India’s diesel shipments to Singapore reached record highs in August, while those to Europe decreased
Due to lower freight costs and low inventory levels in the Asian oil hub, India’s diesel shipments to Singapore are expected to reach a 19-month high in August and surpass 330,000 metric tonnes, according to traders and experts. On the other hand, while shipments to the east are more profitable, the nation’s petroleum exports to Europe for August are anticipated to drop to their lowest levels this year, according to one ship tracker, although that condition may not persist. As a result of the increase in Indian diesel exports to Singapore, which will partially offset the decline in exports from refiners in northeast Asia, particularly China, the region’s high refining margins will be capped. In contrast, the decrease in imports from the South Asian country will help to strengthen the margins of European refiners. According to shiptracking data from Refinitiv, Vortexa, and Kpler, India is on schedule to send Singapore between 330,000 and 439,000 tonnes of diesel in August. Serena Huang, the head of Asia-Pacific analysis at Vortexa, said that the volume is at its highest level since January 2022. “The seasonal lull in India’s gasoline and diesel domestic demand due to the monsoon has seen the country raising its clean product exports for August to date,” she said, referring to refined products such as diesel, jet fuel, and gasoline. According to statistics from Sparta Commodities, freight rates for the India-Singapore route were around $21 per tonne less expensive than those for the India-northwest Europe route in July, down from $14 per tonne in mid-July, making it more profitable for sellers to transport cargoes east.
PNGRB re-evaluating performance bank guarantee rule
The Petroleum and Natural Gas Regulatory Board (PNGRB) is re-evaluating a rule on performance bank guarantees for city gas companies that has benefited the likes of Adani Gas, Indian Oil and GAIL. The current rule allows the downstream regulator to reduce the performance bank guarantees (PBG) required of city gas licensees to 40% of the initial amount after they have completed their minimum work programme (MWP). Recently, PNGRB allowed a reduction in the PBG by GAIL Gas Ltd and Indian Oil Adani Gas Pvt Ltd after the two entities completed their MWP in their respective licensed areas of Bengaluru and Daman. After having allowed some city gas companies to benefit from this rule, the regulator is now having a rethink as several companies, which have completed MWP, have queued up with their requests for PBG reduction, according to people familiar with the matter. “A differentiated approach is needed,” a source close to PNGRB said. Companies that have submitted high-value performance bonds need some relief as their increased financial cost could escalate cost for gas consumers, he said, adding that the companies that have submitted small amounts of PBG do not have a strong case for relief. “How will PNGRB enforce the licensing rules for the rest of the contract period if their PBG is reduced to a very small amount?” he added.
GAIL eyes stake in US LNG projects
GAIL is scouting for a stake in LNG (liquefied natural gas) projects in the US and long-term supply deals as the state-run utility expects gas transmission volumes to rise on the back of expanding pipeline network. The company also plans to spend Rs 300 billion in the next three years on expanding its pipelines, city gas network and petrochemicals capacity, chairman Sandeep Kumar Gupta told shareholders on Wednesday. GAIL has teamed up with Greenline, a company backed by Essar group’s venture capital arm Exponentia Ventures, which is pioneering use of LNG for fuel line heavy-duty commercial vehicles. The company has issued EoI (expression of interest) for equity in LNG liquefaction terminal along with about a million tonne per annum from the US, Gupta said, adding talks are on with major suppliers for long-term contracts. Simultaneously, GAIL is connecting gas from new fields and upcoming LNG import terminals into its pipeline network.
Vedanta seeks minimum USD 9.5 for Rajasthan gas
Billionaire Anil Agarwal’s Vedanta Ltd is seeking a minimum of USD 9.5 for the natural gas it produces from its Rajasthan block, according to a tender floated by the firm for the sale of the fuel. Vedanta sought bids from users for 0.6 million standard cubic meters per day of gas it plans to produce from the RJ-ON-90/1 block in the Barmer basin of Rajasthan in three months beginning October 1. Gas extracted from below ground is used to produce electricity, make fertilizer, turned into CNG to fire automobiles, or piped to household kitchens for cooking purposes. In the tender, Vedanta asked users to quote a variable ‘P’ that they are willing to pay over and above 14.5 per cent of Brent crude oil price. At the current Brent price of USD 84 per barrel, the base comes at USD 12.18 (14.5 per cent of USD 84). Users have to quote a ‘P’ over and above this price. Gas price will be calculated as lower of Platts LNG WIM (the price of liquefied natural gas delivered on India’s west coast) and 14.50 per cent of Brent Price + P, it said. “Notwithstanding the value calculated (through the formula), the Sales gas price for any month shall not be lower than USD 9.5 per million British thermal unit,” the tender said.
India’s July Russian oil imports dip; Saudi import down to 2-1/2-year low
India’s July crude oil imports from Russia dipped for the first time in nine months, while inbound shipments from Saudi Arabia tumbled to their lowest in 2-1/2 years following OPEC+ cuts, tanker data from trade and industry sources showed. Both China and India, the world’s biggest and third-biggest oil importers, cut imports from Russia and Saudi Arabia in July after prices rose and as the two oil producers reduced output and crude oil shipments. Saudi Arabia volunteered to cut output by another 1 million barrels per day (bpd) from July through September, and Russia will reduce exports in August by 500,000 bpd, part of a deal among members of the Organization of the Petroleum Exporting Countries and its allies, a grouping know as OPEC+, to curb supplies and support prices. India’s overall imports also declined 5.2% from June to 4.4 million bpd oil in July, the data showed, as several refining plants are shut for maintenance during monsoon season. Russian oil imports declined 5.7% to 1.85 million bpd and Saudi shipments fell by 26% to 470,000 bpd, the data showed
Standard Chartered: All-Time-High Demand Will Push Oil To $100
U.S. oil futures slipped below $81/bbl on Tuesday after weak economic data out of China prompted surprise interest rate cuts by the People’s Bank of China. China’s industrial production rose 3.7% in July compared to a year ago, well below the 4.4% increase analysts had predicted while real estate investment in July accelerated to a 8.5%Y/Y decline. Thankfully,oil-specific data came in much more positive, with refiners processing 14.93M bbl/day of crude oil in July, up 31% Y/Y and 40,000 bbl/day higher than the June figure. China worries aside, physical markets continue to show signs of strength, with Asian refineries expected to continue ramping up imports while crude inventories at the Cushing, Oklahoma, hub are expected to drop to their lowest level since April. Supplies have become increasingly tight since late June as Saudi Arabia and Russia cut production. Indeed, the latest energy report by the International Energy Agency (IEA) revealed that global oil demand grew by 3.26 million barrels per day in Q2, reaching an all-time high of 103 mb/d. The IEA estimates that the call on OPEC and inventories will be 30 mb/d in Q3 and 29.8 mb/d, which implies inventory draws of over 2mb/d in both quarters at current OPEC output levels; the IEA assessed OPEC output at 27.86 mb/d in July. The call on OPEC is a measure of the “excess demand” that OPEC countries face, and equals the global oil demand minus both the crude oil production by non-OPEC countries and the production by OPEC countries which are not subject to quota agreements. Brent to Rally Past $100/bbl In Q4 Commodity analysts at Standard Chartered have buttressed that view saying their projections also imply large inventory draws peaking at 2.9 mb/d in August. However, their timing for when demand will hit a new high is a couple of months later than the IEA’s. StanChart estimates that June demand was about 0.5 mb/d below August 2019’s all-time high, but expects the record will be exceeded in the current month. According to the analysts, highly effective producer output restraint, led by Saudi Arabia, will create the conditions for a price rally that will take Brent prices above this year’s high at $89.09/bbl onto their Q4-average forecast at $93/bbl, with a likely intra-quarter high above $100/bbl. Related: Kurdistan Oilfield Restarted Despite Ongoing Export Halt Last month, the Energy Information Administration (EIA) forecast total U.S. output will hit 12.61M bbl/day in the current year, eclipsing the previous record of 12.32M bbl/day set in 2019’s and easily beating last year’s 11.89M bbl/day. U.S. crude oil output is up 9% Y/Y, which under normal circumstances would blunt OPEC’s efforts to keep supplies low in a bid to goose prices. There is little doubt the U.S. Shale Patch is largely responsible for keeping oil markets well supplied and oil prices low: Rystad Energy has estimated that whereas OPEC and its allies have announced cuts amounting to ~6% of 2022’s production, non-OPEC supply has made up for two-thirds of those cuts, with the U.S. accounting for half of that. Thankfully, U.S. output is unlikely to go high enough to put significant pressure on international prices. StanChart says the sharp tightening shown in most H2 balances is starting to spill-over into physical markets, and oil prices appear to be well supported to overcome the negative news coming from China. Meanwhile, the European gas market remains highly volatile. Reports of potential strike action at Australian liquefied natural gas (LNG) facilities about a week ago caused Dutch Title Transfer Facility (TTF) prices to spike 40% higher, peaking at EUR 43.545 per megawatt hour (MW/h). Whereas most of the upward move was swiftly reversed, front-month TTF still managed to settle at EUR 34.434/MWh on 14 August, a w/w gain of 13%. TTF prices have now risen 21.4% over the past two weeks despite increasingly bearish inventory dynamics. According to Gas Infrastructure Europe (GIE) data, EU gas inventories stood at 103.84 billion cubic meters (bcm) on 13 August, up 19.25 bcmY/Y and 17.86bcm above the five-year average. Europea’s gas stores are now 89.5% full, a level they took 57 more days to reach last year. The pace of refill continues being torrid, with the build over the past week clocking in at 2.56 bcm, the fastest in any seven-day period since late-May. EU gas inventories are currently just 5.59 bcm below last year’s high; a mere 8.64bcm below the all-time high and just 12.25bcm below the GIE estimate of full capacity. It will be interesting to see how the markets react when Europe’s gas stores are finally full.
The Impact Of Looming Strikes At Australian LNG Facilities Should Be Limited
A prolonged stoppage is the least likely scenario of potential strikes at Australian LNG facilities accounting for 10% of global supply, according to Reuters’ Asia commodities and energy columnist, Clyde Russell. This weekend, members of the union Offshore Alliance unanimously endorsed giving Woodside seven working days’ notice of Protected Industrial Action if the workers’ bargaining claims for the Woodside Platforms are not resolved by Wednesday, August 23. On Sunday, the unions at Woodside’s North West Shelf offshore gas platforms said they could go on strike as early as on September 2 if their demands are not met. Woodside’s talks with its LNG workers have so far failed to produce an outcome that would avert a strike at the country’s largest LNG facility, the North West Shelf. There, 99% of workers voted in favor of industrial action. Australia’s labor regulator earlier this month gave the go-ahead to industrial action at Woodside and Chevron LNG facilities, in case the workers’ votes are in favor of it. Natural gas prices in Europe and in Asia spiked when the news of the potential strikes broke. They have since retreated but if actual strikes begin, they would affect a tenth of the world’s supply of liquefied natural gas and another spike could follow. Woodside’s North West Shelf is the largest LNG production project in Australia, with a capacity of 16.9 million tons annually, followed by Chevron’s Gorgon, which has a capacity of 15.6 million tons. Wheatstone, also operated by Chevron, can produce 8.9 million tons of LNG annually. Together, the three produce about 40 million tons of LNG per year. Because of that substantial capacity, disruption at the three facilities would send ripples across the global gas market, sending prices higher and once again pricing poorer buyers out of the market. In addition, the pre-winter seasonal rally of LNG tanker charter prices has started earlier than in previous years amid expectations of high demand for the winter and uncertainties over the potential strike in Australia.
Green Hydrogen standards: India says H2 produced using RE will be classified as ‘green’
India joined the select league of countries of the world on Saturday as it notified its own standards for hydrogen to be classified as ‘Green Hydrogen.’ According to an official order dated August 18, the Ministry of New and Renewable Energy (MNRE) outlined the emission thresholds that must be met in order for hydrogen produced to be classified as ‘Green’, ie, from renewable sources. The scope of the definition encompasses both electrolysis-based and biomass-based hydrogen production methods. According to the notification, India will classify Hydrogen as ‘Green’ if it is produced using Renewable Energy (RE) through methods like, but not limited to, electrolysis and biomass conversion. Renewable Energy will also include electricity generated from renewable sources which is stored in an energy storage system or banked with the grid. After discussions with multiple stakeholders, the Ministry of New and Renewable Energy has decided to define Green Hydrogen as having a well-to-gate emission (ie, including water treatment, electrolysis, gas purification, drying and compression of hydrogen) of not more than 2 kg CO2 equivalent per kg of Hydrogen (H2) taken as an average over the last 12-month period.
Nigeria Has Lost $46 Billion Worth Of Crude Oil To Theft
In the decade to 2020, Nigeria lost to oil theft more than 619.7 million barrels of crude oil valued at $46.16 billion, representatives for the Nigeria Extractive Industries Transparency Initiative (NEITI) said at a forum this week. During the period 2009 to 2020, Nigeria’s losses to oil theft averaged 140,000 barrels per day (bpd) valued at $10.7 million daily, the organization said, as quoted by local outlet Leadership. NEITI has compiled reports to establish how much oil, gas, and mining companies paid to the country and how much of those revenues were actually received by the government. More recently, Nigeria plans to hold an international roadshow to attract investments in its upstream sector, the petroleum regulator of OPEC’s biggest African oil producer said in a speech shared with Reuters this week. The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) plans to organize in the coming weeks an international roadshow to pitch upstream investments in the country, which looks to boost its oil production and significantly raise its natural gas output. “Whereas the global imperatives for energy transition is clear and justified, the need for Africa’s energy security, economic development and prosperity cannot be overemphasised,” the Nigerian regulator said. Nigeria aims to significantly increase its oil production to up to 1.7 million bpd by November 2023, hoping to win a higher quota in the OPEC+ agreement, Gabriel Tanimu Aduda, Permanent Secretary at Nigeria’s Ministry of Petroleum Resources, told Energy Intelligence last month Nigeria has consistently failed to produce to its quota in the OPEC+ agreement. The combination of pipeline vandalism and oil theft with a lack of investment in capacity has made Nigeria the biggest laggard in crude oil production in the OPEC+ alliance. Oil theft and pipeline vandalism have long plagued Nigeria’s upstream oil and gas industry, driving majors out of the country and often resulting in force majeure at the key crude oil export terminals.
IndianOil, BPCL To ONGC: Here’s How The Oil & Gas Sector Fared In Q1
The aggregate consolidated net profit of Indian oil and gas companies more than doubled in the June quarter of fiscal 2024. The 21 companies considered for the analysis posted cumulative profit growth of 134% year-on-year to 574.794 billion in the April-June period. Public sector refiners led the profit growth for the sector, with Indian Oil Corp. leading the pack as it recorded a net profit of Rs 137.5044 billion, compared to a net loss of Rs 19.925 billion in the year-ago period. Bharat Petroleum Corp. came in second with a consolidated net profit of Rs 105.509 billion, compared to a net loss of Rs 62.631 billion during the same period last year. Hindustan Petroleum Corp. posted a net profit of Rs 62.039 billion, compared to a net loss of Rs 101.969 billion in the June quarter of fiscal 2023, while Hindustan Oil Exploration Co.’s profit doubled to Rs 661 million from Rs 324 million a year ago. However, Chennai Petroleum Corp. posted the biggest net profit fall of 76% year-on-year to Rs 5565 million in the June quarter. This was followed by Supreme Petrochem Ltd. and Mangalore Refinery and Petrochemicals Ltd. which reported a 63% fall in net profit each. In terms of revenue, the sector saw an aggregate 13% fall in revenue growth, mainly on account of lower crude prices. Hindustan Oil Exploration, Deep Industries Ltd., and Castrol India Ltd. recorded the highest year-on-year revenue growth at 100%, 39%, and 7.4%, respectively. Sector giants in terms of market capitalisation like Reliance Industries Ltd., Oil and Natural Gas Corp., and Indian Oil saw a fall in revenue growth. Revenues of Reliance Industries Ltd. and Oil and Natural Gas Corp. fell by 20% each, while Indian Oil’s top line was down by 12%. Oil India Ltd. witnessed the highest revenue fall as sales slipped by 42%. This was followed by Chennai Petroleum and Mangalore Refinery, which recorded a 35% and 34% decline in revenue, respectively.