Russia’s flagship oil is moving ever closer to $60 per barrel cap
The price of Russia’s flagship Urals crude at the point of export is getting closer to the $60 limit, data from Argus Media Ltd. The price of Russian oil is nearing a threshold that could create complications for the country’s biggest buyers. The Group of Seven nations last year imposed a cap of $60 a barrel on crude shipped from Russia to limit the Kremlin’s profits amid the war in Ukraine. Buyers who pay above that level lose access to industry-standard insurance under the sanctions. The price of Russia’s flagship Urals crude at the point of export is getting closer to the $60 limit, data from Argus Media Ltd. show. The delivered price of the grade to India’s west coast — including shipping costs — was actually more than $73 a barrel as of April 6. It’s getting increasingly difficult to assess the actual price of Russian crude, due to the emergence of a shadow fleet of vessels and trading companies with unclear affiliations. However, oil prices soared following last week’s shock announcement by OPEC+ to cut output, and global demand is expected to increase later this year, adding further upward pressure. or much of the past year, Russian oil exports have surged, with much of it going to India and China. But increasingly tighter sanctions are starting to bite, and Russia has pledged to cut output through the end of the year. The country’s seaborne exports just saw their biggest weekly drop since December, tanker-tracking data compiled by Bloomberg show. A gap of about $18 a barrel exists between the point of shipping and delivery of Urals cargoes in Argus’s data. The Russian grade shipped from the Baltic port Primorsk and Novorossiysk on the Black Sea costs about $55 a barrel. The delivered price of Russian oil to India averaged $72.14 a barrel in February, the most recent month for available data, according to the South Asian nation’s ministry of commerce and industry. That’s marginally lower than in January. While Russian crude is getting pricier, there are signs that it’s still cheap enough to undercut other suppliers. The cost of Iraqi crude to India dropped to an average of $76.19 a barrel in February, compared with $78.92 in January, according to India’s ministry.
India’s revised gas pricing formula to aid demand, upstream profit stability: Fitch
India’s decision to limit prices of domestic natural gas from legacy fields to between $4 per million British Thermal Unit (mmbtu) and $6.5 will support margins for city gas distributors, encourage the use of gas, and reduce cash flow volatility for upstream producers, Fitch Ratings said on Wednesday. “We expect a partial pass-through of the lower administered price mechanism (APM) gas prices, at which domestic upstream producers supply gas to city gas distributors, in the prices of compressed natural gas (CNG) and domestic piped natural gas (PNG) to add to the distributors‘ margins in the near term,” it said.
India continues to waive transmission costs for green hydrogen plants
According to a government official, India has extended a waiver of transmission fees for renewable energy to hydrogen production plants that start up before January 2031 in order to become the world’s cheapest producer of the fuel. The move is intended to lower the cost of green hydrogen – hydrogen produced by splitting water with renewable electricity – by one-fifth. The shift will make more green hydrogen production facilities eligible for the 25-year remission of transmission rates, which was previously accessible for plants established before July 2025. Large-scale hydrogen and ammonia projects take three to four years to build, and many are unlikely to be operational by June 2025, according to a government official. The country’s goal is to manufacture green hydrogen at the world’s lowest cost, at $1-$1.50 per kilogram, down from $4-$5 per kilogram now. Reliance Industries and Adani Enterprises have established $1 per kg cost targets by 2030. Other significant Indian corporations that have declared intentions to produce green hydrogen include Larsen & Toubro, Indian Oil, NTPC, JSW Energy, ReNew Power, and Acme Solar. According to industry estimates, renewable energy, including transmission, accounts for 65%-70% of the cost of manufacturing green hydrogen. Inter-state transmission costs between 1-2 rupees every unit of power transmitted. According to the official, every rupee reduction in renewable energy costs reduces the cost of green hydrogen by 60 Indian rupees ($0.73). The hydrogen mission in India is anticipated to require 8 trillion Indian rupees ($98 billion) in investments by 2030, including 125 gigatonnes of non-fossil-based generation capacity and new transmission lines. India also intends to provide green hydrogen producers with incentives worth at least 10% of their costs as part of a $2 billion initiative that will commence before the end of the year. The government opposes broadening the concept of green hydrogen to include fuel derived from low-carbon energy sources, as some industrialized countries have requested at G20 meetings. See also: Indian Army & NTPC arm sign agreement to build green hydrogen plants Cabinet approves NHPC’s investment in India’s largest hydro project.
Cheaper spot LNG prices tempt some Asian buyers amid supply gains
Cheaper spot prices for liquefied natural gas (LNG) are luring price-sensitive buyers back in Asia, with China and India recording rising imports in March. The spot price of LNG for delivery to north Asia was $12.50 per million British thermal units (mmBtu) in the week to April 6, steady from the previous week, which was the lowest level since June 2021. The price has dropped 67% from its northern winter peak of $38 per mmBtu, reached in mid-December and is also down 82.3% from its record high of $70.50 from August last year, hit when European demand for the super-chilled fuel surged during the energy crisis sparked by Russia’s invasion of Ukraine. China’s imports of LNG are estimated by commodity analysts Kpler at 5.55 million tonnes in March, up from February’s 4.95 million and also well above the 4.77 million from March last year. China lost its status as the world’s biggest importer of LNG back to Japan last year, largely because its utilities pulled back from the spot market as prices surged. India was another LNG importer stung by the record high spot prices last year, but is returning to the market as prices retreat India’s March imports are estimated at 1.84 million tonnes, up from February’s 1.27 million, which was the lowest monthly total since January 2017, according to Kpler data. India’s March imports were the most since June 2022, and also exceeded the 1.77 million tonnes from March last year. Other smaller Asian LNG importers, such as Pakistan, Bangladesh and Thailand also recorded higher arrivals in March from February. What’s worth noting is that Asia’s overall imports of LNG were largely steady in March, coming in at 22.35 million tonnes, up slightly from February’s 22.18 million, but down on a per day basis. This is largely because developed country importers such as Japan typically see lower imports as the peak winter demand season ends, with March arrivals pegged at 5.58 million tonnes, down from 6.54 million in February.
IEA Warns Saudi Arabia’s Oil Production Cut Plan To Tighten Indian Economy
The International Energy Agency (IEA) warns of a potential burden on the Indian economy due to Saudi Arabia’s oil production cut plan, predicting tight global markets in the second half of the year. In response to a question about the potential impact of Saudi Arabia’s oil production cut on countries like India, stated, Fatih Birol, Executive Director of, the International Energy Agency told ANI, “India is a country that imports energy and oil. The majority of the oil consumed in India is imported. Such a move could result in an increase in India’s oil import bill, posing a burden on the Indian economy and consumers.” On Saudi Arabia’s announcement of cutting oil production, Birol stressed, “Saudi Arabia, Russia and others- the OPEC plus producers decided to cut the oil production. And when we look at the International Energy Agency’s analysis and the analysis of almost every serious institution looking at the oil markets, the second half of this year markets would be all very tight. Birol added that he finds this decision risky for the global economy. Commenting on the effectiveness of the ban on Russian oil, Birol stated that it depends on the objective. “Since February 24, when the war started, today, the Russian oil and gas export revenues declined, dropped by 60 per cent. If we consider that the oil and gas export revenues are a very important input for the Russian budget, this is a major challenge for the Russian economy.” Fatih Birol acknowledged that India has been identified as a key country that imports crude oil and then re-exports refined oil to European countries. He stated that he considers this to be a legitimate action. When discussing the impact of Ukraine’s war on the energy sector, Birol emphasized that renewable energies promote peace. He further noted that Russia, which is currently the world’s largest natural gas exporter, is facing increasing competition as more countries are producing and exporting gas. Birol anticipated that the influx of liquefied natural gas (LNG) into the markets in the next few years would likely lower prices and alleviate concerns .
Oil Prices Return To Recent Highs
The price of crude oil returned on Tuesday to the recent highs seen after OPEC+ announced it would cut production by another 1.6 million barrels per day. On April 2, OPEC+ announced that it would cut its crude oil production by another 1.66 million barrels per day (including the 500,000 bpd Russian production cut) on top of its 2 million bpd cut. Naturally, oil prices spiked following the news, reaching gains of 8% at the Monday open. Brent was trading at more than $86 per barrel, with WTI trading at nearly $81. Further gains were made after opening, with WTI reaching $81.69 Today, the price of WTI has climbed by more than 2% on the day to $81.37, with Brent climbing 1.50% to $85.44. And prices were still rising at the time of writing. A Tuesday report by Energy Intelligence showed that OPEC+’s total March production was 680,000 fewer barrels per day than the month prior, falling to 37.64 million bpd. Most of the production drop was attributed to Nigeria and Russia, which together accounted for 440,000 bpd of the production decline. Fears of tighter supply as a result of the ever-elusive but always-present China reopening schtick clashing with OPEC+’s supply decreases are most likely behind the Tuesday price moves. U.S. gasoline prices continue to tick upward as well, along with the price of oil. Tuesday’s national average gasoline prices were $3.608 per gallon, according to AAA—an increase of more than $0.10 from a week ago, accounting for most of the $0.134 per gallon rise over the last month. While Brent and WTI prices were climbing on Tuesday, WCS prices were falling, losing 1.61% and reaching $58.49. Citigroup said on Tuesday that it is estimating that prices will fall below $80 on China’s slower-than-expected recovery.
EIA Expects An Oil Market Surplus Despite OPEC+ Cuts
Despite OPEC+’s surprise production cut, the global oil market will remain in surplus this year and next as demand growth could be hurt by lower-than-expected economic growth in the coming months, the U.S. Energy Information Administration (EIA) said in its latest Short-Term Energy Outlook (STEO). The latest forecasts include declining production in OPEC and Russia, yet the EIA still expect global oil production to increase by 1.5 million barrels per day (bpd) in 2023, due to strong growth from non-OPEC countries excluding Russia. Non-OPEC+ production growth will largely be driven by North and South America, the administration said. This year, global oil production is set to average 101.3 million bpd, while global oil consumption is estimated at 100.87 million bpd. The surplus on the market will start to shrink this quarter, but even in Q3 the market will be in a slight surplus, the EIA forecasts. That’s contrary to some other projections that say the OPEC+ cuts will tighten the market so much later this year that prices could jump to $100 per barrel. If the current OPEC+ cuts expire at the end of 2023, global oil production is set to average 103.25 million bpd in 2024, while consumption is expected at 102.72 million bpd—with supply outstripping demand next year, too, according to the EIA. “Increasing risks in the U.S. and global banking sectors increases uncertainty about macroeconomic conditions and their potential effects on liquid fuels consumption, which increases the possibility of liquid fuels consumption being lower than our current forecast,” the EIA said. “We expect global oil markets will be in relative balance over the coming year.” Global oil inventories, which increased by 400,000 bpd in 2022 and by 1.1 million bpd in the first quarter of 2023, will be mostly unchanged during the second half of 2023, the EIA predicts. Inventory builds will average about 500,000 bpd beginning in 2024 if the OPEC+ cuts expire at the beginning of next year.
Iraqi oil to India gets cheaper as competition From Russia bites
The price of crude from Iraq averaged $76.19 a barrel, compared with $78.92 in January, according to data published by India’s ministry of commerce and industry. Russian supplies averaged $72.14, marginally lower than January. India and China emerged as a key consumers of Russian crude after many other buyers shunned its barrels due to the war in Ukraine. The OPEC+ producer has cemented itself as the South Asian nation’s biggest supplier of oil. Crude from Saudi Arabia was the most expensive for Indian buyers in February, averaging $87.66 a barrel. That compares with $85.84 in January. The data from the ministry is preliminary and represents oil delivered to the port.
Urja Ganga pipeline takes cheaper gas to hinterland
The ‘Urja Ganga’ pipeline, India’s most ambitious project taking environment-friendly gas to so-far untouched areas, has taken the benefit of lower natural gas prices to the hinterland, helping expand adoption of the cleaner fuel, official sources said. Traditionally, natural gas was available for use as fuel to generate electricity, make fertilizer or turn into CNG and cooking gas was available only in the Western and Northern parts of the country, as pipelines taking the fuel from source to users were limited to these parts. In October 2016, work on laying a 2,655-km pipeline from Jagdishpur in Uttar Pradesh to Haldia in West Bengal, Bokaro in Jharkhand and Dhamra in Odisha began. The line was extended to Guwahati in Assam from Barauni in Bihar, a length of 726 km, to take the fuel to hereto-unconnected states in the East. The Jagdishpur-Haldia-Bokaro-Dhamra Pipeline (JHBDPL), popularly called the Pradhan Mantri Urja Ganga pipeline, is now ready to supply gas to the eastern states of Bihar, Jharkhand, Odisha and West Bengal, official sources said. This has helped pass on the benefit of reduction in CNG and piped cooking gas prices to consumers in these regions following the government decision to cut input natural gas prices. About Rs 5-7 reduction in rates has now reached consumers in 20 towns and cities in the hinterland. Gas pipeline is the cheapest mode of transportation of gas. Sources said to carry gas to the eastern states of India, state-owned gas utility GAIL (India) Ltd was authorized to lay JHBDPL. The government provided 40 per cent viability gap funding amounting to Rs 5,176 crore for execution of JHBDPL. Further, as a part of JHBDPL, GAIL is also laying Barauni-Guwahati pipeline which shall act as a source for North East Gas Grid pipeline being executed with 60 per cent viability gap funding amounting to Rs 5,559 crore to connect all the North Eastern states to natural gas source and supply gas to all parts of the country. The Pradhan Mantri Urja Ganga pipeline will connect all the geographical areas (more than 90) spread over the states of Uttar Pradesh, Bihar, Orissa, West Bengal and further to the North Eastern Region of India. With the completion of this project, the North Eastern/ Eastern part of India becomes an integral part of the gas-based economy with twin benefits of cheapest transportation of gas through Urja Ganga and gas pricing reforms, they said. Under the unified tariff regulations recently notified by sector regulator Petroleum and Natural Gas Regulatory Board (PNGRB), transportation tariff has been cut by about 50 per cent to Rs 99.90 per million British thermal units for the eastern parts, helping make the clean fuel more affordable. Last week, the Cabinet Committee on Economic Affairs approved the revised domestic natural gas pricing guidelines for gas produced from nomination fields of state-owned Oil and Natural Gas Corporation (ONGC) and Oil India Ltd. The price of such natural gas shall be 10 per cent of the monthly average of Indian crude basket and shall be notified on a monthly basis. The price for gas produced from nomination fields of ONGC/OIL shall have a floor and a ceiling. This has resulted in reduction of gas price from USD 8.57 per mmBtu to USD 6.5 per mmBtu. The reforms will lead to significant decrease in prices of piped cooking gas for households and compressed natural gas (CNG) for transport, they said adding the reduced prices shall also lower the fertilizer subsidy burden and help the domestic power sector.
LNG developer Tellurian seeks investors
The proposed Driftwood LNG terminal in the state of Louisiana is slated to begin production in 2027, with an annual capacity of roughly 11 million tonnes in the first phase. Japanese and Indian companies are showing interest, Simoes said, adding that Tellurian is also in contact with oil majors and upstream companies. Tellurian, which plans to retain a majority stake, seeks investments from two to three companies. Annual capacity of 11 million tonnes represents more than 10% of LNG demand in Japan, the world’s top importer of the fuel. Eventual expansion planned for Driftwood would boost capacity to about 28 million tonnes, or more than 30% of current U.S. production. Japanese companies were involved in the launch of three U.S.-based LNG projects. Increasing imports from the U.S. would help ensure a stable supply for Japan. U.S. engineering company Bechtel is handling Driftwood’s design, procurement and construction, with the design 80% complete. Tellurian is using revenue from shale gas production and sales for the plant construction. Simoes said the company had spent $1 billion by the end of February. But the project was dealt a major blow when two of its top customers, Shell and energy trader Vitol, canceled long-term deals last year totaling 6 million tonnes annually. Tellurian seeks to salvage the project under an arrangement that will let equity partners offtake LNG based on their stakes. “We continue to put together the pieces to have advanced discussions with potential equity partners,” Simoes said. “So it’s very attractive, which is why we’re quite busy.” Multiple LNG projects are underway in the U.S. South. Venture Global LNG said on March 13 that it was proceeding with an additional investment in its Louisiana plant, with plans to produce roughly 20 million tonnes — the production could start by 2025. Major energy company Sempra decided on March 20 to proceed with an investment in the Port Arthur LNG plant in Texas. The plant is slated to have a capacity of roughly 13 million tonnes a year and seeks to start PR