Govt plans to create carryover stock of ethanol for next year
The government is planning to create a carryover stock of ethanol for the next year anticipating a rise in demand for E20 fuel in the country, according to a senior food ministry official. E20 fuel is a blend of 20 percent ethanol with petrol. The government aims to achieve the 20 percent ethanol blending target by 2025. “Ethanol blending is going well. Oil Marketing Companies (OMCs) have started dispensing E20 fuel in about 100 outlets in 31 cities in the country. We have started E20 fuel, if it goes well then, the requirement will be more,” said Subodh Kumar, Additional Secretary in the food ministry. Like sugar, the government plans to create a carryover stock of ethanol with OMCs and distilleries for 2023-24 ethanol year (December-November) and more sugar would be diverted for the same, he said. The government has kept the 12 percent ethanol blending target in the ongoing 2022-23 ethanol year while 15 percent for the next year. “About 1.20 billion litres has been blended with petrol till February-end. We are continuously blending 12 percent. The ethanol availability and production capacity are sufficient to meet this year’s target,” the official said. To meet 15 percent blending target next year, the official said that additional 1.50 billion litres of ethanol would be required, and the government is encouraging sugar mills and distilleries to enhance production capacity. The ethanol production capacity has gone up to 10.40 billion litres till February this year. The government is encouraging ethanol capacity creation under an interest subvention scheme. The official said that the government has approved 243 projects and banks have already sanctioned Rs 203.34 billion loans and out of which Rs 110.93 billion has been disbursed. Last week, the government reviewed the upcoming projects and about 2.50-3.00 billion litres of ethanol capacity will come in the next 9-10 months, he added.
GAIL India issues swap tender for LNG cargo
GAIL (India) Ltd has issued a swap tender offering one liquefied natural gas (LNG) cargo for loading in the United States in exchange for another cargo for delivery to India, said two industry sources on Wednesday. India’s largest gas distributor is offering the cargo for loading from May 21-23 from Cove Point, Maryland, on a free-on-board (FOB) basis. It is seeking a cargo for delivery to India’s Dahej terminal for 27-31 May on a delivered ex-ship (DES) basis. The tender closes on March 9, said the sources. GAIL has 20-year deals to buy 5.8 million tonnes a year of U.S. LNG, split between Dominion Energy’s Cove Point plant and Cheniere Energy’s Sabine Pass site in Louisiana.
India’s oil deals with Russia dent decades-old dollar dominance
U.S.-led international sanctions on Russia have begun to erode the dollar’s decades-old dominance of international oil trade as most deals with India – Russia’s top outlet for seaborne crude – have been settled in other currencies. The dollar’s pre-eminence has periodically been called into question and yet it has continued because of the overwhelming advantages of using the most widely-accepted currency for business. India’s oil trade, in response to the turmoil of sanctions and the Ukraine war, provides the strongest evidence so far of a shift into other currencies that could prove lasting. The country is the world’s number three importer of oil and Russia became its leading supplier after Europe shunned Moscow’s supplies following its invasion of Ukraine begun in February last year. After a coalition opposed to the war imposed an oil price cap on Russia on Dec. 5, Indian customers have paid for most Russian oil in non-dollar currencies, including the United Arab Emirates dirham and more recently the Russian rouble, multiple oil trading and banking sources said. The transactions in the last three months total the equivalent of several hundred million dollars, the sources added, in a shift that has not previously been reported. The Group of Seven economies, the European Union and Australia, agreed the price cap late last year to bar Western services and shipping from trading Russian oil unless sold at an enforced low price to deprive Moscow of funds for its war. Some Dubai-based traders, and Russian energy companies Gazprom and Rosneft are seeking non-dollar payments for certain niche grades of Russian oil that have in recent weeks been sold above the $60 a barrel price cap, three sources with direct knowledge said. The sources asked not to be named because of the sensitivity of the issue. Those sales represent a small share of Russia’s total sales to India and do not appear to violate the sanctions, which U.S. officials and analysts predicted could be skirted by non-Western services, such as Russian shipping and insurance. Three Indian banks backed some of the transactions, as Moscow seeks to de-dollarise its economy and traders to avoid sanctions, the trade sources, as well as former Russian and U.S. economic officials, told Reuters. But continued payment in dirhams for Russian oil could become harder after the United States and Britain last month added Moscow and Abu Dhabi-based Russian bank MTS to the Russian financial institutions on the sanctions list. MTS had facilitated some Indian oil non-dollar payments, the trade sources said. Neither MTS nor the U.S. Treasury immediately responded to a Reuters request for comment. An Indian refining source said most Russian banks have faced sanctions since the war but Indian customers and Russian suppliers are determined to keep trading Russian oil. “Russian suppliers will find some other banks for receiving payments,” the source told Reuters. “As it is, the government is not asking us to stop buying Russian oil, so we are hopeful that an alternative payment mechanism will be found in case the current system is blocked.” FRIENDLY VERSUS UNFRIENDLY Paying for oil in dollars has been the nearly universal practice for decades. By comparison, the currency’s share of overall international payments is much smaller at 40%, according to January figures from payment system SWIFT. Daniel Ahn, a former chief economist at the U.S. State Department and now a global fellow at the Woodrow Wilson International Center for Scholars, says the dollar’s strength is unmatched, but the sanctions could undermine the West’s financial systems while failing to achieve their aim. “Russia’s short-term efforts to try and sell things in return for currencies other than the dollar is not the real threat to Western sanctions,” he said. “(The West) is weakening the competitiveness of their own financial services by adding yet another administrative layer.” The price cap coincided with an EU embargo on imports of Russian seaborne oil, rounding off a year of bans and sanctions, including largely expelling Russia from the SWIFT global payments system. Around half of its gold and foreign exchange reserves, which stood near $640 billion, were frozen. In response, Russia said it would seek payment for its energy in the currency of “friendly” countries and last year ordered “unfriendly” EU states to pay for gas in roubles. For Russian firms – as payments were blocked or delayed even if they were not violating any sanctions, due to overly zealous compliance – dollars became potentially a “toxic asset”, independent analyst and former adviser at the Bank of Russia Alexandra Prokopenko, said. “Russia desperately needs to trade with the rest of the world because it’s still dependent on its oil and gas revenues so they are trying all options they have,” she told Reuters. “They’re working on building a direct infrastructure between the Russian and Indian banking systems.” India’s largest lender State Bank of India has a nostro, or foreign currency, account in Russia. Similarly, many banks from Russia have opened accounts with Indian banks to facilitate trade. IMF Deputy Managing Director Gita Gopinath said in the month after Russia’s invasion of Ukraine that sanctions on Russia could erode the dollar’s dominance by encouraging smaller trading blocs using other currencies. “The dollar would remain the major global currency even in that landscape but fragmentation at a smaller level is certainly quite possible,” she told the Financial Times. The IMF did not respond to a Reuters request for comment. Beyond Russia, tensions between China and the West are also eroding the long-established norms of dollar-dominated global trade. Russia holds a chunk of its currency reserves in renminbi while China has reduced its holdings of dollars, and Russian President Vladimir Putin said in September Moscow had agreed to sell gas supplies to China for yuan and roubles instead of dollars. INDIA DISPLACES EUROPE India in the last year displaced Europe as Russia’s top customer for seaborne oil, snapping up cheap barrels and increasing imports of Russian crude 16-fold compared to before the war, according to the Paris-based International Energy Agency. Russian crude accounted
Russian Oil Gets More Pricey as Pool of Asian Buyers Expands
The price of Russian crude and fuel is rising for buyers in Asia as a pool of bigger customers from China and India expands, putting pressure on smaller refiners that have eagerly consumed the cheap oil. Offer levels for Russia’s Urals and ESPO crude, as well as fuel oil, surged over the past weeks, according to traders with knowledge of the matter. Increased interest from Chinese state-owned and large private refiners such as Sinopec, PetroChina Co. and Hengli Petrochemical Co., in addition to a jump in Indian demand, led cargoes to be snapped up at higher prices, they said. The larger refiners have muscled in to a patch typically dominated by China’s smaller independent processors, known as teapots, which have been consistent consumers of discounted Russian crude. ESPO oil from the nation’s Far East has been a particular favorite due to its short shipping distances Offers for ESPO that’s typically loaded at Kozmino port was close to $6.50 to $7 a barrel below ICE Brent on a delivered basis to China, while flagship Urals shipped from western ports was around $10 under the same benchmark, said traders. That’s an increase of as much as $2 from last month, marking one of the steepest jumps since sanctions were imposed on Dec 5, they added
The EU Moves Toward Forming A Natural Gas Buyers’ Cartel
The European Union will make its first move as a buyers’ group on the international gas market next month as it launches the first tender for suppliers. The tender follows months of discussions on how best to secure natural gas supplies for the 27-member bloc in such a way as to avoid some member states outbid other member states because of their deeper pockets. The solution was found in what would effectively be a buyers’ cartel, shopping for gas as one. According to Bloomberg, the first offers, from gas suppliers in the United States, the Middle East, and Africa are to be signed in June. Price will be the sticking point in that joint buying exercise. One of the purposes of the whole endeavor was to keep gas prices low by buying in larger volumes. Besides, natural gas prices are currently a lot lower than they were a year ago. Yet the EU needs to buy a lot of gas and such bulk buying may very well push prices higher. The total gas needs of the EU plus four neighboring countries amount to 24 billion cubic meters over the next three years, according to European Commission Vice President Maros Sefcovic. This is a lot of gas to be sourced on the global spot market. “We clearly need to turn the economic tide in Europe,” Sefcovic told Bloomberg in an interview. “I believe we’re creating a new system that will increase competition and bring in new suppliers and push energy prices down. Since we started this exercise, there’s enormous interest from international suppliers.” According to him, some 50 gas suppliers have expressed interest in participating in the EU’s joint gas buying. There is also interest in joint buying from large industrial gas consumers in the EU, Sefcovic also said. Price, however, remains of crucial importance. Europe has been paying a lot more for its gas than the U.S., for instance, and China, according to Sefcovic. This needs to change if the bloc is to remain competitive on the world stage. “What is increasingly important is that we have to deal with prices. We can’t power our economy at such a huge price differential compared with the US or China,” the official told Bloomberg.
Iran Claims To Have Found World’s Second-Largest Lithium Deposit
A major lithium deposit that rises to the level of the world’s second-largest has been found in Iran, the country’s Ministry of Industry, Mines, and Trade said on Iranian state television on Saturday. “For the first time in Iran, a lithium reserve has been discovered in Hamedan,” the Ministry said, adding that it believes the deposit holds 8.5 million tons of lithium. Only Chile holds more lithium, with 9.2 million metric tons, according to the U.S. Geological Survey. Lithium is a critical part of electric vehicle batteries. Lithium carbonate prices soared last year to all-time highs of $86,170 per tonne, but that huge rally seems to be behind us, with prices sinking this month to $52,500 per tonne. Behind the recent price slump is—to some degree–a slowdown in China’s EV demand, in part due to the country putting an end to its EV subsidies. But the larger price pressure comes from an increase in lithium supplies from China, Australia, and Chile—and now, Iran. “Supply is coming on stream faster than you can say ‘boo’.Demand remains strong but prices have been unsustainable for some time now,” analyst Dylan Kelly of Ord Minnett told Mining.com. Rystad had previously warned that the global market deficit of lithium would shrink from 76,000 tonnes LCE last year, to somewhere between 20,000 and 30,000 tonnes LCE this year—and that was before Iran’s most recent discovery. Goldman Sachs concurred, forecasting that supply would grow at a faster clip than demand, depressing market prices. While the analysts seem to agree that the lithium carbonate market is set for continued correction this year, Rystad energy sees the price correction as temporary, with demand still healthy. The question now is how big of an impact Western sanctions will have on Iran’s ability to sell whatever lithium it uncovers.
City gas distributors to gain as spot LNG prices decline
A steep drop in spot liquefied natural gas (LNG) rates has come as a major respite for city gas distributors in India. Spot LNG prices have fallen to about $14-15 per metric million British thermal units (mmBtu) from average of over $45 per mmBtu in the fiscal second quarter, and average of slightly above $30 per mmBtu in the third quarter. Persistently high gas prices have continued to weigh on the earnings of city gas distributors, squeezing their margins. Although these companies raised prices, this has narrowed the gap between compressed natural gas (CNG), piped natural gas (PNG), and other fuel options such as diesel, prompting concerns about volume growth. The near-term outlook for spot gas prices remains favourable. Ayush Agarwal, an analyst at S&P Global Commodities Insights, expects Platts JKM (Japan Korea Marker) and WIM (West India Marker) to average below $15/mmBtu in Summer 2023 and below $20/mmBtu for 2023. With gas prices declining, city gas distributors are poised to reap benefits, which could be further enhanced by the anticipated cap on administered pricing mechanism (APM) prices in the upcoming fiscal year. The Kirit Parikh panel has recommended a floor of $4 per mmBtu and a ceiling price of $6.5 per mmBtu for APM gas. Analysts expect benefits to accrue in FY24.
Little gains: India saved just $2 per barrel even after Russia’s deep discounts
An increase in India’s subsidized purchases of Russian crude following Moscow’s invasion of Ukraine a year ago is likely to save around $2.5 billion in the first three quarters of the current fiscal year, an analysis by IndiaTrade for the period shows. data shows. However, the savings, while substantial for India, are far less than many expected amid reports of huge discounts being offered by Russia. According to the analysis, cheap Russian oil brought down the average landed price of imported crude oil for India, the world’s third-biggest consumer of crude, by about $2 a barrel during the nine-month period. The average landed price of imported crude oil for April-December was $99.2 per barrel. If Russian barrels are taken out of the math, the average price rises marginally to $101.2 per bbl. The total value of India’s oil imports for the period under consideration stood at $126.51 billion. The analysis shows that if Indian refiners had paid for Russian oil the average price paid for crude from other suppliers, the oil import bill would have been around $129 billion, or about 2 per cent higher. The value of oil imports from Russia for this period was approximately $22 billion. The average landed price of Russian crude oil for India in April-December was $90.9 a barrel, about $10.3 lower than the average non-Russian barrel price. This translates into an effective discount of 10.1% on the average landed price of crude oil imported from other countries. Though substantial, this discount is much less than what has been claimed in various reports from India and abroad. According to industry insiders, the difference may be due to the relatively higher cost of freight and insurance for Russian oil compared to other traditional suppliers. With Moscow facing Western sanctions over the Ukraine war, freight and insurance costs for transporting Russian oil have reportedly skyrocketed. So, while the discount may be deeper on the price of the oil, the discount on the landed price – including freight and insurance costs – will be lower. Earlier in February, Reuters reported, quoting Goldman Sachs, that buyers in Asia may have paid more for Russian crude than quoted prices. “We argue that the flexibility in production so far may partly reflect that the effective price paid for Russian oil appears to be significantly higher than quoted price estimates,” Goldman Sachs said in a February 10 note cited by Reuters. Said. Indian refiners began buying subsidized Russian crude, upsetting many in the West, who wanted Russian oil to be sold by buyers to curb Moscow’s ability to finance the war in Ukraine through oil sales. Leave out the oil. So far, India has ensured that as one of the top importers of crude oil, it will buy oil from wherever it can get a good deal. Recently, Petroleum Minister Hardeep Singh Puri had said that India will play the market card to ensure supply of oil at a reasonable price. India is the world’s third largest consumer of crude oil and depends on imports to meet more than 85 per cent of its requirement. Trade data analysis shows that the effective discount on Russian crude during April-December varies significantly from month to month. The lowest discount was $0.6 a barrel in April and the highest was $15.1 a barrel in May, the average price of crude oil imported from the rest of the world in those months. In percentage terms, the discount ranged between 0.6 percent and nearly 14 percent.
India’s GAIL seeks two LNG cargoes for April-May delivery
India’s GAIL GAIL.NS has issued a tender seeking two liquefied natural gas (LNG) cargoes for delivery into India in April and May, two industry sources said on Monday. The country’s largest gas distributor is seeking the LNG cargoes on a delivered ex-ship (DES) basis into the Dahej terminal. The tender will close on March 7, said the sources.
Oil spill continues despite temporary measures on Cauvery Basin Refinery pipeline in Nagai
Despite the temporary measures taken to arrest the leakage in the pipeline of the Cauvery Basin Refinery (CBR) of Chennai Petroleum Corporation Limited (CPCL) at Pattinamchery in Nagapattinam district, the oil spill continued to pollute the sea on Saturday. A senior CPCL official reported that the leakage had been clamped as a temporary measure in the early hours of Saturday. The officer explained that the tide was low between 1am and 4.45am on Saturday, during which the clamping was done after dumping sandbags around the pipeline on the shore. However, due to high tide, the pipeline was surrounded by seawater, causing the crack to continue to cause oil spills. T Sakthivel, a representative of the fishermen in the village, said that although a temporary arrest has been made, the leakage still continues. “The velocity of the spill has come down. They will take up the work again during the low tide in the early hours,” said Sakthivel.