India to dominate polyvinyl chloride capacity additions in Asia by 2027, says GlobalData
India is set to register the highest polyvinyl chloride capacity additions in Asia, contributing about 49% of the region’s capacity additions by 2027, according to GlobalData, a leading data and analytics company. GlobalData’s latest report, ‘Polyvinyl Chloride Industry Installed Capacity and Capital Expenditure (CapEx) Forecast by Region and Countries including details of All Active Plants, Planned and Announced Projects, 2023-2027’ reveals that India leads with the largest capacity additions, with a capacity of 3.79 million tonnes per annum (mtpa) from six planned and announced projects. Increased application of polyvinyl chloride in the construction, agriculture and packaging industries is expected to result in a growth in demand for polyvinyl chloride in India. Nivedita Roy, Oil and Gas Analyst at GlobalData, comments: “In India, the main capacity addition will be from a planned project, Mundra Petrochem Mundra PVC Plant, with a capacity of 2 mtpa. It is expected to commence production of polyvinyl chloride in 2026.” Reliance Industries Dahej PVC Plant 2, a planned project follows next with second highest capacity addition of 1.20 mtpa. The plant is expected to commence operations by 2026. Nivedita concludes: “Chemplast Sanmar Cuddalore PVC Plant, a planned project is the third highest contributor in terms of capacity additions in the country, accounting a capacity of 0.30 mtpa. The plant is expected to commence production of polyvinyl chloride in 2023.”
Petronas to pick 49% in ReNew project
Energy Global PLC on Wednesday said it has entered into a partnership with Petroliam Nasional Bhd, Malaysia’s state-run oil and gas company. As part of the collaboration, Gentari Sdn Bhd, a subsidiary of Petronas, will acquire a 49% equity stake in NASDAQ listed ReNew’s 403 megawatt (MW) peak power project. First reported by Mint on 8 August 2022, the deal is part of Petronas’ plans to back green energy projects in India by tying up with ReNew at the project level. The move reflects a broader trend of global oil companies, including industry leaders like Shell Plc, Total, and Thailand’s PTT Group, establishing a significant presence in the burgeoning green energy sector in India. As the hydrocarbon sector faces disruptions, other major players, such as Eni SpA from Italy, Statoil ASA from Norway and Russia’s Rosneft are also exploring opportunities in the green energy space. “On 31 May, ReNew entered a partnership with PETRONAS’ clean energy subsidiary Gentari, , which will purchase a 49% equity stake in ReNew’s 403 MW Peak Power project. As a part of the partnership ReNew will invest approximately ₹3,130 million (~$38 million) for its 51% stake in the project and through its affiliates will undertake EPC, O&M, and project management for the project,” ReNew said in a statement, while announcing its Q4 FY23 results. In June 2022, Petronas set up Gentari Sdn Bhd, to accelerate adoption of clean energy and build a renewable energy capacity of 40GW. It plans to supply 1.2 metric tonnes per annum (mtpa) of green hydrogen and establish electric vehicle (EV) charging points across the Asia Pacific, with a focus on Malaysia and India.
Falling global crude prices won’t reduce your petrol, diesel bills anytime soon. Here’s why
Despite a consistent fall in global crude prices, which went through the roof after the start of the Russia-Ukraine war last year, common consumers will have to wait for a drop in petrol and diesel prices in India. Though margins on petrol and diesel have turned positive for the oil marketing companies following the softening of international oil prices, they would require more time to recover their losses accumulated due to high crude prices last year. As far as a revision in oil retail prices is concerned, it may happen only after state-owned oil firms recoup losses they incurred last year, PTI reported, quoting officials. State-owned Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) have temporarily abandoned the daily price revision since last year and have not revised petrol and diesel prices in line with the cost. And the losses they incurred when the oil prices were higher than the retail selling prices are now being recouped with rates dropping. Officials said the three firms have been making positive margins on petrol since the fourth quarter of the 2022 calendar year, but diesel, which accounts for the bulk of the fuel sales, had been in red. But last month, margins on diesel turned positive with a small 50 paise a litre profit, they said, adding, this, however, was not enough to make up for the past losses. International oil prices had spiked to USD 139 per barrel in March 2022 in the aftermath of the Russia-Ukraine war. They have since cooled to USD 75-76. At peak, oil firms lost Rs 17.4 per litre on petrol and Rs 27.7 a litre on diesel. In the October-December quarter, oil firms earned Rs 10 a litre margin on petrol but lost Rs 6.5 on diesel. In the following quarter, the margins on petrol moderated to Rs 6.8 a litre while diesel earned Rs 0.5 per litre. Officials said besides past losses, oil companies want to see if the drop in oil prices will last. “I guess they will watch for the prices for one more quarter (April to June) before deciding to restart fuel price revision,” an official said. Holding prices when input cost was higher than retail selling prices led to the three firms posting net earnings loss. They posted a combined net loss of Rs 21,201.18 crore during April-September despite accounting for Rs 22,000 crore announced but not paid LPG subsidy. International oil prices have been turbulent in the last couple of years. It dipped into the negative zone at the start of the pandemic in 2020 and swung wildly in 2022 — climbing to a 14-year high of nearly USD 140 per barrel in March 2022 after Russia invaded Ukraine, before sliding on weaker demand from top importer China and worries of an economic contraction. But for a nation that is 85 per cent dependent on imports, the spike meant adding to already firming inflation and derailing the economic recovery from the pandemic. So, the three fuel retailers, who control roughly 90 per cent of the market, froze petrol and diesel prices for the longest duration in at least two decades. They stopped daily price revision in early November 2021 when rates across the country hit an all-time high, prompting the government to roll back a part of the excise duty hike it had effected during the pandemic to take advantage of low oil prices. The freeze continued into 2022 but the war-led spike in international oil prices prompted a Rs 10 a litre hike in petrol and diesel prices from mid-March before another round of excise duty cut rolled back all of the Rs 13 a litre and Rs 16 per litre increase in taxes on petrol and diesel effected during the pandemic. That followed the current price freeze that began on April 6, which still continues.
EIA: Oil Prices Will Not Rally Despite Saudi Output Cut
Oil prices will not average more than $80 per barrel in the second half of this year, despite the most recent production cut announced by Saudi Arabia, the U.S. Energy Information Administration (EIA) said in its latest Short-Term Energy Outlook (STEO) released this week. At Sunday’s meeting, OPEC+ producers decided to extend their crude oil production cuts through 2024, while Saudi Arabia said it would voluntarily reduce its production by 1 million bpd in July to around 9 million bpd. The Saudi cut could be extended beyond July, Saudi Energy Minister, Prince Abdulaziz bin Salman, said. Despite the Saudi cut and the extension of the current OPEC+ cuts through 2024, the EIA expects non-OPEC producers to drive global liquids production to growth of 1.5 million barrels per day (bpd) in 2023 and 1.3 million bpd in 2024, limiting the upside for oil prices. Production growth in the United States, Norway, Canada, Brazil, and Guyana will be the primary drivers of the increase in global liquids output. The cuts, however, will result in draws in global oil inventories in each quarter between the third quarter of 2023 and the third quarter of 2024, the EIA reckons. Oil inventories will drop slightly next year, compared to last month’s STEO that forecast inventory growth of 300,000 bpd for 2024. This, the U.S. administration says, will put gradual pressure on oil prices. But oil is not expected to rally, and Brent Crude prices will average $79 per barrel in the second half of 2023, which is $1 a barrel higher than in May’s STEO estimate. The 2024 oil price forecast was raised to an average of $84 per barrel, up by $9 per barrel compared to last month’s assessment. Early on Wednesday, Brent Crude prices traded just below $76 per barrel as the Saudi cut failed to lift prices with the market focused more on the economic slowdown instead of expectations of a tighter market further out this year. Oil consumption will rise by 1.6 million bpd this year, and by another 1.7 million bpd next year, the EIA said, but noted that “Significant uncertainty remains around global economic growth and the potential impact on oil demand over the forecast period.” The EIA also revised down its estimates for the U.S. economy and diesel consumption for this year and next. The latest forecasts assume U.S. GDP growth of 1.3% in 2023 and 1.0% in 2024, which is down from last month’s forecast of 1.6% in 2023 and 1.8% in 2024, based on the S&P Global macroeconomic model for the U.S. economy and EIA’s energy price forecasts. The reduction in forecast GDP growth has led to lowered estimates for distillate fuel – mostly diesel – consumption. The EIA now expects U.S. distillate consumption to fall in 2024, which is a change from last month’s forecast that had expected distillate consumption to grow next year. “Recently, service sector production has been the primary driver of GDP growth, which requires less diesel consumption,” the EIA said in its discussion about diesel consumption and economic growth as part of the latest STEO. “We expect this trend to continue; we forecast in our STEO that U.S. diesel consumption in the second half of 2023 will be below the 2015−2019 average before a slight further decline in 2024 despite an expected increase in GDP over the same periods.” EIA’s forecast assumes that the Fed’s interest rate increases will slow inflation without causing major disruptions to U.S. employment or economic activity. “If GDP growth does decline, we could see a further slowdown in U.S. diesel consumption,” the EIA noted. Despite the Saudi attempts to further tighten the oil market and push prices higher, macroeconomic concerns about the U.S. and European economies and a possible slower-than-expected Chinese recovery continue to weigh on oil prices.
Rerouted Oil to Soften Russian Economy Contraction: World Bank
Oil shipment volumes from Russia “have not changed materially” despite war sanctions, and the absorption of its losses in Europe by the likes of China and India would help keep its economic contraction at 0.2 percent this year from an estimated 2.1 percent in 2022, the World Bank said Tuesday. “Clear signs of trade diversion emerged following the invasion, with the value of Russian fuel exports to the EU declining by over 40 percent last year, while exports to India and China increased”, the United Nations lender said in its outlook report for 2023 and 2024. Traditionally the top destination for Russian energy, the European Union accounted for eight percent of Russia’s mineral fuels exports in December 2022, having consistently fallen since March 2022, when the region comprised 17.4 percent of the total. Europe’s intake March 2022, the month after President Vladimir Putin launched his war on Ukraine, was its highest in the January 2019-March 2023 data the World Bank presented in the report. The 27-member bloc’s share of imports of Russian mineral fuels stood at 2.2 percent March 2023. In contrast world number two economy China saw its share of imports of Russian mineral fuels rise to 8.2 percent in March this year from six percent in March 2022 and 5.8 percent in December 2021. India saw a sharper increase, accounting for five percent of Russian mineral fuels shipments March 2023 from 0.9 percent March 2022 and 0.6 percent December 2021. “Russian imports from Türkiye more than doubled”, the World Bank said. Türkiye’s share stood at 1.4 percent March 2023 from 0.7 percent March 2022 and 0.5 percent December 2021. “Those trends were also reinforced since the beginning of the year, with Russia’s fuel exports to the EU falling by 87 percent in March from a year earlier”, the Washington-based World Bank added. “In Russia, the contraction this year is envisaged to be milder than initially forecast, partially due to the continued flow of energy exports”, it said. “Output in Russia is projected to contract slightly, by 0.2 percent in 2023, a 3.1 percentage point upgrade from the January 2023 forecast. This change mainly reflects the unexpected resilience of oil production and higher-than-expected growth momentum from 2022”, the report stated. Russia’s rerouting of its oil helped limit its output contraction last year to 2.1 percent. “The recession was less severe than projected earlier, due to higher oil production, the redirection of oil exports away from traditional markets, and more government fiscal support than initially assumed”, the World Bank said. But while Russia’s fuel exports found alternative markets, the World Bank said, “Continued contraction in export volumes, weak domestic demand, policy uncertainty, and sanctions due to Russia’s invasion of Ukraine will continue to weigh on activity”. Slowdown in Other Oil Economies Other oil exporting economies are also likely to slow down this year “as the boom in industrial activity associated with high energy prices fades”, the report stated. “Crude oil prices are projected to average $80/bbl [barrel] in 2023, a $8/bbl downward revision from the January forecast, and to edge up to $82/bbl in 2024, reflecting a modest pickup in demand”, the World Bank said. “Prices for natural gas and coal are expected to moderate in 2023 and decline further in 2024, as Europe has made substantial progress in improving efficiency and reducing energy demand. Natural gas prices in Europe are expected to remain well above their pre-pandemic five-year average, despite elevated inventories”.
Indian imports of US ethane for petchems to expand
State-controlled refiners Bharat Petroleum (BPCL) and Gail are investing in new ethane-fed cracker projects at their existing petrochemical facilities to capitalise on the abundant availability of cheap US ethane and the growing fleet of very large ethane carriers (VLECs). This follows on from private-sector refiner Reliance switching to US ethane at its 1.5mn t/yr ethylene cracker in Jamnagar, in west India’s Gujarat state, over the past few years, having previously relied on ethane extracted from LNG imports from the Mideast Gulf. Gail operates two 450,000 t/yr crackers at its Pata petrochemical plant in Uttar Pradesh in northern India, which can use either ethane or propane. This arrives through the Hazira-Vijaypur-Jagdishpur pipeline having been fractionated and processed from LNG at Hazira on the west coast of Gujarat. BPCL is also increasingly integrating its refining operations with petrochemicals, but presently only has 500,000 t/yr of propylene capacity at its 310,000 b/d Kochi refinery in Kerala. BPCL is investing close to $6bn to develop an ethane-fed cracker at its 156,000 b/d Bina refinery in Madhya Pradesh, while Gail is spending a similar amount on building a 1.2mn t/yr ethane-fed cracker near its 5mn t/yr LNG plant at Dabhol in Maharashtra. Gail has signed an initial agreement with Shell Energy India to import US ethane and has expressed interest in hiring VLECs to transport the supply over 20 years starting from mid-2026. The plans are partly aimed at cutting reliance on LNG after a shortage last year prompted by disruptions to supplies from Russia’s state-controlled Gazprom in the wake of the war in Ukraine, and surging international prices. Petrochemical producers in India imported 1.3bn m³ of LNG in 2022, down by 47pc on the year, oil ministry data show. This resulted in Gail shutting down its Pata plant for a few months and then operating it at a lower utilisation when it was brought back on line. Besides the price and reliability of LNG imports, the act of processing and fractionating it for use in NGLs in India also adds complication and costs. “We continue to focus on differentiated and specialty polyester products,” Reliance said recently. “We have always mentioned about having zero dependence on LNG and that essentially continues.” Plant pressures India’s ethane imports have been relatively steady in recent years. They reached 1.62mn t in 2022, compared with 1.53mn t in 2021 and 1.57mn t in 2020, Vortexa data show. But the country’s expanding ethylene production capacity and domestic consumption will boost this in the coming years. India’s ethylene demand is likely to increase to 8.7mn t and polyethylene consumption to 6.9mn t by 2026, Argus calculates. Center Approves Setting up of Ethanol Plant in Una June 8, 2023: The Central Government has approved the ethanol plant being set up by Hindustan Petroleum Corporation Limited (HPCL) in district Una of Himachal Pradesh. This plant will be set up on 30 acres of land at a cost of 5 billion. Rice, sugarcane, and corn are majorly used for ethanol production. Therefore, this scheme will also prove helpful in strengthening the economy of the farmers of the region. Chief Minister Thakur Sukhwinder Singh Sukhu had taken up the matter with the Centre. The raw material for this plant will be procured from districts Kangra, Hamirpur, Bilaspur, and Una. Apart from this, this plant will provide employment and self-employment opportunities to the local people and farmers of Kangra, Hamirpur, Bilaspur, and other parts of the state. With the establishment of this plant, about 300 people of the area will get direct and indirect employment opportunities.
Cheap Russian crude imports turn not so profitable for Indian oil companies
India managed to reduce its overall expenditure on crude oil imports by taking advantage of discounted Russian oil. However, Indian Oil Marketing Companies (OMCs) failed to maximise the benefits from this favorable situation. Kotak Institutional Equities in a report said that, “We also note that while India’s overall crude imports costs have benefitted from Russian imports, OMCs’ reported raw material costs do not show any increased advantage versus Dubai crude.” Kotak Institutional Equities say that the benefit of Russian crude will be higher for companies like Nayara Energy, which is owned by Rosneft, a Russian OMC. Indian oil companies have to spend more on transportation and insurance costs as compared to Nayara Energy which saves cost and benefits from the discounted Russian crude oil. Indian Oil Corporation’s (IOC) raw material costs in Q2FY23 was around $115 billion per barrel, while Dubai crude oil was around $105 billion per barrel. This means IOC was not able to monetise the benefits of Russian imports. Similarly, Bharat Petroleum Corporation’s (BPCL) raw material costs in Q2FY23 was around $115 billion per barrel compared to Dubai crude oil, which was around $105 billion per barrel. Dubai crude is used as a benchmark. Thus, if Indian refiners’ crude costs decline (versus Dubai crude), it not only boosts their refining GRMs, but also offers improved advantage over Singapore GRM
More Russian Oil is making backdoor entry into NATO nations via Saudi Arabia, UAE
The cat is out of the bag. India is not the only country using imported Russian oil to export processed petro-products. West Asian oil giants, led by Saudi Arabia, are buying millions of barrels of Russian diesel oil, which is banned in Europe, to sell the product to buyers in the European Union (EU). Saudi Arabia and the United Arab Emirates (UAE) are importing low priced Russian oil to jack up oil exports at higher prices to Europe. Earlier, reports suggested that India, the world’s third largest consumer and importer of crude oil, was exporting Russian oil, after refining, to countries in Europe and Asia. These reports are only partly true as India has been exporting refined oil products for many years. India has been importing crude oil from a number of countries. Lately, India has substantially raised its crude oil imports from the US, with the country’s share in India’s crude basket hitting a record 14.3 percent in December. While Russia has become the top source of crude oil with a share of 21.2 percent in December, India reduced its dependence on Iraq (16.9 percent), UAE (6 percent) and Kuwait (4.2 percent) to accommodate more crude imports from the US. In December, crude oil imports from the US shot up 93 per cent to 3.9 million MT. India hardly imported crude oil from Russia till 2021. Huge transportations costs made Russian crude oil very expensive compared to India’s nearby import sources from West Asia. Incidentally, India’s first greenfield private sector refinery at Jamnagar in Gujarat, put up by Reliance Industries (RIL), was granted export-oriented status as early as in April, 2007. It used imported crude oil, mostly from West Asian suppliers, to make refined products for the purpose of export. The RIL refinery has an installed capacity of 1.24 million barrels per day, making it the world’s largest refinery. The situation changed after the Russia-Ukraine war began in February, last year. The western trade and financial embargo on Russia forced the latter to sell its oil and other products at large discounts. Oil imports suddenly became much cheaper from Russia. This made India go for Russian crude oil as the country’s energy market is 87 percent dependent on imported oil. Till 2020-21, India’s purchase of crude oil from Russia was less than one percent of its total oil imports. India bought only 419,000 tonnes of crude oil from Russia in the first 10 months of 2020-21, which was 0.2 per cent of the total import of 175.9 million tonnes. India exported refined petroleum products worth US$49 billion in 2021, making the country the world’s third largest refined petroleum exporter. The main export destinations were Singapore ($4.59 billion), the US ($3.56 billion), the Netherlands ($2.89 billion) and Australia ($2.62 billion). India’s fastest growing export markets for refined petroleum during 2020 and 2021, well before the Russia-Ukraine war, were the US, Australia and Togo
Saudi output cut unlikely to lift oil prices to high $80s-low $90s, Citi says
Top crude exporter Saudi Arabia’s one million barrel per day (bpd) oil output cut is unlikely to underpin a “sustainable price increase” into the high $80s-low $90s with weak fundamentals pointing to lower prices by year-end, Citi analysts said in a note on Tuesday. Brent gained as much as $2.60 on Monday after Saudi Arabia, OPEC’s de facto leader, said its output would drop by 1 million bpd to 9 million bpd in July. However, oil prices came off those gains to edge lower on Tuesday. “We see average quarterly prices fairly range-bound for the year, averaging $81 for Brent in both H1 and H2 but with the potential to range between $72 and $90,” Citi said in the note. Citi analysts cited factors such as weaker demand and stronger non-OPEC supply by year-end, potential recessions in the U.S. and Europe, and lower growth in China which could see prices end up lower rather than higher this year and in 2024. OPEC+, which groups the Organization of the Petroleum Exporting Countries and allies led by Russia, currently has cuts of 3.66 million bpd in place, amounting to 3.6% of global demand, to limit supply into 2024 as the group seeks to boost flagging oil prices. But “it would take surprisingly better coordinated action among OPEC+ producers to tighten markets… The likelihood that Saudi Arabia would tackle this on its own on a sustained basis is quite low,” Citi said. Citi said if Saudi Arabia kept production at 9 million bpd throughout the third quarter of this year, the deficit during the period would widen to above 1 million bpd and leave global oil markets finely balanced in 2023 – however, markets would still face a large surplus in 2024. Other analysts said a global shortfall in supply is set to deepen in the third quarter following the kingdom’s output cuts and could push Brent towards $100 a barrel by year-end.
Saudi Oil Output Cut Unlikely To Hurt India As Russia Leaps Ahead
Saudi Arabia’s decision to further cut crude output is unlikely to hurt India as Russia, with its discounted oil, has trumped all other nations to emerge the largest supplier with 42% share in India’s fuel imports. The cheap Russian supply in May scaled another record and is now more than the combined oil bought from Saudi Arabia, Iraq, UAE and the U.S., PTI reported citing data from energy cargo tracker Vortexa. India took 1.96 million barrels a day from Russia in May, 15% higher than April. The additional supply cut of one-million barrels a day from July by Saudi Arabia will not lead to any substantial impact as India has an extraordinarily good pricing deal from Russia, according to Ashwin Jacob, partner Deloitte India. “The price increase in coming months will be compensated by the Russian discounts to large extent.” The impact on India will be minimal,” Jacob said. In FY23, barring Russia, crude imports from all other geographies including Saudi Arabia, Iraq, UAE, US, and others countries, fell. “In 2022-23, there was a change in the sources of India’s crude imports. Russia’s share in India’s crude imports soared to 19.1 per cent from 2.0 per cent a year ago,” the Reserve Bank of India said in its FY23 annual report. India imported 232.73 million tonnes of crude in FY23, an increase of 9.58% year-on-year, according to Petroleum Planning & Analysis data. The increase in value terms was 37% year-on-year to $157 billion. According to Director General of Commercial Intelligence and Statistics, India imported Petroleum Crude worth $162.2 billion and petroleum products worth $47.21 billion in FY23. It exported petroleum products worth $97.4 billion in FY23. Kotak Securities, in a report said, markets are likely to tilt into a deficit in the second half of 2023, if Chinese demand recovery materialises. “With rising odds of a Federal Reseve pause in June coupled with tightening supplies, we might see oil prices trading with an upside momentum.”