India’s Vedanta to Sink Billions into Oil and Gas, Commodities: Report
India’s largest private producer of crude oil Vedanta plans to invest billions of dollars into the oil and gas sector and its commodities-related business, according to a report by S&P Global Commodity Insights, citing company chairman Anil Agarwal. Agarwal said that the changing energy landscape will increase demand for oil and gas, as well as metal resources, in the foreseeable future, according to the report. Vedanta owns Cairn Oil & Gas, which is the largest private sector producer of crude oil in India, owning assets in the regions of Rajasthan, Andhra Pradesh, and Gujarat in India, according to the company website. The Mangala field in Rajasthan, discovered in January 2004, was the largest onshore oil discovery in India in two decades. The Mangala, Bhagyam, and Aishwariya fields, the three major discoveries in the Rajasthan block, cumulatively have reserves of approximately 7.7 billion barrels of oil equivalent (Bboe). Cairn has 62 licenses in India, which are estimated to contain over 3.0 Bboe of gross unrisked prospective resources. In an earlier news release, Cairn said that its estimated total gross 2P plus 2C resources have reached 1.156 Bboe, of which oil accounts for 85 percent. 2P reserves are the total of proven and probable reserves, while 2C is the best estimate of contingent resources. The company is planning up to 20 potential new development projects to bring a substantial proportion of the 846 million barrels of oil equivalent of gross 2C resources into production. The company plans to drill up to 20 exploration wells in the next two years, targeting approximately 500 million barrels of oil equivalent of gross unrisked prospective resources. “Cairn has a world-class resource base of over 1.1 Bboe gross, and we continued to sustain the business last year, adding more resources than we produced”, Cairn CEO Nick Walker said. “We have significant undeveloped resources and we’re moving at pace to apply the latest technology to define a portfolio of up to 20 new projects. We’ve also a material exploration position in India and are commencing an exciting exploration drilling program aimed at continuing to grow our resources. Cairn is committed to increasing India’s domestic oil and gas production, with a vision to contribute 50 percent of the country’s crude production.” Cairn’s current total production capacity stands at 147,000 boe per day, with the Rajasthan block contributing 120,000 boe per day, or nearly 82 percent of the total. Cumulatively, the block has produced over 700 million boe in the last decade, according to the news release. In a separate news release, Cairn said it signed three memorandums of understanding with the state governments of Rajasthan, Gujarat, and Andhra Pradesh for biodiversity conservation through the mass plantation of 750,000 trees. The carbon captured through the mass plantation is equivalent to emissions needed to provide electricity to 4,500 Indian households, the company said. The three agreements account for 38 percent of the two million trees that Cairn has pledged to plant by 2030 and will help the company achieve net-zero carbon emissions by 2050. The initiative is in line with India’s targets for the development of carbon sinks.
Uncertainty In Oil Markets As Fundamentals Counter Economic Concerns
Oil prices dropped in Asian trading early on Wednesday before bouncing back slightly as market participants continue to weigh tightening supply and China’s fresh stimulus pledge against concerns of slowing developed economies amid rate hikes. In Asian trade on Wednesday, the U.S. benchmark WTI Crude was down by 0.13% to $75.65. The international benchmark, Brent Crude, recovered its early losses and was up 0.05% to $79.68. Concerns about the U.S. and European economies, coupled with the lower-than-expected Chinese growth in the second quarter, continue to put downward pressure on prices, although the American Petroleum Institute (API) estimated late on Tuesday a small draw of 797,000 barrels to U.S. crude oil inventories. U.S. gasoline inventories are also estimated to have fallen last week, per API data. If confirmed by the official EIA inventory report later on Wednesday, draws could support oil prices in the latter part of this week. The market, however, appears to be continuously concerned about the U.S. and European economies. The Fed is widely expected to raise the key interest rate by a quarter percentage point, with odds on Wall Street at 93.6% for a rate hike at the July 26 meeting. “A retail sales report confirmed the US economy is still healthy and ready for another quarter-point rate rise by the Fed,” Ed Moya, senior market analyst at OANDA, said on Tuesday. Still, “Wall Street grows confident Fed will be ‘One and Done’ on rate hikes,” Moya notes. Limiting the slide in oil prices early on Wednesday was the Chinese pledge from Tuesday that it would “formulate and introduce more effective policies for restoring and expanding consumption as soon as possible.” On the fundamentals front, Russian crude oil exports are now showing signs of decline for a second consecutive week and are estimated to have sunk to a six-month low in the four weeks to July 16. “With Russian flows falling to a six-month low, expectations are growing that OPEC+ will keep this market tight throughout the summer,” OANDA’s Moya commented. “Brent crude looks like it wants to find a home above the $80 level and that shouldn’t be too hard as long as the crude demand outlook doesn’t get blindsided,” the analyst noted.
ADNOC Signs LNG Deal With Indian Oil Major Worth Up To $9 Billion
ADNOC Gas has signed a long-term agreement to supply liquefied natural gas to Indian Oil Corporation, in a deal worth between $7 billion and $9 billion. Under the terms of the agreement, ADNOC Gas, the integrated gas unit of Abu Dhabi National Oil Company (ADNOC), will export up to 1.2 million metric tonnes per annum (mmtpa) of LNG to Indian Oil over a period of 14 years, the Abu Dhabi company said in a statement. ADNOC Gas, which supplies around 60% of the UAE’s sales gas needs and has access to 95% of the UAE’s huge gas reserves, looks to expand its global presence as the LNG market grows and countries look to diversify supply to boost energy security. “The landmark deal marks another significant milestone for ADNOC Gas as it expands its global reach, reinforcing its position as a global LNG export partner of choice, and reaffirming IOCL as its key strategic partner in the LNG market,” ADNOC Gas said. India, for its part, aims to boost the share of natural gas in its energy mix to 15% by 2030, up from around 6% now. Competition for LNG has increased and long-term LNG contracts have returned, after the Russian invasion of Ukraine upended the global gas market, prompted Europe to pledge to ditch Russian pipeline gas by 2027, and kickstarted a competition between Europe and Asia for spot and long-term LNG supply. The United States and Qatar have recently signed major long-term deals with both Chinese and European firms. Last month Germany signed a 20-year deal with U.S. firm Venture Global LNG to import 2.25 million tons of LNG per year from Venture Global’s third project, CP2 LNG, as Europe’s biggest economy is looking to secure gas supply after Russia stopped deliveries. Chinese buyers, for their part, have recently signed with Qatar the longest LNG term deals in the history of the industry while also discussing additional agreements with QatarEnergy and with U.S. LNG developers.
Why TotalEnergies’ $27 Billion Deal With Iraq Is A Gamechanger
The long-delayed US$27 billion four-pronged megadeal between France’s TotalEnergies and the Federal Government of Iraq has received the final go-ahead from both sides and is due to start within the next four weeks. The huge deal is crucial in enabling Iraq to increase its oil production from around 4.5 million barrels per day (bpd) to perhaps 13 million bpd within five years. It is also critical to Iraq’s ability to end its dependence on Iran for gas imports and electricity for its power grid. For the West, the deal is crucial is securing access to Iraq’s huge, underdeveloped oil and gas reserves as part of its strategy to find new sources of each to compensate for lost supplies from Russia. It is also vital in reasserting a stake in the central Middle East to counteract the increasing influence of China and Russia there, as analysed in my new book on the new global oil market order. In short, this four-pronged deal with TotalEnergies is a very big thing indeed, which is why all parties involved have pulled out all the stops to either get it across the line or stop it in its tracks, depending on which side they are on. Iraq’s input into proceedings, which caused the main delays from the original signing of the megadeal in 2021 to now, was not part of a brilliantly interwoven geopolitical strategy aimed at world domination (that was China, with a little help from Russia – more of that in a moment). Instead, it was down to its standard attempts to gouge out as much as possible in the way of commissions – delivered in the form of ‘cash compensation payments’ made to various front companies – for some senior government people. Suffice it to say here that at one stage Iraq was in the process of re-establishing the omni-toxic Iraqi National Oil Company (INOC), an organisation widely regarded within the oil industry as one of the most corrupt organisations ever created. It quickly became clear that one does not get to become a senior figure in France’s leading oil and gas company by being as stupid as seems to be the minimum requirement to secure a senior position in Iraq’s Oil Ministry, with TotalEnergies refusing to partner with INOC ‘due to the lack of clarity on the legal status of the company’. In layman’s terms, the French oil and gas behemoth did not trust INOC as far as it could throw it. In October 2022, then, Iraq’s Federal Supreme Court invalidated the decision to re-establish the Iraqi National Oil Company on the basis that several of its founding clauses were in breach of the constitution, and the deal with TotalEnergies was again a realistic prospect. There have been further shenanigans from Iraq aimed at increasing the possibilities for personal enrichment of some key government people involved – the main one being an increase in the government’s stake in the projects to varying degrees – but all have been rebuffed by the French firm. As it stands, the agreement is now for the Iraq government (through the Basrah Oil Company) to hold a 30 percent stake in the megadeal. TotalEnergies will hold 45 percent of it, with QatarEnergy holding the remaining 25 percent stake. According to sources in the U.S.’s and European Union’s energy security complexes spoken to exclusively by OilPrice.com on this megadeal, Iraq was emboldened to make such demands of TotalEnergies by elements from China and Russia. Following the recent landmark resumption of relations between Iran – which retains enormous influence over Iraq through political, military and economic proxies – and Saudi Arabia, brokered by China (and Russia to a lesser degree), it was made clear to Iran it should do all it could to stop Western companies doing deals in Iraq. Specifically, the European Union’s energy security source exclusively told OilPrice.com, Iran was told by a very high-ranking official from the Kremlin that: “By keeping the West out of energy deals in Iraq – and closer to the new Iran-Saudi axis – the end of Western hegemony in the Middle East will become the decisive chapter in the West’s final demise”. This would also play into what China wants from the Middle East in its grand scheme of things, as delineated in its multi-generational power-grab project, ‘One Belt, One Road’. What it wants is to turn the region into a large oil and gas station by which it can fuel its economic growth to overtake the U.S. as the number one economic and political superpower by 2030. The three biggest oil and gas reserves in the region belong to Iran, Iraq, and Saudi Arabia, so it wants to control those to begin with, as examined in detail in my new book. For Russia, which already has lots of oil and gas – over which China already has significant control – the objectives in the Middle East are more varied. One objective is to continue to exert influence in several countries that it regards as being key to maintaining some of its hold over the Former Soviet Union states. Another, more recent one, is to use this influence to bolster its position as a partner of note to China. As for the other countries in this soap opera – Iran, and Iraq, and now also more clearly, Saudi Arabia – they are in this new global alliance partly for the economic and political support from China (and to a lesser degree, Russia) and because their political systems are naturally much closer to the authoritarian regimes of China and Russia than they are to the democratic ones of the U.S. and its allies. Nonetheless, as it stands, the US$27 billion megadeal is set to move into action within four weeks and, if it does, then it will be a game-changer for Iraq. Most important of the four projects is the completion of the Common Seawater Supply Project (CSSP). This is crucial to enabling Iraq to reach its longer-term crude oil
India state retailers’ gasoil, gasoline sales declines in July: prelim data
Indian state fuel retailers’ gasoil and gasoline sales during July 1-16 declined from the same period in the previous month, preliminary data showed, as widespread heavy rain upended travel demand. Daily sales of gasoil fell by 19.7 per cent to about 2.96 million metric tons in July compared with June, the data showed. Fuel demand in the world’s third-biggest oil importer and consumer typically drops during the four-month monsoon season that begins in June as parts of the country are hit by heavy floods. Demand from the agriculture sector also gets affected in this period due to fewer irrigation-related requirements. State retailers’ gasoil sales were further hit as private refiner Reliance Industries Ltd is selling the fuel at cheaper rates. Gasoil accounts for about two-fifths of India’s overall refined fuel consumption and is directly linked to industrial activity in Asia’s third-largest economy.
Regulator rejects Adani’s application for Noida city gas licence
Oil regulator PNGRB has rejected Adani Total Gas Ltd’s application for a licence to retail CNG to automobiles and piped gas to household kitchens in Noida, on the outskirts of the national capital, on grounds that it does not meet criteria. The Petroleum and Natural Gas Regulatory Board (PNGRB) in an order dated July 14 said Adani Total Gas Ltd does not fulfill the requirements of law and so its application is rejected. Adani has been eyeing a city gas distribution (CGD) licence for cities adjoining the national capital for nearly two decades now.
Russia Is Preparing To Export Less Oil In August
Russia could deliver on at least part of its pledge to reduce oil exports next month as its western ports are planned to ship up to 200,000 barrels per day (bpd) lower crude volumes in August compared to July, Reuters reported exclusively on Friday, quoting sources with knowledge of the export plans. Russia said last week that it would cut its crude oil exports by 500,000 bpd in August in a bid to ensure a balanced market, and the reduction in exports would come from a further 500,000-bpd cut in oil production. This week, Russia’s energy authorities asked the top executives of local companies to plan for export cuts in August, according to Reuters’ sources. The western ports in Russia, Primorsk and Ust-Luga on the Baltic Sea and Novorossiisk on the Black Sea, are expected to ship 100,000 bpd-200,000 bpd lower volumes in August. The export programs for the Far Eastern ports in Russia, from which crude cargoes make much shorter trips to Asian customers China and India, are not available yet, according to Reuters. But the reduction in the export plans for the western ports in August suggests that Russia would make good on its pledge to reduce shipments, at least partially, as Moscow and Saudi Arabia announced cuts to exports and production, respectively, for August nearly simultaneously last week. Signs have emerged that Russian crude oil exports have already started to fall in recent weeks. Tanker-tracking data monitored by Bloomberg showed earlier this week that Russian crude oil exports by sea dropped by 205,000 bpd to 3.21 million bpd on a four-week average basis in the four weeks to July 9. The latest four-week average export volumes fell below the 3.38 million bpd in the four weeks to February 26, after holding up above that level for months.
India’s July petrol, diesel sales drop as monsoon hurts fuel demand
With heavy rains wreaking havoc across the country, India’s petrol and diesel sales declined in the first half of July, compared to the first half of June. As travel demand dropped between July 1 and July 16, fuel sales too took a hit. Daily sales of diesel fell by 19.7% to about 2.96 million metric tons in July compared with June, data showed. The drop is in keeping with consumer trends for the monsoon, with consumption typically dropping in the monsoon season due to widespread floods across the subcontinent. Demand from the agriculture sector also gets affected in this period due to fewer irrigation-related requirements. State retailers’ diesel sales were further hit as private refiner Reliance Industries Ltd is selling the fuel at cheaper rates. Government retailers’ – Indian Oil Corp, Hindustan Petroleum Corp and Bharat Petroleum – daily petrol sales were down by 10.8% month-on-month in July at around 1.26 million metric tons, data showed. As passenger traffic at airports continues to rise, demand for jet fuel (ATF) rose 6.1% to 301,800 tonnes during this period, as compared to the same period last year. It was more than double that of the first half of July 2021. Month-on-month jet fuel sales fell 6.7% when compared with 323,500 tonnes in June 1-15, 2023. For the year, India’s oil demand is forecast at 0.2 million barrels per day year-on-year, according to oil cartel OPEC’s monthly oil bulletin.
Indian Oil signs long term LNG import deals with ADNOC LNG, TotalEnergies
Indian Oil Corp, the country’s top refiner, has signed long-term liquefied natural gas (LNG) import deals with United Arab Emirates’ s Abu Dhabi Gas Liquefaction Co Ltd (ADNOC LNG) and France’s TotalEnergies. The two deals were signed during Prime Minister Narendra Modi’s Visit to France and UAE last week. Supplies under the two deals would commence from 2026, the Indian company said in two separate statements. ADNOC LNG would supply up to 1.2 million metric tonnes per year (tpy) of LNG to IOC for 14 years, the Indian company said, adding India’s trade treaty with UAE enable it to import LNG without paying a 2.5% import tax. This is the first time that an Indian company has signed a long term LNG import deal with ADNOC. TotalEnergies would supply 0.8 million tpy LNG to IOC under the 10 year deal, it said. TotalEnergies would supply LNG to IOC from its global portfolio. India companies are spending billions of dollars to boost their gas infrastructure and are scouting for long term LNG imports deals as the nation wants to raise the share of gas in its energy mix to 15% by 2030 from 6.2% currently. IOC’s signings are also the latest in a slew of term deals signed by Asian LNG importers in recent months. In June, Bangladesh’s state-owned Petrobangla signed a 10-year contract to receive LNG supplies from OQ Trading, formerly known as Oman Trading International, and a 15-year suppy deal with QatarEnergy, starting 2026. Chinese importers Zhejiang Energy and ENN have also signed 20-year deals in recent weeks to receive North American supplies, after QatarEnergy inked 27-year agreements with China National Petroleum Corporation (CNPC) and Sinopec. Meanwhile, Thailand’s state-controlled PTT is in advanced talks with Qatar for a 15-year LNG deal for supplies of 1 or 2 million tonnes per annum, sources told Reuters.
Iraq Takes First Step Towards Becoming The World’s Biggest Oil Producer
Iraq’s parliamentary oil and gas committee plans to increase the country’s oil production to more than five million barrels per day, according to the release of committee minutes last week. As analysed in full in my new book on the new global oil market order, not only could this be done with relative ease by Iraq but it could also easily be the precursor to further oil production increases to 13 million barrels per day (bpd) if handled correctly. This would make Iraq the biggest oil producer in the world. In broad terms, Iraq remains the greatest relatively underdeveloped oil frontier in the world. Officially, according to the EIA, it holds a very conservatively-estimated 145 billion barrels of proved crude oil reserves (nearly 18 percent of the Middle East’s total, and the fifth biggest on the planet). Unofficially, it is extremely likely that it holds much more oil than this. In October 2010, Iraq’s Oil Ministry increased its own figure for the country’s proven reserves to 143 billion barrels. However, at the same time as producing the official reserves figures, the Oil Ministry stated that Iraq’s undiscovered resources amounted to around 215 billion barrels. This was also a figure that had been arrived at in a 1997 detailed study by respected oil and gas firm, Petrolog. Even this figure, though, did not include the parts of northern Iraq in the semi-autonomous region of Kurdistan. This meant, as highlighted by the IEA, that most of them had been drilled during a period before the 1970s began when technical limits and low oil prices gave a narrower definition of what constituted a commercially successful well than would be the case now. Overall, the IEA underlined that the level of ultimately recoverable resources across all of Iraq (including the Kurdistan region) at around 246 billion barrels (crude and natural gas liquids). Given the true scale of Iraq’s oil reserves – and the fact that the average lifting cost per barrel of oil in the country is US$1-2 pb (the lowest in the world, along with Iran and Saudi Arabia) – what sort of oil output could reasonably be expected? Back in 2013, the Integrated National Energy Strategy (INES) was produced, and this analysed in detail three realistic forward oil production profiles for Iraq and what each would involve. As also analysed in my new book, the INES’ best-case scenario was for crude oil production capacity to increase to 13 million bpd (at that point, by 2017), peaking at around that level until 2023, and finally gradually declining to around 10 million bpd for a long-sustained period thereafter. The mid-range production scenario was for Iraq to reach 9 million bpd (at that point, by 2020), and the worst-case INES scenario was for production to reach 6 million bpd (at that point, by 2020). Consequently, the 5 million bpd figure announced last week can be regarded as the first easily achievable stepping stone toward those figures. Indeed, according to Iraq’s Oil Minister, Hayan Abdel-Ghani, last week, the country’s oil production capacity already stands above this level – at 5.4 million bpd – although it is still only producing around 4.3-4.5 million bpd overall. The question at this point is, with these enormous reserves in place, and specific plans on how to turn these into up to 13 million bpd in the Oil Ministry’s files, why is Iraq not already producing a lot more oil than it is? The reason is the ongoing endemic corruption that lies at the heart of Iraq’s oil and gas industry. This not only removes enormous amounts of money from Iraq’s coffers that could fund much-needed infrastructure investments but also deters Western companies with the required technology, logistical expertise, and personnel from becoming too involved in the country. Although commissions are standard practice in the Middle East – and indeed across many business around the world – the practice has become something else entirely in Iraq. This has been highlighted repeatedly by OilPrice.com and independently over many years by Transparency International (TI) in various of its ‘Corruption Perceptions Index’ publications, in which Iraq normally features in the worst 10 out of 180 countries for its scale and scope of corruption. “Massive embezzlement, procurement scams, money laundering, oil smuggling and widespread bureaucratic bribery that have led the country to the bottom of international corruption rankings, fuelled political violence and hampered effective state building and service delivery,” TI states. “Political interference in anti-corruption bodies and politicisation of corruption issues, weak civil society, insecurity, lack of resources and incomplete legal provisions severely limit the government’s capacity to efficiently curb soaring corruption,” it concludes. The sums of money that Iraq has lost could have funded all the major projects needed to boost oil production up to at least 7 or 8 million bpd to begin with, notably the crucial Common Seawater Supply Project (CSSP), as also analysed in my new book. According to a statement made in 2015 by then-Oil Minister – and later Prime Minister of Iraq – Adil Abdul Mahdi, Iraq “lost US$14,448,146,000” from the beginning of 2011 up to the end of 2014 as “cash compensation” payments to international oil companies and to other entities. In basic terms, the way in which such a staggering sum was lost relates to the way in which gross remuneration fees, income tax and the share of the State partner was deducted and accounted for in the compensation paid out over reduced oil production levels. The sheer scale and scope of this corruption created the unwillingness of major Western firms to become too heavily involved in the country. In June 2021, U.K. oil super-major, BP, said it was working on a plan to spin off its operations in Iraq’s supergiant Rumaila oil field into a standalone company. The statement was highly reminiscent of the withdrawal of the U.K.-Dutch oil super-major, Shell, from Iraq’s supergiant Majnoon oil field in 2017 and of its withdrawal from Iraq’s supergiant West Qurna 1 oil field in 2018. Each of