GAIL to explore oil, gas resources
Exploration of oil and natural gas in 486.39 square kilometer area of Barmer-Jaisalmer will be done by Gail India, a Government of India undertaking. For this, the block has been allotted to GAIL India for 3 years plus 9 months. This petroleum exploration license has been issued on the recommendation of the Central Government’s Ministry of Petroleum and Gas. Additional Chief Secretary Mines and Petroleum Dr Subodh Agarwal informed that this block has been allotted to GAIL India in the seventh cycle under the Open Acreage Licensing Policy. “Chief Minister Ashok Gehlot has been emphasizing on speeding up mineral exploration and mining work from time to time. On the other hand, mines minister Pramod Jain Bhaya expressed happiness and said that 2022 has brought opportunities for the state,” he said. Agarwal hoped that in 2023, exploration would bring new hope in the petroleum sector in the state. The officer said that Gail India will do exploration for oil and natural gas in this area.
Gazprom’s gas supply cut hits govt plan for 1,000 LNG stations
Russian gas company Gazprom’s suspension of natural gas supply to state-owned Gail has scuppered the government’s plan to set up 1,000 liquefied natural gas (LNG) fuelling stations nationwide, two industry officials aware of the development said, prompting domestic marketing companies to scramble for fresh supply of LNG. The government had, in November 2020, announced plans to set up 50 LNG fuelling stations along the national highways, and the Golden Quadrilateral connecting Delhi, Mumbai, Chennai and Kolkata. This was aimed at replacing diesel and petrol with cleaner fuel in long-haul vehicles and to achieve the target of a 15% share for natural gas in India’s total energy mix by 2030. In the second phase of the expansion move, 1,000 LNG fuelling stations were to be set up at an investment of ₹100 billion over three years. However, the Russia-Ukraine conflict has sent LNG prices soaring and created a shortage of the fuel
$100 Oil To Return In 2023
Eric Nuttall, partner and senior portfolio manager at Ninepoint Partners LP, has told the Financial Post that oil prices will return to $100 per barrel in 2023.According to the analysts, many of the headwinds that have cut short the oil price rally this year including China’s zero-Covid policy and the coordinated SPR releases by several governments, will no longer be there in 2023. Coupled with sanctions on Russia’s oil and gas, this should elevate oil prices. He has also predicted that the energy sector will continue to outperform other market sectors due to high demand in oil and gas stocks. Nutall is not the only bull here. Last week, the Bank of America predicted that Brent could quickly go past $90 per barrel on the back of a dovish pivot in the U.S. Federal Reserve and a “successful” economic reopening by China. BofA has forecast that Brent prices–currently trading at $77.93–will average $100/bbl in 2023 thanks to Chinese oil demand recovery on a post-COVID reopening coupled with a drop in Russian supplies of about 1 million barrels per day (bpd). According to the investment bank, OPEC+ is likely to fully implement a 2 million bpd output cut in a bid to boost oil prices. The forecast has come at a time when oil prices have been steadily declining due to fears that a weakening global economy would curb fuel demand. Last week, Beijing announced the most sweeping changes to its strict Covid-19 guidelines, including relaxing testing requirements and travel restrictions. Further, people infected with Covid-19 but have only mild or no symptoms are now allowed to isolate at home instead of convalescing in centrally managed facilities. “Our oil demand and price projections for 2023 rely heavily on robust China and India demand growth, so any Asia reopening delays could affect our expected price trajectory,” said the bank, adding that the path to a post-pandemic environment may not be easy “given the low levels of immunity in China.” Crude oil futures have surrendered nearly all gains for the year, posting their largest weekly losses in more than eight months, as restarts for key pipelines eased supply concerns coupled with ongoing worries about a global recession and weaker crude demand from China.
U.S. Consumers Get Cheap Gasoline For Christmas
The average price of a gallon of gasoline in the United States fell on Thursday ahead of the Christmas holiday, with prices now 19 cents cheaper per gallon than this time last year. The national average for a gallon of gasoline has fallen four cents this week, to $3.101, despite demand for the fuel increasing last week from 8.26 million bpd to 8.71 million bpd, according to EIA data. Still, that demand figure is still 300,000 bpd lower than this time last year. Gasoline inventories increased by 2.5 million barrels last week to 223.6 million barrels. With gasoline demand failing to rebound to last year’s levels and inventories increasing, prices have come down. According to AAA data, Arizona and Idaho have seen the largest price decreases (18 cents) over the last week. Indiana, Nevada, Ohio, Illinois, and Michigan round out the list of states with the seven largest decreases. Last week’s average gasoline prices in the United States were at $3.193 per gallon. Gasoline prices rose steadily last year—a trend that was exacerbated by Russia’s invasion of Ukraine and the market worry about how Western sanctions would impact crude oil and crude products such as gasoline. Prices have since come down, with gasoline prices easing 50 cents from the $3.636 per gallon that U.S. drivers saw this time last month. GasBuddy’s Patrick De Haan said earlier this week that U.S. gasoline prices could sink to sub-$3 per gallon by Christmas Eve—although there are still 10 cents to fall before reaching that target. “As demand remains low and stocks rise, drivers will likely continue to see pump prices decrease through next year,” AAA said on their website on Thursday.
Petroleum and Natural Gas Regulatory Board wants petroleum product pipelines too within its ambit
The Petroleum and Natural Gas Regulatory Board (PNGRB) has undertaken a vital exercise to bring all petroleum product pipelines under its ambit, which will help determine their tariff and facilitate non-discriminatory third-party access to public sector oil companies’ pipelines. Access to state-run companies’ product pipelines can dramatically increase private fuel retailers’ ability to serve new markets across the country, increasing competition in the fuel business and benefitting end consumers, people familiar with the matter said. The PNGRB Act of 2006 covers all petroleum and natural gas pipelines, but the focus so far has been only on gas pipelines. The regulator is now trying to enforce the law on petroleum products pipelines as well. In a letter earlier this month to Indian Oil, HPCL, and BPCL, the regulator sought details of all their operational as well as under-construction petroleum product pipelines.
No encroaching where gas pipeline laid: Gail
Gail (India) Pvt Ltd has issued a public notice warning people against encroaching on its Right of User (RoU) of Dabol-Bengaluru natural gas pipeline Stating that it has laid high pressure natural gas pipelines from Dabol to Bengaluru, which is being operated for supplying/transporting natural gas to consumers enroute, the notice says that the pipelines pass through Curchirem in North Goa and Marcaim to Zuari in South Goa. Gail has acquired RoU in the land for laying the pipelines under Petroleum and Minerals Pipelines (P&MP) Act, 1962, the notice further states. “Since these pipelines are carrying highly inflammable and hazardous natural gas, construction of any building or any other structure, construction and excavation of any tank, well, reservoir, dam, or plantation of trees is strictly prohibited on that land as per P&MP Act, 1962,” the notice reads.
Bharat Petroleum To Invest ₹ 353.55 billion In Piped Gas Network In 8 Cities
Bharat Petroleum Corporation (BPCL) on Wednesday said its board of directors had approved the financial plan and capital expenditure for laying the piped gas network, and building and operating of eight city gas distribution (CGD) projects for an estimated investment of ₹ 353.55 billion. According to the statement shared by BPCL with stock exchanges, the company is authorised to undertake the projects “under PNGRB (Petroleum and Natural Gas Regulatory Board) CGD Bid Round 11 and 11A with an estimated investment of ₹ 353.55 billion in a phased manner”. The said projects would be subject to the requisite approvals of statutory authorities of government of India, the company said. Accordingly, the company said it was now developing CGD network in 25 geographical areas including the above CGDs, covering 62 districts in 14 states.
Controversial Gas Cap Could Lead To Less LNG For The EU
After months of negotiations, the EU finally agreed on Monday to set a price cap on natural gas to protect consumers from excessive price spikes and limit inflationary pressure and industrial damage to European economies. The price cap, however, could limit Europe’s capacity to continue to draw most of the global spot LNG supply, analysts say. Some EU member states such as Germany and the Netherlands had reservations about a price cap, concerned that a market intervention and a ceiling on prices would take away Europe’s key advantage in attracting LNG supply this year—higher prices than in Asia. Germany agreed to back the price cap only after the EU also agreed to accelerate permitting rules for renewable energy projects, according to EU officials. Temporary Price Cap As Of February 15 EU energy ministers have reached a political agreement on a regulation that sets a so-called “market correction mechanism”, which would come into force on February 15, 2023. The market correction mechanism will be triggered if the month-ahead price on the Title Transfer Facility (TTF), Europe’s key benchmark, exceeds $191 (180 euros) per MWh for three working days, and the month-ahead TTF price is $37 (35 euros) higher than a reference price for LNG on global markets for the same three working days. On Monday, the TTF contract for January traded at around $116 (110 euros) per MWh. However, if risks to the security of supply occur, the European Commission will suspend the price cap rule, the EU agreed. “Today’s agreement clearly signals that Europe is not prepared to pay any price for gas and that it is able to act united to ensure its energy security,” EU Commissioner for Energy Kadri Simson said. Record LNG Imports Into EU The biggest concern of some EU member states has been that a price cap and similar market interventions would make the gas market less transparent and could deprive Europe of LNG supply that has been easily flowing to the EU so far this year. The EU’s incentive to shake off Russian gas dependence and replace volumes that Russia no longer supplies have made Europe the preferred destination of flexible-contract LNG cargoes, especially those from the United States. More than 70% of all U.S. LNG exports have headed to Europe in recent months and America is sending record volumes to the EU. Between January and November, LNG imports into the EU and the UK combined jumped by 65% year over year, according to estimates from the Oxford Institute for Energy Studies (OIES). Imports from the United States alone surged by 176%, while imports from other sources grew by 27%. In that same period, global LNG exports grew by just 5.5%, with nearly half of the growth coming from the United States, OIES said. “The key point here is that European LNG imports grew faster than global LNG supply, and in particular, European LNG imports from the United States grew faster than total U.S. LNG exports,” OIES researchers noted in their Quarterly Gas Review this month. Europe’s ability to attract most of the LNG supply so far this year was helped by high European prices, falling LNG demand in Asia, including in China, and lower imports of LNG in Brazil, where hydropower capacity performed better than expected, according to OIES. China has seen an unprecedented slump in its LNG imports this year, and Chinese buyers largely stayed away from spot purchases as inventories ahead of the winter were adequate, and demand was lackluster amid snap Covid lockdowns that have slowed industrial demand and economic growth. Low Chinese demand and prohibitively high prices for other Asian buyers such as Pakistan or Bangladesh have created tailwinds for Europe’s LNG purchases. LNG Market Set To Tighten Next Year In recent weeks, however, demand in Asia has started to grow, China returned to the LNG spot market for next year, and the easing of the Covid restrictions in China are likely to intensify competition on the LNG market between the Atlantic and the Pacific basins. Europe is building floating LNG import terminals to welcome more cargoes next year, but there simply may not be enough LNG supply to flow to Europe when Asian demand rebounds, analysts say. “Even with an anticipated 35 Bcm rise in LNG supply in 2023, Europe is likely to face increasing competition for LNG supply from Asian markets, especially China, and any LNG supply issues will only exacerbate the situation,” OIES research fellows wrote. Last week, Asia’s spot LNG prices for February delivery rose by 1% to $38 per million British thermal units (MMBtu), industry sources told Reuters. Chinese giant CNOOC has reportedly bought four to six LNG cargoes for delivery next year, in one of the largest spot purchases this year. Amid signs of rising demand from Asia, the EU gas price cap could bring more risks than benefits. The EU said on Monday the cap would be suspended if risks outweigh benefits. “The exclusion of day-ahead and intra-day contracts from the mechanism would make it possible for European companies to buy the gas they need in the short term, but would still leave consumers exposed to price hikes,” said Jacob Mandel, Senior Associate for Global Energy Markets at Aurora Energy Research. “And it could keep importers from acquiring gas that needs to be bought in advance, such as the LNG cargoes that have kept Europe well supplied so far this winter.”
China’s Imports Of Russian Energy Have Surged By $27 Billion Since Invasion
China’s imports of oil, pipeline gas, LNG, and coal from Russia have hit a total of $68 billion since the Russian invasion of Ukraine, up from $41 billion for the same period last year, as Western buyers shun or have banned imports of many Russian energy products, according to data compiled by Bloomberg. China’s imports of LNG from Russia surged to a record in November although overall Chinese LNG purchases were down by 5.4% year over year, per Chinese customs data cited by Bloomberg. Chinese imports of LNG from Russia doubled to 852,000 tons in November compared to the same month in 2021. Oil imports from Russia also jumped last month, by 17%, and Russia beat Saudi Arabia to be China’s top oil supplier in November, according to the data. Chinese imports of Russian coal surged by 41%, doubling from November 2021, although they were off the record high from September this year. This month, many independent Chinese refiners based in the Shandong province have continued to buy Russian crude and are ignoring the price cap imposed by Western countries. The price cap on Russian crude imposed by the EU, the G7, and Australia came into effect on December 5, but China hasn’t joined the so-called Price Cap Coalition, which bans maritime transportation services for Russian crude oil unless the oil is sold at or below $60 per barrel. Independent Chinese refiners have seen their refining margins jump in recent weeks as they are able to negotiate steeper discounts for their preferred Russian crude grade, even if they buy it above the price cap, trading and industry sources told Reuters on Tuesday. The flow of cheaper Russian crude to China lifted the refining margins of the independent refiners, the so-called teapots, to above $115 (800 Chinese yuan) per ton last week, from less than $86 (600 yuan) at the beginning of December, according to a China-based oil analyst who spoke to Reuters.
Oil & gas sector contributed ₹3570 billion to govt exchequer in H1 FY22
The petroleum sector’s contribution to the government’s exchequer stood at ₹3570 billion in H1 FY23, of which the Centre’s share was around ₹1970 billion, while the share of the State governments stood at ₹1600 billion, Parliament was informed on Monday. The data provided by the Minister of State for Petroleum & Natural Gas Rameswar Teli as part of a written response to a query in the Rajya Sabha showed that in FY22, the oil and gas sector contributed ₹4920 billion to the central exchequer, while States got ₹2820 billion. Total contribution Similarly, the total contribution to government exchequer stood at ₹6730 billion, of which the Centre’s share was ₹4550 billion, and States received ₹2180 billion from the petroleum sector.