India makes first crude oil payment to UAE in local currency
India and the United Arab Emirates have initiated a paradigm shift in their bilateral trade dynamics by instituting transactions denominated in their respective domestic currencies. Notably, India’s leading petroleum refiner, Indian Oil Corp, recently concluded a transaction wherein it conducted payment in rupees for the procurement of one million barrels of oil from the Middle Eastern nation. This pivotal move underscores a pivotal shift in trade modalities and was executed through a payment to the Abu Dhabi National Oil Company (ADNOC), as confirmed by an official statement from the Indian embassy in the UAE. This reflects India’s endeavor to leverage its trade landscape by reducing reliance on the dollar and consequently streamlining transactional intricacies
Angola LNG offers September cargo
State-owned Angola LNG is offering a cargo for delivery over 29 August to 26 September for loading from its 5.2mn t/yr Soyo liquefaction facility, through a tender closing on 16 August. The cargo is being offered on a des basis to various destinations within the Atlantic basin, Europe, Indonesia, Malaysia, Singapore and Thailand. It can be delivered to Bangladesh, India and Pakistan over 5-20 September. The firm was last in the market to offer a cargo for 29 August to 17 September delivery from its Soyo liquefaction facility, and the tender closed on 9 August. Results of the tender remain unclear. This is Angola’s third tender this month, which could alleviate potential tight supply in Asia-Pacific. Industrial action could impact Chevron’s 15.6mn t/yr Gorgon and Wheatstone LNG facilities in Australia as well as the Woodside-operated 4.9mn t/yr Pluto and 16.3mn t/yr North West Shelf (NWS). The strike might take place sometime in September should it go ahead, potentially impacting production during that month, which could tighten supply and lead to higher offers. Pockets of prompt demand have continued to emerge in south Asia. Indian major importer Gail is seeking a cargo for delivery over 5-10 September through a tender closing on 16 August. Fellow state-owned IOC withdrew its tender for 15-25 September delivery, due on 11 August, as a result of market volatility. The front half-month of the ANEA, the Argus assessment for spot LNG deliveries to northeast Asia, stood at $11.495/mn Btu on 14 August, 85¢/mn Btu higher than a week earlier. The Argus-assessed price for deliveries to India and the Middle East was at $10.95/mn Btu for the front-half month on 14 August, 51¢/mn Btu higher than a week earlier.
India’s imports from Russia doubled to $20.45 bn in April-July period
India’s imports from Russia doubled to USD 20.45 billion during the April-July period of this fiscal due to increasing inbound shipments of crude oil and fertiliser from that country, according to the commerce ministry data. With this, Russia has become India’s second largest import source during the first four months of this fiscal The imports were USD 10.42 billion during April-July 2022. From a market share of less than 1 per cent in India’s import basket before the start of the Russia-Ukraine conflict, Russia’s share of India’s oil imports rose to over 40 per cent India, the world’s third-largest crude importer after China and the United States, has been buying Russian oil that was available at a discount after some in the West shunned it as a means of punishing Moscow for the invasion of Ukraine. The ministry’s data showed that imports from China dipped to USD 32.7 billion during the April-July period as against USD 34.55 billion in the same period last year. Similarly, imports from the US declined to USD 14.23 billion during the period under review from USD 17.16 billion in April-July 2022. The imports from UAE too contracted to USD 13.39 billion during April-July 2023 as against USD 18.45 billion in the same period last year. On the export front, India’s exports to seven of its top 10 destinations have recorded a negative growth rate during the period.
India hikes windfall tax on crude petroleum to Rs 7,100 per tonne
The Indian government on Monday increased the windfall tax on crude petroleum to Rs 7,100 per tonne from Rs 4,250 per tonne with effect from August 15, according to the notification of Finance Ministry Along with crude petroleum, Special Additional Excise Duty (SAED) on diesel will also see a rise. It will be hiked to Rs 5.50 per litre from Re 1 per litre at present, said the notification The notification further stated that a duty of Rs 2 per litre will be imposed on jet fuel or ATF with effect from August 15. Currently, there is no SAED on the jet fuel. SAED on petrol will remain zero, just like the last time windfall tax was hiked.
India Raises Concerns Over Volatility in Global Oil Prices
India, the world’s third largest oil importer and consumer, has expressed its concerns about the volatility of global oil prices to major oil producers and organizations, according to Indian Oil Minister Hardeep Singh Puri. The Indian government has been engaging in bilateral discussions with oil-producing countries, as well as with the Organization of the Petroleum Exporting Countries (OPEC) and other international bodies, to convey the country’s serious concerns about crude oil price volatility. India is advocating for responsible and reasonable pricing that benefits consumer countries. OPEC and its allies, collectively known as OPEC+, have been implementing supply limits since late 2022 to stabilize the market. In June, they extended these supply curbs into 2024. Additionally, Saudi Arabia and Russia recently made extra commitments outside of the OPEC+ agreement to support crude prices. As a result of these efforts to tighten supply, oil prices have experienced a rally, with Brent crude trading close to its January highs. Currently, Brent crude is priced at $87.32 a barrel, while West Texas Intermediate crude (WTI) stands at $84.03. However, in India, high oil prices have impacted the profitability of government-controlled retailers. These retailers have not revised the pump prices of petrol and diesel since last year to protect customers and curb inflation. The three state-run refiner and fuel retailers in India, Indian Oil Corp, Bharat Petroleum Corp, and Hindustan Petroleum Corp, dominate the fuel retailing sector in the country. India’s concerns over volatile oil prices highlight its efforts to ensure stability in the energy market and protect its economy from excessive price fluctuations.
Osaka Gas, Sumitomo Near Deal for Think Gas Stake, Sources Say
Osaka Gas Co. and Sumitomo Corp. are nearing a deal to buy about a 30% stake in Think Gas Distribution Pvt. that could value the Indian natural gas supplier at as much as $1.5 billion, according to people familiar with the matter The consortium of Japanese firms may reach an agreement with Think Gas’s backer I Squared Capital as soon as September, said the people, who asked not to be identified as the information is confidential. Bloomberg News reported in March that the private equity firm was working with an adviser on a potential sale of as much as 30% of Think Gas. Though deliberations are advanced, I Squared could still decide against proceeding with the deal, the people said. Representatives for I Squared Capital, Osaka Gas and Sumitomo declined to comment, while Think Gas didn’t immediately respond to requests for comment. Established by I Squared in 2018, Think Gas operates across 13 districts in India and supplies natural gas to the domestic, commercial, industrial and automotive sectors, according to its website. In 2021, the infrastructure focused I Squared invested about $200 million in Singapore-based AG&P City Gas, another city gas distributor in India that has 12 concessions in the country.
India Will Continue To Buy Russian Oil Even As Prices Climb
India continues to buy a lot of Russian oil despite a significant narrowing in its discount to Brent, Bloomberg has reported, citing sources from local refiners. In early August, the price of Russia’s flagship Urals blend delivered to the west coast of India hit $81 per barrel. Just a month earlier that price was around $68, Argus pricing data cited in the report shows. Purchases, however, have not slowed down because, according to Bloomberg sources, comparable oil blends from Middle Eastern producers cost more. “There was a perception that India had limited capacity to refine medium sour grade of Russian crude, which would create a natural ceiling on Russian imports,” a Citi analyst told Bloomberg. “It has now been clearly demonstrated that such a bottleneck does not exist. This would imply that Indian refiners can continue with their Russian oil imports as long as discounts outweigh the higher logistics cost of imports,” Samiran Chakraborty, chief India economist at the Wall Street bank, also said. Last year, Russian exports of crude oil to India rose tenfold from the previous year, the Indian Bank of Baroda reported earlier this year. This year, shipments of Russian crude to the subcontinent remained strong, putting Russia at the number-one spot as oil supplier to India, replacing Saudi Arabia. In June, Russian oil exports to India hit a record high of 2.2 million barrels daily, Kpler data cited by the Indian Express showed. In July, exports were expected to ease, as a result of greater demand at home and lower demand in India amid the monsoon season, which also coincides with partial refinery shutdowns for maintenance. Once the monsoon is over, however, Kpler expects a rebound in Russian oil shipments to India, with analyst Viktor Katona forecasting “a deluge of Russian cargoes in India from October onwards.” “As long as there is any discount on Russian crude versus comparable grades on a landed basis, there will be demand for it in India,” energy analyst Vandana Hari from Vanda Insights told Bloomberg.
India aims to triple natural gas share to 15% by 2030: Minister
India has embarked on an ambitious trajectory to amplify its existing 6% share of natural gas in the energy amalgam to a formidable 15% by 2030, as the government presses forward with a suite of comprehensive measures, said minister of state in the ministry of petroleum & natural gas, Rameswar Teli. In a written reply in the Lok Sabha, the minister said, “various steps have been taken by the government to raise the share of natural gas in energy mix to 15% in 2030 from about 6% currently.”
ADNOC Gas invests $3.6bn to boost gas processing capabilities
UAE’s ADNOC Gas has invested $3.6bn (Dhs13.1bn) to boost its gas processing capabilities as the company looks to expand its production capacity in the UAE. The investment is aimed at providing sufficient energy to the country’s growing industrial sector while stimulating economic growth and diversification through the In-Country Value (ICV) generated by the contract. The contract to expand ADNOC Gas’ gas processing infrastructure was awarded to the joint venture between National Petroleum Construction Company and Tecnicas Reunidas. The scope of the contract includes the commissioning of new gas processing facilities which will enable an optimised supply to the Ruwais Industrial Complex. The project seeks to increase ethane extraction from ADNOC Gas’s existing onshore facilities in the Habshan complex through the construction of new gas processing facilities. It is also aimed at unlocking further value from existing feedstock and delivering it to Ruwais via a dedicated 120km natural gas liquids (NGL) pipeline. ADNOC Gas said more than 70 per cent of the contract value will flow back into the UAE’s economy under the ICV programme, supporting local economic growth and diversification. “This capital project represents ADNOC Gas’ latest investment in its gas processing infrastructure and underscores our commitment to responsibly meeting our customers’ current and future energy demand for natural gas and its feedstock,” said Ahmed Mohamed Alebri, CEO of ADNOC Gas. ADNOC Gas said it continues to leverage opportunities arising from ADNOC Group’s integrated gas masterplan, which links every part of the gas value chain in the UAE, ensuring a sustainable and economic supply of natural gas to meet local and international demand.
New Research Could Make Shale Oil Production Cheaper
The U.S. shale revolution has dramatically reshaped the world energy markets. The shale boom was one of the most impressive growth stories, from take off in 2008 to the Permian stealing the mantle from Saudi Arabia’s Ghawar as the world’s highest-producing oilfield in a little over a decade. Different methods of chemical enhanced oil recovery (EOR) have been developed over the years thanks to the continuous decline in conventional oil reserves as well as the accelerated increase in the global energy demand. Surfactant flooding is one of the most commonly used chemical EOR methods due to its ability to enhance recovery using multiple mechanisms including interfacial tension (IFT) reduction, wettability alteration, foam generation and emulsification. However, a fresh study by Russian petroleum engineering firm Skoltech has found that using water solutions of nanoparticles and surfactants may actually trap the oil underground instead of helping it to be recovered. Even more intriguing: the researchers have also discovered that brine is just as effective in EOR operations as more expensive surfactants. The researchers ran a numerical simulation and two complex lab experiments on oil shale samples to determine the effectiveness of injecting water solutions containing silicon dioxide nanoparticles or a surfactant into shale oil reservoirs to enhance recovery. The surfactant used was sodium fatty acid methyl ester sulfonate. “Our study considered 13 fluids and two were selected for tests on cylinder-shaped samples of oil-saturated rock from the Bazhenov Formation of Western Siberia. First we injected brine–water with a very high salt content–and measured an oil recovery factor of about 53%. This is roughly analogous to being able to extract about half of the oil in the reservoir. That figure served as the baseline value for assessing the efficiency of the two agents in the experiment, although the value under actual reservoir conditions would be lower,” the researchers have said. While the surfactant did boost the oil recovery factor, the 53% boost was exactly the same as with brine injection, meaning shale producers might be wasting precious money. The surfactant was also found to block some of the pores in the rock thus reducing its permeability. Exxon Mobil Corp. (NYSE:XOM) Chief Executive Officer Darren Woods recently revealed that shale producers can double crude output from their existing wells by employing novel fracking technologies. “There’s just a lot of oil being left in the ground. Fracking’s been around for a really long time, but the science of fracking is not well understood,” Exxon Chief Executive Officer Darren Woods said Thursday at the Bernstein Strategic Decisions conference. Woods has revealed that Exxon is currently working on two specific areas to improve hydraulic fracturing. First off, the company is trying to frac more precisely along the well so that more oil-soaked rock gets drained. It’s also looking for ways to keep the fracked cracks open longer so as to boost the flow of oil. Declining Shale Costs After years of rising production costs amid post-pandemic inflation, the U.S. shale patch can finally breathe a sigh of relief after the cost trajectory hit a turning point. Production costs fell 1% year-on-year in the second quarter, marking the first time they have shrunk in three years. Drill pipe prices have halved this year, daily rig rates are down by more than 10% and the costs of steel and diesel are also trending lower. According to Goldman Sachs via Bloomberg, Drill pipe prices have fallen by 50% this year; daily rig rates are down by more than 10% while the costs of diesel and steel have been gradually declining. Only labor has been defying this trend as wages continue rising. Whereas a decline of a single percentage point might not make much of a difference on the bottomline, Goldman says costs will be 10% lower in 2024, enough to boost profits and cash flows significantly. Easing price pressures are most welcome: after two years of bummer earnings and copious cash flows, the U.S. oil and gas sector is set to record a decline on both metrics in the current year. Big Oil Production Growth Several Big Oil companies have returned their Q2 scorecards, and nearly all have a common theme: considerable production growth but even bigger top-and bottom-line contraction. Exxon Mobil Corp. (NYSE:XOM) has reported Q2 earnings of $7.88B, good for 55.9% Y/Y decrease while Q2 revenue of $82.91B is good for -28.3% Y/Y growth. On a brighter note, Exxon says it remains on track to deliver $9 billion of structural cost savings by the end of 2023 relative to 2019, having achieved cumulative structural cost savings of $8.3 billion to date. Exxon reported that Q2 total production fell 3.3% Y/Y to 3.61M boe/day; however, excluding divestments, entitlements, government mandates and the Sakhalin-1 expropriation by Moscow, net production actually rose by more than 160K boe/day. The Permian basin delivered a quarterly record 622K boe/day and is on track to increase 10% this year while Guyana is on track to grow production 5% to 400K boe/day by year-end. Chevron Corp.(NYSE:CVX) reported that its Q2 earnings decreased 48.3% Y/Y to $6.01B while adjusted earnings contracted 49.2% to $5.78B. Meanwhile, Q2 revenue clocked in at $48.9B, good for -28.9% Y/Y growth. Chevron reported record Permian Basin production of 772,000 barrels of oil equivalent per day, up 11% Y/Y.