BPCL to invest $ 5 billion in Bina refinery complex
India’s state-owned Bharat Petroleum Corp Ltd (BPCL) plans to invest rupee (Rs) 430bn-500bn ($5.2bn-6.1bn) to expand its Bina refinery and build a petrochemical complex at the site in the central Madhya Pradesh state. BPCL has received necessary approvals from the Madhya Pradesh state government for the project, the company said in a regulatory filing to the Bombay Stock Exchange (BSE) on 14 April. The planned petrochemical complex is expected to produce linear low density polyethylene (LLDPE), high density polyethylene (HDPE), polypropylene (PP), bitumen, benzene as well as gasoline, diesel and aviation turbine fuel, it said in its statement. The company expects to commission the project by the fiscal year ending March 2028, it added. In a June 2022 report to the Ministry of Environment, Forests and Climate Change, BPCL stated plans to expand the capacity of its Bina refinery by more than half to 12m tonnes/year from 7.8m tonnes/year, it said The planned petrochemical complex will have a cracker with a 1.2m tonne/year ethylene capacity; a 650,000 tonne/year LLDPE/HDPE swing plant; a 500,000 tonne/year HDPE unit; a 650,000 tonne/year polypropylene (PP) line; and a 50,000 tonne/year butene-1 unit, based to the report. ($1 = Rs82.12)
Windfall tax reimposed on local crude oil; duty on diesel exports scrapped
India Tuesday reimposed windfall tax on domestically produced crude oil at ₹6,400 per tonne and scrapped export duty on diesel. The export duty exemption for petrol and aviation turbine fuel (ATF) will continue. In the last revision the Centre had reduced the windfall profit tax on domestically produced petrol to zero while it has halved the levy on the export of diesel to ₹0.50 per litre. The duty will be effective from April 19, according to a notification issued by the Central Board of Indirect Taxes and Customs. In the last revision the government had cut the tax on the export of diesel to ₹0.50 per litre from ₹1. The latest revision comes on the back of rise in oil prices, which have climbed up following a surprise cut in production Opec plus. The tax rates are reviewed every fortnight based on average oil prices in the previous two weeks.
India and China snap up Russian oil in April above ‘price cap’
India and China have snapped up the vast majority of Russian oil so far in April at prices above the Western price cap of $60 per barrel, according to traders and Reuters calculations. That means the Kremlin is enjoying stronger revenues despite the West’s attempts to curb funds for Russia’s military operations in Ukraine. A G7 source told Reuters on Monday the Western price cap would remain unchanged for now, despite pressure from some European Union countries, such as Poland, to lower the cap to increase pressure on Moscow. The advocates of the cap say it reduces revenues for Russia while allowing oil to flow, but its opponents say it is too soft to force Russia to backtrack on its activities in Ukraine. The latest data from Refinitiv Eikon suggest Russian Urals oil cargoes that loaded in the first half of April are mostly heading to India’s and China’s ports. India accounts for more than 70% of the seaborne supplies of the grade so far this month and China for about 20%, Reuters calculations show. Meanwhile, lower freight rates and smaller discounts for Urals against global benchmarks nudged the daily price of the grade back above the cap earlier in April from a period of trading below. India and China have not agreed to abide by the price cap, but the West had hoped the threat of sanctions might deter traders from helping those countries buy oil above the cap. Average discounts for Urals were at $13 per barrel to dated Brent on a DES (delivered ex-ship) basis in Indian ports and $9 to ICE Brent in Chinese ports, according to traders, while shipping costs were $10.5 a barrel and $14 a barrel respectively for loadings from Baltic ports to India and China. That means the Urals price on a free on board (FOB) basis in Baltic ports, allowing about $2 per barrel of additional transport costs, has been slightly above $60 per barrel so far in April, Reuters calculations show. Shipping costs have come down significantly in recent weeks as Russian port ice conditions eased and more tankers became available. Freight rates for Urals cargoes loading in Baltic ports for delivery to India have eased to $7.5-$7.6 million from $8-$8.1 million two weeks ago, two traders said. The cost of tanker shipment from Baltic ports to China was $10 million, down from nearly $11 million a couple of weeks ago, they added. During winter, freight costs for Urals cargoes jumped above $12 million for both India and China. Lower freight costs suggest Russian oil suppliers have secured enough vessels even given long distances, the traders said. Meanwhile, output cuts announced by the OPEC+ group of oil producers at the start of April have also boosted values for various grades around the world, including Urals. Urals prices in Indian ports had traded at a discount of $14-$17 per barrel to dated Brent on a DES basis in March, while the price at Chinese ports was around $11 per barrel against ICE Brent.
Iraq To Restart Kurdistan Oil Exports This Week
Iraq will restart the export of crude oil from the Kurdistan region by the end of the week, the country’s Prime Minister, Mohamed Shia al-Sudani, said, as quoted by Rudaw. The news follows comments made earlier this week by the deputy speaker of the Iraqi parliament, who said Erbil and Baghdad had settled most of their differences with regard to oil exports from Kurdistan, and all that was left was hammering out some details. “Today or tomorrow, we will go to sign the agreements with SOMO and the oil companies to resume exports,” PM Al-Sudani told Rudaw, adding that the resumption of exports could begin before the end of the week. Kurdistan’s crude oil exports – around 400,000 to 450,000 bpd shipped through an Iraqi-Turkey pipeline to Ceyhan and then on tankers to the international markets – were halted in late March by the federal government of Iraq. A few days earlier, the International Chamber of Commerce ruled in favor of Iraq against Turkey in a dispute over crude flows from Kurdistan. Iraq argued that Turkey shouldn’t allow Kurdish oil exports via the Iraq-Turkey pipeline and Ceyhan without approval from the federal government of Iraq. The court ruled that Turkey should pay Iraq compensation of $1.5 billion for what now appears to be illegal exports of oil over five years. In response, Turkey shut off the Kirkuk-Ceyhan pipeline, effectively suspending oil exports from Kurdistan. Emergency talks followed, as did oil field shutdowns because Kurdistan does not have enough storage space to maintain production. Oil prices jumped considerably on the production outage in northern Iraq. The negotiations between Baghdad and Erbil are focused on who gets more control over the oil flows, with the two sides being forced to make concessions so exports could resume. For the central government in Iraq, it looks like a win, because exports will now go through the Iraqi state-owned oil company, SOMO, rather than through the Kurdistan authorities.
Russia Finds New Market For Its Fuels In The Middle East
The trade shift in Russian oil flows is benefitting Moscow’s Middle Eastern allies in the OPEC+ pact as the biggest Arab Gulf oil producers, Saudi Arabia and the United Arab Emirates (UAE), scoop up Russia’s fuels at discounted prices. With Western markets essentially shut for Russia’s crude and products, new trade routes have emerged, and the countries sitting on some of the largest oil reserves are now importing Russian diesel, naphtha, and fuel oil, according to tanker-tracking and data commodity services. Saudi Arabia and the UAE, traditional Middle Eastern allies of the United States, are not shying away from importing, storing, trading, or re-exporting Russian fuels despite American efforts to persuade them to join a crackdown on Russian attempts to evade the Western sanctions on its oil. Russia Begins Exporting Fuel To Top Middle Eastern Oil Producers Since the Western countries announced they would impose embargoes and price caps on Russia’s crude oil and oil products, the reshuffle of oil trade out of Russia has involved the Middle East as a major importing and trading hub. In 2022, Russia’s oil exports to the UAE hit a record 60 million barrels, triple compared to the previous year, according to Kpler data cited by The Wall Street Journal. Fujairah, the biggest trading hub in the UAE, is now receiving a lot of Russian oil products, whose volumes are now second only to gas oil from Saudi Arabia, per estimates from Argus Media. The UAE is also emerging as a hub for trading, insuring, and shipping Russian oil. Earlier this year, Russia started exporting fuels to Saudi Arabia, the world’s top crude oil exporter and de facto leader of OPEC. Saudi Arabia and Russia are also the leaders of the OPEC and non-OPEC producers in the OPEC+ alliance, which has been coordinating crude oil supply to the market for more than six years now. Kpler estimates that Russia is now sending around 100,000 barrels per day (bpd) of fuels to Saudi Arabia, compared to virtually zero before the Russian invasion of Ukraine, per data quoted by the Journal. Russia seems to be accelerating its exports of diesel to Saudi Arabia through both direct shipments and ship-to-ship transfers. Russia started exporting diesel to Saudi Arabia in February after Moscow’s key fuel export outlet, the EU, enacted an embargo on seaborne imports of Russian oil products on February 5, Reuters reported earlier this year, quoting traders and ship-tracking data. Using STS loadings, Russia is shortening the routes for tankers headed to Africa and Asia after Moscow is now banned from exporting fuels to the EU. The EU banned—effective February 5—seaborne imports of Russian refined oil products, and around 1 million bpd of Russian diesel, naphtha, and other fuels had to find a home elsewhere if Moscow wanted to continue getting money for those products. The flow of Russian fuels to third countries is also regulated by price caps, similar to the cap on Russian crude if the trade is carried out through Western insurers. The cap on Russian diesel is $100 per barrel, while the cap on lower-cost petroleum products is set at $45 a barrel. “As Russia’s oil reshuffle continues, some trading patterns are solidifying. India and China have emerged as the top strategic trading partners for Russia, accounting each one-third of total arrivals of Russian oil in March,” Serena Huang, Head of APAC Analysis at Vortexa, wrote last week. “In considering the alternative markets for Russian oil after the EU ban, we see an interesting distinction of crude, naphtha and fuel oil exports being concentrated among a handful of destination countries in Asia and the Middle East, whilst diesel supplies have headed towards more diverse markets including Saudi Arabia, Turkey, Brazil etc,” Huang added. Russian diesel exports jumped by 33% in March, with shipments from Russia’s Black Sea ports going to the East and Western Mediterranean regions to countries such as Libya, Egypt, and Tunisia. Exports out of the Baltic Sea ports “have shifted fairly evenly in terms of percentage share to Brazil, Saudi Arabia, Egypt and Morocco,” Vortexa’s Senior Market Analyst Pamela Munger said earlier this month.
Earnings preview: Oil and gas sector expecting a sleek quarter due to better realisations
The earnings numbers for the fourth quarter of the financial year gone by (FY23) for the oil and gas sector will be declared this week starting with Reliance on Friday. Sector watchers expect the quarter to be better than the previus one (Q3FY23) riding on realisations. On the other hand, Singapore’s gross refining margins (GRMs) have increased to levels of $8.2 per barrel versus $6.3 per barrel earlier, and this is something that will show in Reliance Industries Ltd’s (RIL) earnings, which will see an improvement led by the O2C or the oil to chemical segment and lower windfall tax as well. Overall, this would lead to an EBITDA increase of 5 percent on a sequential basis and on a consolidated basis as well for the company. For oil marketing companies (OMCs), lower crude and higher refining margins will be positive, but a bigger turnaround will come in from the marketing segment, and that is where improvement will be seen. When both segments will lead to a 77 percent sequential surge in EBITDA and 3.3 times increase in profit after tax (PAT) according to ICICI Securities. For upstream companies, even though crude prices have declined, realisations post taxes have been around $72-76 per barrel and gas realizations have been stable quarter on quarter (QoQ). So this will see a set of. Overall high other income will aid earnings for oil producers this time . City gas distribution (CGD) companies will see a mixed bag whereas Mahanagar Gas Ltd (MG) will see the best performance. MGL took sharper price hikes versus Indraprastha Gas Ltd (IGL) and hence the EBITDA performance is expected to be better. Gujarat Gas will see a weak performance this time round led by lower demand in the industrial segment. Nirmal Bang estimates that Gujarat Gas will see 26 percent decline in EBITDA YoY, IGL will see a 12.5 percent increase, but the biggest rise will be 72 percent increase in MGL’s EBITDA. Now for gas utilities, GAIL and GSPL will see a weak quarter due to supply shortages and also weak demand while Petronet LNG will see better numbers. That is because of the lower spot LNG price.
We have advanced our target to achieve 20% ethanol blending in petrol from 2030 to 2025-26: Petroleum Minister Hardeep Singh Puri
The government has advanced its target to achieve 20 per cent ethanol blending in petrol from 2030 to 2025-26, Union Minister for Petroleum Hardeep Singh Puri said on Monday. While addressing the Global CBG Conference of the Indian Federation of Green Energy (IFGE) – CBG Producers Forum, Puri said that the Government of India has notified the National Policy on Biofuels, 2018 to increase usage of biofuels in the energy and transportation sectors of the country. “Production of indigenous biofuels will play a pivotal role in achieving the targets of net zero and import reduction. We have increased the ethanol blending in petrol from 1.53 per cent in 2013-14 to 10.17 per cent in July 2022. This translates into forex savings of Rs 41,500 crore, timely payment of over Rs 40,600 crore to farmers and a reduction of 27 lakh tones in CO2 emissions. We have also advanced our target to achieve 20 per cent ethanol blending in petrol from 2030 to 2025-26,” he said. The Union Minister also said that the production of CBG would have multiple benefits viz., reduction of natural gas imports, reduction of GHG emission, reduction in the burning of agriculture residues, providing remunerative income to farmers, employment generation, and effective waste management. Puri said that the Government of India has set a target to increase the share of gas in the energy mix up to 15 per cent in 2030 to make India a Gas based economy. “Presently we are importing around 50 per cent of our requirement of natural gas. The speedy expansion of CBG wil help in meeting our additional requirement from domestic resources,” the Union Minister said. He further added “India has an ambitious target to set up 5000 commercial plants by 2024- 25 and produce 15 MMT of CBG which would replace other gaseous fuels being used in the country. So far 46 CBG/biogas plants have been commissioned and sale has been started from more than 100 Retail Outlets.”
Adani-Total’s Dhamra LNG terminal to start commercial operations at May-end
Adani Group and French company TotalEnergies’ newly built Rs 6,000 crore facility to import LNG at Dhamra on the Odisha coast will start commercial operations at the end of May, the French firm said on Monday. The 5 million tonne a year capacity terminal received its first ever shipment of liquefied natural gas – a fuel that will be used to make steel, produce fertilizers and turned into CNG and cooking gas – on April 1. Qatari ship ‘Milaha Ras Laffan’ docked at Dhamra port on April 1 morning, bringing in 2.6 trillion British thermal units of natural gas in its frozen form (LNG) which will be used to commission the facility. “This delivery enables the gradual commissioning of the terminal, which is expected to start commercial operations at the end of May 2023,” TotalEnergies said in a press statement. Karan Adani, CEO of Adani Ports and Special Economic Zone (APSEZ) – the firm that operates the Dhamra port and has leased the LNG jetty to Adani Total Private Ltd – had previously announced the receipt of the first LNG cargo. “This is a huge leap forward not only in access to clean and affordable energy but also in decarbonising India’s energy sector,” he had said earlier this month. Adani Total Private Limited is a 50:50 joint venture between TotalEnergies and Adani. The commissioning cargo was supplied by TotalEnergies from its portfolio in Qatar. “With regasification capacity of 5 million metric tonne of LNG per year, the Dhamra LNG terminal adds more than 10 per cent to India’s regasification capacity, strengthening the country’s position as the world’s fifth largest LNG importer and allowing it to increase the share of natural gas in its energy mix from 8 per cent to 15 per cent by 2030 to reduce its carbon intensity,” the statement said. Dhamra is the only LNG import terminal in eastern India and only the second on the entire east coast. The country’s five other terminals are on the western coast (three in Gujarat, one each in Maharashtra and Kerala). “We are pleased to have completed the first delivery of LNG to the new Dhamra LNG terminal, developed in partnership with Adani, with a cargo from Qatar. India wants to develop the use of natural gas to reduce the carbon intensity of its energy mix by replacing coal, and LNG can therefore meet the growing domestic demand. The commissioning of the Dhamra terminal reflects TotalEnergies’ ambition to support India’s energy transition and supply security,” said Thomas Maurisse, Senior Vice President LNG at TotalEnergies. After all checks, the terminal would be ready to start commercial operations with an expected 2.2-2.3 million tonne of LNG expected to be imported in the first year and a gradual ramp-up to full capacity in the next. Dhamra is a tolling facility where state-owned GAIL (India) Ltd and Indian Oil Corporation (IOC) have booked capacity. They will import LNG at the terminal which will be re-converted into gas before being piped to refineries and fertiliser units. It will also be converted into CNG for running automobiles and piped into household kitchens for cooking purposes. It has a 20-year take-or-pay contract to provide regasification services to IOC for 3 million tonne per annum of LNG and 1.5 million tonne to GAIL. The terminal will be able to berth the widest range of LNG vessels all year round, transport gas via pipelines, trucks or on reloaded vessels. It houses two storage tanks, each of 180,000 cubic meters capacity, amongst the largest in the country. The capacity can be doubled to 10 million tonne in future by adding a third tank. Dhamra will be the main supply point on the recently completed Urja Ganga pipeline developed by GAIL, providing gas access to over 35 per cent of India’s population, covering about 20 per cent of the country’s land mass. Refineries, fertiliser plants, industries and city gas networks in the hinterland will be the major consumers of gas from Dhamra LNG. LNG is predominantly methane (C1) gas chilled to around (-)160 degrees Celsius where it turns into a liquid at atmospheric pressure, occupying less than 1/600th of the volume it otherwise would. This allows huge quantities of energy to be transported across oceans in specialised vessels. It is considered as a bridge fuel for India’s energy transition. Last year, the global LNG trade reached around 400 million tonne. Over the past three years, Indian imports have varied between 22 and 24 million tonne representing around 3 per cent of the country’s primary energy basket.
India’s gasoil sales jump in April first half
Indian state refiners posted an 8.4% rise in sales of gasoil to 3.45 million tonnes in the first half of April compared with the same period last month, preliminary sales data showed, indicating higher demand from the agriculture sector and a recovery in industrial activity. Gasoil accounts for about two-fifths of refined fuel consumption in India and is directly linked to industrial activity. While gasoil is mainly used by trucks, gasoline is used in passenger vehicles. Sales of gasoline fell 6.6% to 1.14 million tonnes during the period, the data showed. Sales of liquefied petroleum gas (LPG) also declined more than 6% to 1.1 million tonnes in the same period, and jet fuel sales were down nearly 4% at 284,600 tonnes, the data showed. State-run companies – Indian Oil Corp, Hindustan Petroleum Corp and Bharat Petroleum – own about 90% of India’s retail fuel outlets.
Despite LPG & piped gas coverage, 15% of sulphur, CO in Mumbai’s air due to kerosene
Even though the state is inching close to a kerosene-free status, the existing supply of the combustible oil is far from meeting the Centre’s directive of bringing down the sulphur content from 2.5% (2,500 parts per million) to 0.10% (100 parts per million), a reduction of 96%. As a result, up to 15% of the sulphur and carbon monoxide load in Mumbai’s air is due to domestic burning – mainly kerosene used in slums and surrounding rural areas – forcing Mumbaikars to breathe the poisonous gas. It’s been almost four years since the central environment ministry’s notification directed petroleum companies to bring down sulphur content in kerosene. However, only a miniscule quota of kerosene alloted to the army has been converted to the expected sulphur standards, say activists. Sulfur dioxide emitted from kerosene use irritates skin and mucous membranes of eyes, nose, throat, and lungs. High concentrations of SO2 can cause inflammation and irritation of the respiratory system. In addition to sulphur dioxide, kerosene heaters also emit carbon dioxide, carbon monoxide and nitrogen dioxide. Breathing these substances can pose a danger.