India’s imports from OPEC at all-time low as Russian oil buy peaks
India’s oil imports from oil producers cartel OPEC’s share fell to an all-time low of 46% in April as purchases of cheaper Russian oil peaked, recently released industry data has shown. The Organization of the Petroleum Exporting Countries(OPEC) nations, mainly in the Middle East and Africa, had a 72% share of all crude oil India imported in April 2022. This share fell to 46% in April 2023, according to energy cargo tracker Vortexa. OPEC made up for as much as 90% of all crude oil India imported at one point of time but this has been sliding since Russian oil became available at discount in the aftermath of Moscow’s invasion of Ukraine in February last year. OPEC supplied 2.1 million barrels per day out of 4.6 million bpd oil India imported in April. This gave it a 46% share, according to Vortexa. Russia continued to be the single largest supplier of crude oil, which is converted into petrol and diesel at refineries, for a seventh straight month by supplying more than one-third of all oil India imported.
No oil exploration in disputed areas without consulting all stakeholders and tribal bodies in the area, says Nagaland government
Following opposition to oil exploration in Nagaland, the state government has stated that exploration in the disputed areas with Assam will not start before consulting all stakeholders and tribal bodies of the area. Nagaland deputy chief minister Y Patton on Friday said, “The government will hold a consultative meeting with all stakeholders before signing the MoU with Assam government. The government will hold consultation with tribal bodies and civil societies of the oil-bearing areas of Nagaland—Mon, Longleng, Mokokchung, Wokha, Nuiland, Dimapur and Peren.” The NSCN-IM and Working Committee of Naga National Political Groups (NNPGs) , both of which are in the peace process, said that the natural minerals and resources should not be explored without arriving at a final solution to the Naga political issue. Oil India Limited (OIL) plans to start exploration in Nagaland once the climate is conducive. OIL is planning to do a 3D seismic survey of 4000 sq km of area in Upper Assam. OIL has done seismic data accusation of the areas in the Northern bank of Brahmaputra in Assam. OIL has a 3000 sq. km area in Nagaland. Dr Ranjit Rath chairman and Managing Director OLI who was in Guwahati on Monday while talking to media persons said, “We already started exploration in Mizoram. Further study is going on to further explore. In Tripura we have assets and exploration is done. In the Northern bank of Brahmaputra River Pathshala and Mangaldoi are covered under Open Acreage Licensing Policy (OALP) bidding. We have done seismic data acquisition.” He added, “We are carrying out exploration in Arunachal Pradesh, we have planned extensive drilling and production is going on. In Nagaland till the time there was a dispute between Assam and Nagaland that was getting sorted out. There is a lot of discussion going on. We have 3000 sq km of exploration acreage in Nagaland. “ Rath said, “Once there is a climate of sorted out issues we will immediately have started exploration. We strongly believe that both the Assam shelf where we have the main producing area, and the Assam- Arakan fold belt which is in the South East of Assam shelf covering Nagaland has enough potential.” CMs of Assam, Nagaland held talks on settlement of border dispute, agreed in-principle on exploring oil in disputed areas for economic benefit recently. Both states have in-principle decided to go in for a MoU on oil exploration in the disputed areas along the inter-state boundary so that oil can be extracted and royalties shared between the neighbouring states. ONGC had earlier stopped E&P activities in Nagaland in 1994 after the militant outfit NSCN (IM) asked it to quit the state. Rath said, “In Manipur we are taking up baseline assessment of the areas in Nagaland border and some areas will be picked up for explorations.
India’s oil imports from Russia seen peaking in May amid China competition
Russia remained the top crude supplier to India in April, further improving its market share to 36%, but a slow month-on-month increase fuelled expectations that the imports from the country could peak in May. That’s being attributed to competition from China for the oil. Russia supplied 1.68 million barrels a day (mbd) of crude to Indian refiners in April, 4% higher than 1.61 mbd in March, according to energy cargo tracker Vortexa. China imported 1.3 mbd by sea from Russia while Europe imported 206,000 barrels per day in April. India’s overall crude imports fell 3.5% to 4.6 mbd in April from March. Russia’s share in India’s crude imports expanded to 36.4% in April from 33.8% in March. This compares to a share of 0.2% before the Russia-Ukraine war. However, the increase in imports of the deeply discounted Russian oil has slowed in recent months. After rising sequentially by 29% in December and 26% in February, the increase slowed to 1.8% in March and 4% in April. Indian Refiners Focus on Europe for Exports Iraq’s share in the Indian market shrank to 17.6% in April from 18.4% in March, while Saudi Arabia’s share dropped to 14.5% from 21%. The UAE’s share fell to 4% from 6.5%. The US and Africa marginally gained. “India’s imports of Russian crude in April have set a new record once again, but the month-on-month increase has slowed and could possibly be peaking this month. Increased competition for Urals from China will likely put a lid on upsides to India’s imports of Russian crude,” said Serena Huang, an analyst at Vortexa. Urals, the Russian flagship mid-sulphur crude, has been the biggest draw for both India and China as it has sold at a deep discount to the global benchmark Brent. It’s easier to ship Urals and pay for it as it’s mostly traded below the G7-imposed price cap of $60 per barrel on Russian oil. India’s import of Urals rose 9% in April over March when it had registered a 5% month-on-month decline. The share of Urals in Russian oil imported by India rose after several months in April to 73.6% from 70% in March and 79% in January. The share of ESPO, another Russian grade, nearly doubled to 10.5% in April from March. India’s imports of Russian refined products fell 31% sequentially to 125,000 barrels per day in April. Chinese imports of Russian products increased 44% to 321,000 bar .. India’s imports of Russian refined products fell 31% sequentially to 125,000 barrels per day in April. Chinese imports of Russian products increased 44% to 321,000 barrels per day while Europe’s remained steady at around 479,000 barrels per day. “While India’s clean product exports in April have fallen by 25% month-on-month, exports to Europe have remained robust, amid a supportive arbitrage,” said Huang. India exported 264,000 barrels per day of refined products to Europe in April compared with 285,000 barrels per day in March. Its exports to the US fell to 30,000 barrels per day in April from 106,000 barrels per day in March. Better margins in the European market have shifted Indian refiners’ focus away from the US to Europe. Europe, the biggest market for Russian crude as well as refined products before the Ukraine war, is seeking supplies from elsewhere in the world after deciding to largely cut dependence on Russia.
Just How Important Is The U.S. Shale Industry?
In 2022, almost 7.8 million barrels of crude oil daily were produced from so-called tight oil resources. The other name for these is unconventional resources. Yet a third and a lot more popular name is shale. Shale is a porous rock that traps hydrocarbon molecules in its pores and makes their release tricky. Or it used to be tricky. Back in the early 20th century, a technology called hydraulic fracturing was developed that allowed the extraction of those hydrocarbon molecules from the pores of the shale rock. Some trace the origins of fracking back to the 19th century when some producers used liquid and solid nitroglycerin to stimulate yields from oil wells in several U.S. states. Modern fracking, luckily for all involved, does not use nitroglycerin. It uses water, chemicals, and sand. Although known for decades, fracking only gathered pace in the early 2000s after a landmark study by the Environmental Protection Agency, which concluded that hydraulic fracturing does not pose a contamination threat to drinking water resources. What followed this study was aptly named a revolution. A historical U.S. oil production chart by the Energy Information Administration reveals a fascinating story. Until about the end of 2010, production grows gradually and consistently, with a few dips here and there following the industry boom and bust cycles. From 2011 onwards, growth is no longer smooth and gradual—it is a literal spike from around 5.6 million barrels daily at the end of 2010 to 13 million barrels daily by late 2019. All thanks to fracking. Fracking, which not everyone in the oil and gas industry likes, by the way, because it was used as a euphemism for a curse word on Battlestar Galactica, turned the United States into the world’s biggest oil producer and also the world’s biggest gas producer. It was gas production that hydraulic fracturing was first used for, and only later expanded to oil. To date, despite slowing production growth and forecasts from some analysts that the revolution is over for good, hydraulic fracturing still contributes the bulk of U.S. total oil and gas production and keeps it higher than anyone back in the 1970s, for instance, could have expected. The process of hydraulic fracturing is simple, on the face of it. It involves drilling a well into the shale rock and injecting into it a mixture of water, chemicals, and what the industry calls proppant, or a special sort of sand, that lodges in the porous rock and keeps the pores open so the oil and gas can ooze out and be collected from the well. Yet simple does not mean easy. Fracking requires massive amounts of the abovementioned materials—the longer and deeper wells become, the more water, chemicals, and sand fracturing them requires. Then there is the wastewater problem. A few years ago, Oklahoma drew media attention because of the significantly increased frequency of earthquakes since the start of the shale boom. The state, one of the big oil producers in the U.S., had negligible seismic activity before 2009, when fracking really took off. By 2016, Oklahoma was recording an average of two quakes a day—what was earlier the average for a year. To date, quakes are just as frequent. Some blame hydraulic fracturing for unsettling the rock and stimulating seismic activity. The U.S. Geological Survey conducted a study and found that it’s not fracking itself that is the problem. The problem was the massive amounts of wastewater that get disposed of in underground reservoirs after the fracturing process is completed. Wastewater wells, the USGS said in its study, operate longer than it takes to frack a production well, and they absorb greater quantities of fluid. This is what causes increased seismic activity, according to the USGS, which only found a causal link between fracking and quakes for just 2% of quakes in Oklahoma. Wastewater disposal regulations have expectedly tightened since that study was published but opposition to hydraulic fracturing has not diminished—at least outside the United States. Amid the energy crunch last year in Europe, some from the industry called on European governments to start exploiting their own, sometimes considerable, shale oil and gas resources. The backlash was immediate and powerful, just as it was years earlier when it led to fracking bans in France, Bulgaria, Denmark, and the Netherlands. In some cases, however, it’s a question of economic viability. Poland, for example, has ample shale resources, but extensive exploration failed to find a way to extract these economically. Norway, too, declared its shale resources uneconomical, focusing on conventional offshore drilling. Whether hydraulic fracturing has been a boon or a bane depends on the perspective. From an energy security perspective, it has most certainly been a boon, and not just for the United States. Argentina is now drawing on U.S. producers’ experience to develop its own shale oil and gas riches in the Vaca Muerta formation, and Europe has enjoyed a steady flow of American oil and gas, most of them extracted from the same shale formations exploiting which Europe’s shale-rich countries have banned. Yet in a reminder that there is always a tradeoff, Oklahoma still experiences earth tremors on a much more frequent basis than it did before the shale revolution began. There is also growing pressure on the industry to reduce its methane emissions, which are considerable. The industry is working on that. After all, methane is a marketable product—another fruit of the shale rock.
Increasing compressed biogas share in total gas mix can reduce annual import bill by $25 bn by 2030: IBA
The Indian Biogas Association(IBA) has pitched for increasing the share of compressed biogas in total gas mix, saying it will help reduce the country’s annual import bill by USD 20-25 billion by 2030. In a letter to Petroleum and Natural Gas Minister Hardeep Singh Puri recently, IBA suggested that in the process of attaining a gas-based economy by 2030, the oil ministry has to keep a strict vigil on the overall sustainability. The industry body suggested gradually increasing the share of compressed biogas (CBG) in the overall gas mix to at least 10 per cent by 2025 and to 20 per cent in 2030. Furthermore, the CBG-CGD (city gas distribution) synchronization plan, which was launched in April 2021 and is due for review three years later (in 2024), should be extended for at least ten years to provide long-term certainty to players in the CBG ecosystem, it suggested. Increasing the share of CBG will ensure guaranteed offtake and a transparent ecosystem for CBG producers.
India’s top gas importer Petronet sees ‘huge jump’ in demand as prices ease
India’s top gas importer Petronet LNG expects a ‘huge jump’ in local gas demand for at least six months due to a softening of global prices of liquefied natural gas(LNG), its chief executive A. K. Singh said on Wednesday. Indian gas demand is already showing signs of recovery after global LNG prices fell to about $11 per million British thermal units in Asian markets. Petronet operated its 17.5 million tonnes a year Dahej LNG terminal on the west coast at 97% in April compared to 77% in the three months to March, Singh told reporters on its quarterly earnings call. “If the prices stabilise we can expect a huge jump,” Singh said, adding Indian gas demand was price sensitive. India wants to raise the share of gas in its energy mix to 15% by 2030 from 6.2% at present. Singh said Indian LNG imports could have risen to 30 million tonnes a year had there not been abnormal situations such as the COVID pandemic and Russia’s war in Ukraine. In the fiscal year to March 2023, India imported 20.1 million tonnes of LNG, down from 25.6 million tonnes in 2019/20 according to the government data. “Things are looking quite bright as of now… We expect this trend to continue at least till six months from now,” Singh said. He added demand in the later part of the year would depend on the winter season in the West and its implication on LNG prices.
Indian Gas Exchange volumes up 215% YoY in April
Trading volumes on the Indian Gas Exchange (IGX) rose 215% year-on-year to 1,790,700 mmBtu (~45 mmscm/1.5 mmscmd) in April, as per data released by the exchange. However, the month-on-month, volumes fell 68% due to decreased spot demand as long-term supplies rose. IGX executed a total of 74 trades during the period. According to data, Hazira was the most active delivery point for free market gas, while Gadimoga saw the trading of domestic ceiling price gas. Other delivery points included Dahej, Ankot, Suvali, and Mhaskal. IGX traded a total of 903,650 mmBtu of domestic ceiling price gas during the month, with 785,850 mmBtu traded at the ceiling price of $12.46/MMBtu and 117,800 mmBtu below the ceiling price at $11.5, as per the Ministry of Petroleum and Natural Gas (MoPNG) notification dated 13 January, 2023. The exchange offers delivery-based trade in six different contracts, including Day-Ahead, Daily, Weekday, Weekly, Fortnightly, and Monthly, across six regional gas hubs in India. The Gas Index of India (GIXI) for April was ₹1,075/$14 per MMBtu, down 8% from previous month.
Could Argentina Replicate Brazil’s Offshore Oil Boom?
In January this year, the Federal Court of Appeals in Mar del Plata dismissed a lawsuit brought forward by several environmentalist organizations and the mayor of the coastal resort city against an offshore oil and gas exploration project. The court set strict environmental protection conditions for the companies involved in the exploration works—YPF, Shell, and Equinor—and stipulated that permanent observers are appointed for the project to make sure these conditions are met. With this ruling, the court basically gave what looks like the final push for Argentina’s offshore oil industry. Up until recently, the South American country has been best known in oil industry circles for its massive Vaca Muerta shale formation. It is certainly an important part of the Argentine government’s plans for future export revenues, with its estimated 16 billion barrels of oil and 308 trillion cubic feet of natural gas. But Vaca Muerta is not the only one. “We celebrate this great news for the country. It is estimated that this offshore project could reach a production volume of 200,000 barrels per day, 35% of Argentina’s current production. Undoubtedly, a before and after for the development and growth of our country,” said the Argentine energy minister, Flavia Royon, following the court of appeals’ ruling in favor of the Mar del Plata project. Equinor is set to begin drilling in the CAN 100 block, some 300 km off the Argentine coast, later this year, and if it encounters hydrocarbons, the project, dubbed Argerich, will proceed to the next stage, where the reserves tapped will be assessed. It’s not the only offshore oil and gas project in this new South American hopeful. Earlier this month, the media reported that the energy ministry was organizing a public consultation on an offshore natural gas project near the coast of Tierra del Fuego. The $700-million project dubbed Fenix is being led by a consortium including French TotalEnergies, German Wintershall Dea, and BP’s subsidiary Pan American Energy. Production of natural gas is scheduled to begin in 2025, and peak output is seen at 10 million cubic meters daily over a period of 15 years. The Fenix project should help reverse a decline in Argentine natural gas production, along with expected production boosts in the Vaca Muerta. That’s not all, either. Earlier this year, the Argentine authorities extended an exploration drilling license held by Norway’s Equinor and Argentine YPF by one year. The license is for an offshore area known as CAN 102 in the deep waters off the Buenos Aires coast. Equinor, by the way, had quite an ambitious drilling program offshore Argentina, but it has run into court injunctions courtesy of drilling opponents even as Argentina grapples with what is now a chronic economic crisis and could certainly do with additional export revenues. According to YPF, the Argentine state oil and gas company, the country has reserves of some 31 billion barrels of oil equivalent off its coast. That’s even more than Vaca Muerta’s total reserves, which translate into some 29 billion barrels of oil equivalent. Together, Argentina’s waters and the shale formation make for an impressive set of oil and gas resources—most of them untapped. As for whether these offshore reserves would end up being exploited, with Argentina repeating Brazil’s offshore boom, that remains to be seen. The fact that supermajors are investing in offshore drilling in Argentina suggests they are not banking on peak oil and gas demand. On the contrary, they seem to be banking on the continued relevance of both oil and gas despite the energy transition push governments in the West are swearing by these days.
India calls CREA report misleading and deceptive efforts to tarnish image
Weeks after Finland based independent international research organisation Centre for Research on Energy and Clean Air (CREA) published its report stating India is purchasing cheap Russian crude oil and converting it into refined petroleum products, which are “laundered” in Europe and G7 countries, ministry of petroleum and natural gas rebutted the charges and called the report misleading and a deceptive effort to tarnish India’s image. CREA’s report ‘Laundromat: How the price cap coalition whitewashes Russian oil in third countries’ was published on April 19 had said that India is leading the group of ‘laundromat countries’ that buy discounted crude oil from Russia, refine it, and sell the processed products to European countries, thus sidestepping European sanctions against Russia. The ‘laundromat countries’ mentioned in the report are China, India, Turkey, the UAE, and Singapore. While responding to the same charges, the ministry said on Wednesday, “India is free to import or export goods and commodities within the terms of international law and calling its legitimate business as ‘laundromat’ implies an illegal activity to which India strongly objects. It shows a lack of understanding of global supply demand dynamics and India’s long history as a major refined products exporter. Crude Oil import below $60 from Russia or elsewhere not under any international embargo. There is also no self-embargo by ‘coalition country’ on buying Diesel refiners around the world. To use word like ‘Whitewashed oil’ is disingenuous at best or mischievous at worst,” the ministry said in its statement. “India meets its energy requirements through imports from multiple countries including Russia. India has never shied away from this fact nor is it apologetic about it as evidenced by multiple ministerial statements over the last year. As far as exports go, as the largest democracy and a country governed by law, Companies in India are free to run their businesses as per law & the Govt does not put restrictions on them in their legitimate business pursuits,” it added.
BPCL lowers pet coke prices by up to INR 1,840/t for May ’23
BPCL has slashed pet coke prices by up to INR 1,842/t from its various refineries for May’23 shipments. Current prices: Bina refinery: INR 18,873/t (for rail supply) and INR 16,823/t (for road supply). Kochi refinery: INR 15,301/t (for rail supply), down INR 1,760/t. There is no road supply from this refinery. The material availability at Kochi is estimated at around 70,000-75,000 t.