fed and held interest rates on Thursday after a long run of hikes, but said it was not taking a recent fall in inflation for granted.
India to get its first green hydrogen fuel cell bus
Union Minister of Petroleum and Natural Gas Hardeep Singh Puri is all set to inaugurate India’s first green hydrogen fuel cell bus at Kartavya Path in Delhi on Monday. According to Press Information Bureau (PIB), the initiative is part of Indian Oil’s efforts to conduct operational trials on designated routes in Delhi, Haryana, and Uttar Pradesh with 15 fuel cell buses propelled by green hydrogen. The green hydrogen fuel cell bus will be flagged off at Kartavya Path in the national capital. Green hydrogen at 350 bar pressure will be made available for the first time in India with this project, making it possible to run fuel cell buses. At its research and development campus in Faridabad, Indian Oil has also installed a refueling station that can replenish green hydrogen created by electrolysis using solar PV panels. Fuel cell technology In the world of e-mobility, fuel cell technology is acquiring prominence, with hydrogen serving as a fuel for fuel cells. The electrochemical mechanism in fuel cells converts hydrogen and oxygen into water efficiently, generating electricity. Green Hydrogen, produced through the use of renewable energy, has the potential to play a crucial role in such low-carbon and self-sufficient economic pathwAustin.
How The Transition Push Contributed To Higher Oil Prices
Earlier this week, Morgan Stanley said in a note that all signals for crude all were “flashing tightness”. The investment bank joined a growing number of forecasters expecting Brent crude to top $100 per barrel before the year’s end, again. What all these forecasters have in common is that all of them point out a discrepancy between demand for oil, which has remained strong, and supply, which has become increasingly constrained. At a time when governments in the West are making a huge effort to reduce that demand. And supply, too. For now, they can only claim success in the supply area. And a major contribution to higher prices with that. When President Biden came into office, his first order of business was to effectively ban oil and gas drilling on federal lands. He later revoked his ban as retail fuel prices began climbing and the White House reconsidered its attitude to local supply of hydrocarbons. Not that it helped. Not when the whole energy policy of the administration has been oriented against the oil industry. We see the same situation in Europe, where the push against oil and gas is even stronger, and in other parts of the world, as well. Reuters reported this week, citing Rystad Energy data, that investment in oil and gas on a global scale would only grow moderately this year to $579 billion. That compared to an average annual investment rate of $521 billion for the period between 2015 and 2022, after the 2014 peak, which stood at $887 billion. Also this week, the Energy Information Administration reported that oil production from the U.S. shale patch was set to decline in October from September after the September average was also forecast to be lower than the average for August. In fairness, the EIA has been proven too pessimistic in its forecast by the actual production data, with its forecast production decline for August actually turning out to be a modest monthly increase in production. Yet production did indeed decline this month, albeit still quite modestly. The bigger problem is it did not increase in any meaningful way, contributing to global tightness. Production is not increasing in any meaningful way elsewhere, either, even if we set aside for a moment the Saudi and Russian cut of a combined 1.3 million barrels daily. But demand is still strong, which has led to suggestions from transition campaigners that governments should switch targets and, instead of supply, focus on curbing demand by taxing the use of hydrocarbons. This state of affairs does not bode well for the future energy security of a world that will consume close to 103 million barrels of crude oil every day this year, according to the latest to forecast peak oil demand, the International Energy Agency. The chief executive of Aramco, who has been one of the most vocal critics of the transition push as it is being conducted, recently leveled a new dose of criticism at its planners: “The current transition shortcomings are already causing mass confusion across industries that produce and/or rely on energy. Long-term planners and investors do not know which way to turn,” Nasser said at the World Petroleum Congress in Canada. Exxon’s CEO was more succinct: “If we don’t maintain some level of investment in the industry, you end up running short of supply, which leads to high prices” – a scenario that is currently unfolding in Europe and the United States. The reason there is no sufficient investment, according to the industry, is the uncertainty caused by the transition agenda of the governments where they operate. Indeed, when you have no clarity of the regulations that your government would direct your way as part of its efforts to fight climate change, investment decisions become even harder than usual to make. As the executive chair of Canada’a Cenovus told Reuters, “If you want to add 100,000 barrels a day of production, you’re going to spend billions and billions of dollars. In terms of any real meaningful investment in large projects, that’s probably going to have to wait for some more clarity on the government front.” The situation is even worse for African countries that want to pursue their energy independence by developing their own hydrocarbon resources. Banks and international lenders such as the World Bank and the International Monetary Fund have made it quite clear they would not be lending for oil and gas development. “We are being intimidated into running away from fossil fuel investment,” the secretary general of the African Petroleum Producers’ Organization, Omar Farouk Ibrahim, said as quoted by Reuters. Yet Big Oil is still big enough to be able to put some money into new production without too much worry about the future. TotalEnergies recently said it could commit $9 billion to exploration in Suriname. Shell is drilling in Namibia and making discoveries that will require fresh investments to develop. Whether these new exploration ventures would be enough to make up for lower production in legacy regions is hard to say. Perhaps, if governments really get down to curbing demand, balance could return to oil markets. For a short while. Because people really don’t like to be told how little energy to use.
Everyone wants a pie of India’s largest renewable power producer
French energy giant TotalEnergies SE’s USD 300 million investment in clean energy projects of Adani Green Energy Ltd has taken the total investments poured in by global investors in India’s largest renewable power producer to USD 1.63 billion or about Rs 140 billion, sources close to the company said. Last week, Total announced it will hold a 50 per cent stake in the new joint venture firm where Adani Green Energy Ltd (AGEL) will hold the rest. The joint venture will hold a portfolio of 1,050 MW, including 300 MW of already operational capacity, 500 MW under construction and 250 MW under-development assets with a blend of solar and wind power. Total already has a 19.7 per cent stake in AGEL. It also has an equal joint venture with AGEL, called AGE23L that holds a portfolio of 2,353 MW. The USD 300 million investment Total is making in the joint venture is the first since the Hindenburg report in January highlighted Adani Group’s debt pile and alleged accounting fraud and stock manipulation, which Adani denies. Sources said AGEL is one company within the Adani Portfolio, which has attracted a range of investors over the past few months including repeat strategic investor Total, one of the largest emerging market funds GQG Capital Partners and one of the world’s largest sovereign funds Qatar Investment Authority. Together these three investors have invested USD 1.63 billion or close to Rs 140 billion over the past few months, taking advantage of the attractive valuations post the short-seller report, they said.
Oil prices rise as supply concerns outweigh demand fears
Oil prices rose on Friday as concerns that a Russian ban on fuel exports could tighten global oil supply outweighed fears that further possible U.S. interest rate hikes could dent fuel demand, but they were still headed for a weekly loss in four. Brent futures for climbed 21 cents, or 0.2%, to $93.51 a barrel by 0103 GMT, while U.S. West Texas Intermediate crude (WTI) futures gained 23 cents, or 0.3%, to $89.86. Both benchmarks were on track for a small weekly drop after gaining more than 10% in the previous three weeks amid concerns about tight global supply as the Organization of the Petroleum Exporting Countries and allies (OPEC+) maintain production cuts. “Trading remained choppy amid a tug-of-war between supply fears that were reinforced by a Russian ban on fuel exports and worries over slower demand due to tighter monetary policies in the United States and Europe,” said Toshitaka Tazawa, an analyst at Fujitomi Securities Co Ltd. “Going forward, investors will focus on whether the OPEC+ production cuts are being implemented as promised and whether the rise in interest rates will reduce demand,” he said, predicting WTI to trade in a range of around $90-$95. Russia temporarily banned exports of gasoline and diesel to all countries outside a circle of four ex-Soviet states with immediate effect to stabilise the domestic fuel market, the government said on Thursday. The shortfall, which will force Russia’s fuel buyers to shop elsewhere, caused heating oil futures Hoc1 to rise by nearly 5% on Thursday. The U.S. Federal Reserve on Wednesday maintained interest rates, but stiffened its hawkish stance, projecting a quarter-percentage-point increase to 5.50-5.75% by year-end. That buoyed fears that higher rates could dampen economic growth and fuel demand while boosting the U.S. dollar to its highest since early March, making oil and other commodities more expensive for buyers using other currencies. The Bank of England mirrored the Fed and held interest rates on Thursday after a long run of hikes, but said it was not taking a recent fall in inflation for granted.
India’s LNG imports rose in August
India’s liquefied natural gas (LNG) imports rose in August compared to the same month last year, according to the preliminary data from the oil ministry’s Petroleum Planning and Analysis Cell. The country imported 2.23 billion cubic meters, or about 1.7 million tonnes of LNG, in August, a rise of 10.1 percent compared to the same month in 2022, PPAC said. During April-August, India took 12.21 bcm of LNG, or some 9.3 million tonnes, up by 3.5 percent, PPAC said. India paid $1.3 billion for August LNG imports, down from $1.5 billion last year, while costs dropped from $8 billion in the April-August period last year to $6 billion during the same five months this year, it said. As per India’s natural gas production, it reached 3.16 bcm, up by 9.3 percent compared to the corresponding month of the previous year. During April-August, gas production rose by 3.6 percent to 14.85 bcm, PPAC said. At the moment, India imports LNG via seven facilities with a combined capacity of about 47.7 million tonnes. India’s Adani and France’s TotalEnergies started supplying natural gas in April to the grid from their 5 mtpa Dhamra LNG import facility located in Odisha, on India’s east coast. During April-August, Petronet LNG’s 17.5 mtpa Dahej terminal operated at 93.4 percent capacity, while Shell’s 5 mtpa Hazira terminal operated at 36 percent capacity, PPAC said. The Dhamra LNG terminal operated at 18.9 percent capacity, it said.
Sizzling oil worldwide, rising worries in India
The ghost of rising oil prices is back to haunt the economy. Brent crude oil prices are now hovering around $96 per barrel, up more than 30% since 31 May. The recent upward pressure on oil prices is primarily led by supply-side concerns, with Saudi Arabia and Russia deciding to extend their voluntary output cuts till the end of December. When oil prices rise, India tends to feel the heat as we import most of our oil requirements. Costlier oil pushes up the oil import bill, which ultimately weighs on the country’s current account deficit. But note that other Asian economies are also vulnerable to rising oil prices. “Within Asia, India, Thailand and the Philippines appear more vulnerable to higher oil prices,” said a Nomura Global Markets Research report dated 15 September.
Energy transition in uncharted waters: Panel
Oil India intends to remain focused on oil and natural gas, with the revenue from those sectors supporting the pursuit of other energy sources, Oil India chairman and managing director Ranjit Rath said on a panel today at the conference in Calgary, Alberta. “We would always look for more and more energy,” Rath said. “Biofuel will actually be a major, major game changer as far as the transition is concerned.” Brazil, which is a net exporter of oil but a net importer of fuel, has focused on the development of its biofuel industry, Brazilian oil and gas regulator ANP director general Rodolfo Saboia said. “If you ride a car on ethanol in Brazil, you would have a smaller footprint than riding an electric car which is moved by the energy matrix in Europe,” Saboia said. “This shows how important a role biofuels have to play during the energy transition.” Natural gas will be the fossil fuel of choice in the transition, according to Saboia, as Brazil strives to develop that market. Rath agreed with that assessment. “At the end of the day, you would like to have more natural gas as part of your primary energy basket,” Rath said, even as his company pursues partnerships to develop biofuels, green hydrogen and critical minerals. “So, there will be a strong focus on exploration and production.” Saboia’s organization regulates everything from the well to the retail fuel station and is keeping an eye on what policy-makers might do with the challenges they face. How the transition is managed could be quickly disrupted by technological advances, such as biofuels and synthetic fuels for internal combustion engines, Saboia said. “We are sailing in uncharted waters right now, so to articulate policies that might lead to a reasonable and effective way of addressing the energy transition is not a clear scenario,” said Saboia. “It’s always hazy.” With so many unanswered questions, the role of government and interactions between countries striving to find solutions will be critical, he said