Nepal and India agree to construct two petroleum pipelines for smooth supply of petroleum products
An agreement has been reached between Nepal and India for the construction of two important pipelines in the ongoing India visit of Prime Minister Pushpa Kamal Dahal ‘Prachanda’. India would provide around Rs 17 billion for the same. Two petroleum pipeline projects would be constructed while it while Nepal has to construct a storage facility at its own investment. The government of Nepal has put the construction of petroleum pipeline in top priority in order to reduce huge chunk of money the country has been spending in supply of petroleum products. Two petroleum pipelines– from Siliguri of India to Jhapa, Nepal; and from Amalekhgunj of Bara to Lothar of Chitwan would be constructed for easy and smooth supply of petroleum products. Similarly, a storage would be constructed in Jhapa. Although Nepal Oil Corporation and Indian Oil Corporation had been holding discussions for the construction of the pipelines for long, no agreement was reached in this regard. An agreement has been reached in the government-level to forward these projects in course of India visit of Prime Minister Dahal now. According to Executive Director of Nepal Oil Corporation, Umesh Prasad Thani, two pipelines and a terminal of Jhapa would be constructed by India at grants. The NOC had been saying that Siliguri-Jhapa, Amalekhgunj-Lothar petroleum pipelines and storage facilities in Jhapa and Chitwan would be constructed and study for the same had already been conducted. It is believed that the construction of projects would be accelerated after today’s agreement. The total cost of these four projects is equal to Rs 17 billion as per the report jointly prepared by NOC and IOC in 2021. However, the cost may increase slightly due to price hike at international level. According to NOC, the distance of Amalekhgunj-Lothar pipeline is 62 kilometer while Siliguri-Jhapa pipeline is 50 kilometer. The capacity of Jhapa storage facility would be 42,000 kilolitres and of Lothar terminal 103,150 kilolitres.
India, China’s crude oil imports from Russia in May breach all-time highs, shows shiptracking data
India and China’s purchases of Russian crude oil in May are seen to have breached all-time highs. As buyers including these two big economies gorged on discounted supplies from Russia, it led to a fall in demand for oil from the Middle East and Africa, news agency Reuters reported citing shiptracking data. China, world’s No. 1 crude importer, India (world No. 3) are top buyers of Russian oil. In May, these two imported about 110 million barrels in May from Russia. This was a nearly 10% jump month on month and came despite American warnings against price cap evasion. Arrivals of Russian shipments in India are assessed to have reached a record high of 8.6 million tonnes (62.8 million barrels) while China is expected to have received 6 million tonnes, steady from April, Reuters said based on Vortexa data. Data from Kpler, another big tracker, showed a similar trend. As per Kpler, India’s imports touched a record of 66.7 million barrels and China’s was at 49.2 million barrels. According to the data, Indian refiners increased purchases of medium sour crude Urals and lighter grades such as Sokol and Varandey, in addition to a steady inflow of ESPO crude exported from the Pacific port of Kozmino. China, where refiners are pushing to cut feedstock costs and improve refining margins amid a slower-than-expected economic recovery, has bought more and more Russian oil in recent months. “Chinese buyers’ increased demand for Russian oil loading in April and beyond was supported by higher profitability of supplies amid softer freight and firmer differentials,” Reuters said quoting a trader. The lumpsum freight rates for tankers carrying crude from Russia’s Far East port Kozmino, a major ESPO export hub, to northern China fell to $2.2 million after hitting an all-time high of $2.4 million in mid-March, Simpson Spence Young data on Refinitiv Eikon showed. The rise in Russian supplies comes ahead of a meeting between OPEC and their allies including Russia on June 4. Producers face some pressure to act to support Brent futures which have fallen 5% this week to about $73 a barrel despite an OPEC+ pledge in April to cut more output from May.
Domestic natural gas price to remain steady at $6.5 per mmbtu in June: Oil ministry
The domestic natural gas price will remain steady at $6.5 per mmbtu in June, according to an oil ministry notification. Domestic natural gas price is determined every month as 10% of the average price of the India basket crude for the previous month. The gas price, as per the formula, fell to $7.58 per mmbtu for June from $8.27 in May. But since the gas price must stay within a Cabinet-determined band of $4-$6.5 per mmbtu, the effective price for June will not change. This price band applies only to gas produced by the fields operated by Oil and Natural Gas Corp and Oil India.
Gas import bill at USD 1.4 billion in April
India’s LNG import bill stood at USD 1.4 billion in April, up from USD 1.3 billion in the corresponding month of the previous financial year. In volume terms, India imported 2,213 MMSCM of LNG in April, down from 2,078 MMSCM in the corresponding month of the previous financial year.
Russia’s share in India’s crude oil imports soars to 19% in FY23
Russia’s share in India’s crude oil imports soared to 19.1% from 2.0% a year ago, the Reserve Bank of India (RBI) says in its latest annual report. “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 RBI said. The country-wise import data shows Russia gaining the biggest share of the crude pie in FY23, while crude oil imports from Saudi Arabia and the U.S. showed a slight decline. The crude oil imports from Iraq and the U.A.E. remained almost the same as the previous fiscal year. Moreover, India’s combined crude oil imports from other nations declined in FY23 as compared to FY22. In value terms, crude oil imports were the highest in December 2022 at slightly less than $20 billion. In volume terms, crude oil imports were the highest at over 30 million tonnes in December, followed by March 2022 at over 25 million tonnes. The Centre for Research on Energy and Clean Air (CREA), an advocacy and research group that claims to have started in Helsinki in December 2019, accuses five countries led by India and China of ‘laundering’ sanctions against Russia by importing crude from Russia and selling refined products in ‘price cap coalition’ countries, mostly in Europe. Terming the five oil-exporting countries — China, India, Turkey, United Arab Emirates, and Singapore as “laundromat countries”, the report says India exported the highest volume of oil products to price cap coalition countries, one year since Russia’s invasion. India shipped 14.8 million tonnes, representing a 2.4% increase on the prior year in volume terms but a 48% rise in value terms. UAE, China, and Singapore followed as the largest oil products exporters one-year post-invasion, selling 14.2 million tonnes, 7.5 million tonnes, and 7.1 million tonnes respectively to price cap coalition countries. India’s imports from Russia range from petroleum and other fuels, fertilisers, coffee, tea, and spices. The price of crude oil and petroleum products in the international markets fluctuates depending on various factors i.e. demand-supply, geopolitical factors, and other market conditions. The prices of petrol and diesel in the country are linked to the prices of respective products in the international market and not to the crude oil prices. While the crude oil prices have declined from $84.67/bbl in January 2022 to $80.92/bbl in January 2023, international product prices of petrol have slightly gone down from $96.16/bbl to $95.59/bbl and prices of diesel have increased from $97.09/bbl to $111.22/bbl during the corresponding period, the government data shows.
Oil Prices Slip As Fears Of A U.S. Default Return
Crude oil prices retreated today in Asian trade following modest gains made on Monday on the news that President Biden and House Speaker and top Republican Kevin McCarthy had sealed a deal to raise the debt ceiling. However, reports have now emerged that some Republican hardliners in Congress will not support a deal that involves a higher debt ceiling, putting the successful passing of the deal in peril, Reuters has reported. At the time of writing, Brent crude was trading at close to $76.50 a barrel, while West Texas Intermediate was changing hands for a little over $72 per barrel. Both were down modestly from the start of trade today. Debt ceiling negotiations have been a major factor for oil price movements in the past couple of weeks, mostly because of the apparent inability of Republicans and Democrats in Congress to strike any semblance of an agreement on how to increase the federal government’s borrowing power. According to early reports on the tentative deal between Biden and McCarthy, it involves flat spending over the next two years and the recycling of unused Covid funds. However, it appears that this is not good enough for some Republicans both in Congress and outside it. “It’s not a good deal. Some $4 trillion in debt for – at best – a two-year spending freeze and no serious substantive policy reforms,” Rep. Chip Roy said on Twitter. “After this deal, our country will still be careening toward bankruptcy,” Florida Governor Ron DeSantis told Fox News. This means passing the deal would be tough but hardly impossible: history suggests Democrats and Republicans have always been able to set aside their differences in the name of avoiding a debt default. Besides the debt ceiling troubles in the U.S., another factor that has been pressuring prices is potentially conflicting messages from the two leaders of OPEC+, Saudi Arabia and Russia. While Saudi Arabia, through Energy Minister Abdulaziz bin Salman, has supposedly suggested further output cuts, Russia, via Deputy Prime Minister Alexander Novak, has said there was no need for further cuts.
ONGC Videsh has less than $100 mn stuck in Russia, says official
India’s flagship overseas firm ONGC Videsh has less than USD 100 million of dividend income lying in Russia because of Ukraine conflict but the company is not in a hurry to bring it back, a senior official said on Monday. Indian state oil firms have invested USD 5.46 billion in buying stakes in four different assets in Russia. These include a 49.9 per cent stake in the Vankorneft oil and gas field and another 29.9 per cent in the TAAS-Yuryakh Neftegazodobycha fields. They get dividends on profits made by the operating consortium from selling oil and gas produced from the fields. Soon after invading Ukraine in February last year, Russia put restrictions on repatriation of dollars to check volatility in foreign exchange rates. OVL, the overseas arm of state-owned Oil and Natural Gas Corporation (ONGC), got its last dividend back in July 2022. One dividend payout that came after that is lying in the company’s account in Russia. Its managing director Rajarshi Gupta said the dividend income lying in Russia is “less than USD 100 million.” “We are not in a hurry to get it back as the company has capital and operating expenses for the three projects in Russia,” he said. “It is business as usual as far as dividend is concerned.” OVL holds interest in Russia through a Singapore subsidiary.
ONGC to invest Rs 1 lakh cr in energy transition, targets net-zero by 2038
India’s top oil and gas producer ONGC will invest Rs 1 lakh crore by 2030 on energy transition projects as it targets net zero carbon emissions by 2038, its chairman Arun Kumar Singh said on Monday. The firm joins fellow state-owned oil and gas firms Indian Oil (IOC), Hindustan Petroleum (HPCL), GAIL and Bharat Petroleum (BPCL) in preparing roadmaps for net zero emissions as part of the nation’s commitment to deal with the climate challenge. Net-zero for a company means achieving a balance between the quantum of greenhouse gases it places into atmosphere and the amount it takes out. “We have done our internal workings and are now confident that we can achieve net-zero for Scope-1 and Scope-2 emissions by 2038,” Singh told reporters here. The company is planning to scale up electricity generation from renewable sources from 189 MW to 1 GW by 2030. It already has 5 GW of project planned in Rajasthan and is scouting for a similar capacity, he said adding ONGC would also look at offshore wind farms. It is also looking at setting up a 1 million tonne per annum green ammonia plant at Mangalore. “Overall, the investments will be of the order of Rs 1 lakh crore,” he said. The company reversed the declining trend of oil and gas production in 2022-23 and is now looking at raising output with projects both on the east and west coast. ONGC produced 19.584 million tonne (MT) of oil in 2022-23, up from 19.545 MT of previous year. The output is likely to rise to 21.263 MT in the current fiscal (April 2023 to March 2024), to 21.525 MT in 2024-25 and 22.389 MT in the following fiscal. Natural gas output is slated to rise from 20.636 billion cubic meters (bcm) in 2022-23 to 23.621 bcm in 2023-24, 26.08 bcm in the following year and 27.16 bcm in 2025-26. This rise in output is due to projects the firm is implementing on both the east and west coast to raise productivity from current fields and bringing new discoveries into production. As much as Rs 61,200 crore is being invested in 14 development and nine infrastructure projects including KG gas field and rejuvenation of existing producing fields like Mumbai High North and Heera. Singh said ONGC has planned a capital expenditure of Rs 30,125 crore in 2023-24, almost same as Rs 30,208 crore spent in the previous fiscal year. The company, which has 1.62 lakh square kilometer of acreage, is looking to take the acreage to 5 lakh square kilometer by acquiring one lakh square km every year, spending Rs 10,000 crore annually on exploration.
Solar Is Cheapest Energy Source Says IEA
Solar power has been touted as the cheapest available source of energy for several years now. Solar power proponents have been talking about the consistent decline in the cost of raw materials and panel production. They have also talked about LCOE. The levelized cost of energy is a metric that fans of wind and solar like to cite often. It is calculated using a simple formula where you divide the sum of cumulative costs for an energy project over its lifetime by the amount of total energy the project will generate over its lifetime. With this formula, wind and solar do look cheaper than gas-fired power plants or nuclear, which require a lot more in upfront investments. But what the LCOE formula does not account for is the fact that wind and solar do not generate electricity around the clock. That’s one major cost that is getting overlooked. Another substantial cost related to renewables that gets overlooked on a regular basis is the need for storage capacity to offset the intermittency problem. First, there is no such storage capacity available that could solve the problem in its entirety, and this already means solar is not as cheap as suggested by its LCOE. Second, available storage technology is rather expensive, piling on more additional costs, also overlooked by the LCOE formula. Yet, according to the International Energy Agency, as cited by Energy Intelligence, even when factoring in the cost of intermittency, solar remains cheaper than all other sources of energy, and specifically those generated using oil, gas, and coal. Apparently, this is true even when calculated not on an LCOE basis but on the basis of something called a value-adjusted LCOE that takes into account the dispatchability of fossil fuel generation and its positive effect on its competitiveness. The reason that the IEA has reached that conclusion is a simple one: cost assumptions. It is based on cost assumptions for solar power generation costs versus fossil fuel costs by the International Energy Agency, an enthusiastic cheerleader for a complete energy transition to a wind, solar, and hydrogen dominated grid, who has concluded that solar is the cheapest form of energy available. All told, the IEA calculates that on a value-adjusted basis—and with cost assumptions in place—solar comes in at $60 per MWh while gas is $20 more expensive at $80 per MWh. This, of course is a very different gap than the one that opens up with a simple LCOE calculation: $25 per MWh for solar and $110 per MWh for gas. But even that gap is misleading. With all the above in mind, one cannot help but wonder why governments are distributing billions of dollars in subsidies for solar power. Many perhaps also wonder why the countries with the highest ratio of renewable power generation capacity in their energy mix also have some of the highest electricity prices per capita. If solar power is the cheapest kind around, why is Africa not rushing to harness its enormous solar power potential? Why are solar developers not flocking to Africa where so many people have no access to electricity and would greatly benefit from such a cheap source of it? The answer to the above questions reveals yet another regularly overlooked cost associated with presumably cheap solar power: transmission. Africa—and other parts of the world—does indeed have huge potential for solar power generation. What it often lacks is the transmission infrastructure. It also lacks enough paying clients for that cheap solar. Even countries far ahead of African states on the road to windization and solarization have trouble with their grid, by the way. The United States alone would need billions in investment to upgrade the grid to accommodate the wave of new wind and solar capacity coming online. There is also the question of balancing the grid. What most people don’t know because they don’t need to know it is that any electrical grid is a fine-tuned symphony of electrical flow that needs to remain in balance at all times. Sharp jumps and drops in that flow are not something a grid can handle easily. A surge in wind and solar generation makes grid balancing a lot more challenging—and costly. In the UK, for instance, wind turbines have to be turned off on the windier days because they produce more electricity than the grid can handle. This turning off costs money. A lot of it. The Czech Republic had to turn off solar farms over Easter this year because they were generating more electricity that the grid could handle. Other countries have had to do it, too. Because that’s how solar works – it generates electricity when the sun shines and if there’s more sun than there is demand for electricity, the grid risks tipping off balance and grid operators can’t allow that. On the surface, then, solar could be cheaper than everything else. The deeper you look, however, the more additional costs you uncover. Add them all up, and it becomes clear why the cheapest of the cheap still needs so much in direct government subsidies to keep going.
Asian Oil Imports Set For A Rebound In May
Crude oil imports into Asia this month are expected to rise by 8.6% on the month as refineries in China and India exit maintenance season, Reuters’ Clyde Russell reported today, citing data from Refinitiv. The rebound follows a decline in Asian crude imports in April when the total dropped to the lowest in seven months. The numbers sparked concern about the outlook for oil demand as Chinese economic indicators also suggested a less smooth than expected post-pandemic recovery. Yet it seems the biggest reason for the decline was refinery maintenance, based on the strong rebound expected for this month when Refinitiv estimates total Asian imports would hit 27.73 million barrels of oil daily. For China specifically, the data service provider expects oil inflows at a rate of 11.96 million barrels daily, up by as much as a million barrels daily from April. Imports from Russia are seen hitting 2 million barrels daily, up from 1.74 million bpd last month. Almost the same amount of Russian crude is seen going to India this month, at 1.97 million bpd. Imports from Saudi Arabia, the subcontinent’s second-largest supplier are seen falling to 570,000 bpd from 690,000 bpd in April, and so are imports from Iraq—India’s number-three supplier. Meanwhile, Reuters’ Russell notes that India’s future fuel exports may be under threat as EU officials get uncomfortable that the fuels EU countries buy from India are probably produced from Russian crude. Just how serious this threat is, however, is yet to be seen because there are not a lot of alternative suppliers of the amounts of fuel the EU still consumes despite its green push. China’s fuel exports are also set for a decline, but for a different reason: the exhaustion of the first batch of export quotas for the year. Russell noted that a further rebound in local demand will also lead to lower exports.