Russia becomes India’s top oil supplier in October
Russia has become India’s top oil supplier in October, surpassing traditional sellers Saudi Arabia and Iraq, according to data from energy cargo tracker Vortexa. Russia, which made up for just 0.2 per cent of all oil imported by India in the year to March 31, 2022, supplied 935,556 barrels per day (bpd) of crude oil to India in October — the highest ever. It now makes up for 22 per cent of India’s total crude imports, ahead of Iraq’s 20.5 per cent and Saudi Arabia’s 16 per cent. India’s appetite for Russian oil swelled ever since it started trading on discount as the West shunned it to punish Moscow for its invasion of Ukraine.
The G7 Will Set A Fixed Price On Russian Oil
Members of the G7 have agreed to set a fixed price for Russian oil exports as a cap rather than a price set as a discount to a benchmark, Reuters has reported, citing an unnamed source familiar with the discussions. The price itself has yet to be determined, the source said, adding that, according to the G7, “This will increase market stability and simplify compliance to minimize the burden on market participants.” Earlier, a price range in the mid-60s was mentioned as a possible target for the cap as it represented the range, in which Russian oil has traded before the last rally. It has taken the G7 several months to get to this point, with skeptics warning along the way that it might not be the wisest idea, especially after Russia’s President Vladimir Putin said plainly that Russia will not sell oil to countries enforcing a cap and Deputy Price Minister Alexander Novak echoed the statement. The World Bank was the latest to warn the G7 a cap will not work unless there were more countries on board with it. The implied countries are most likely China and India, the biggest buyers of Russian crude right now, both of which have declined to participate in a price cap scheme. Initially, getting China and India on board was a top priority for the G7 team but this appears to have changed, according to U.S. Treasury Secretary Janet Yellen who has spearheaded the price cap effort. “For us, success is going to be not how many countries raise their hand to say ‘We endorse what you’re doing, we’re part of the coalition.’ We’re not looking for that. What we want to see is that Russian oil continues to flow into the market, and that countries are using the leverage provided by the existence of this cap to bargain lower prices,” Yellen said last month.
AG&P to develop city gas projects in Karnataka
AG&P Pratham, a unit of Singapore’s AG&P, has signed a memorandum of understanding with the government of the Indian state of Karnataka to develop city gas distribution (CGD) network in 15 districts of the state, the company said on November 3. Under the MoU, AG&P Pratham will invest 80bn Indian rupees ($970mn) over the next eight years to build CGD networks in districts of Kolar, Mysuru, Mandya, Chamrajnagar, Hassan, Chikkamagaluru, Kodagu, Bagalkot, Koppal, Raichur, Kalaburagi, Vijayapura, Shivamogga, Uttara Kannada and Haveri. The area being developed by AG&P accounts for more than 55% of the state’s geographical area and 42% of its population. Over the next eight years, AG&P plans to supply gas to 5mn households and several industries and commercial establishments. It also plans to set up about 600 compressed natural gas (CNG) stations LNG stations to service the transport sector. To date, AG&P Pratham has launched 60 CNG and LNG stations in the state, while several such stations are at various stages of development. AG&P City Gas is developing 12 CGD networks in India under the brand name AG&P Pratham. In its 12 concessions, AG&P is responsible for developing and operating CNG stations for vehicles, PNG to homes, and the distribution of LNG to industrial and commercial customers. City gas projects in India benefit from marketing exclusivity in their designated areas for eight to ten years and construction exclusivity of related infrastructure for 25 years.
Russian LNG Exports Rise Despite The Push To Cut Dependence On Russia
Russian exports of liquefied natural gas (LNG) rose in October to their highest level since March, vessel-tracking data compiled by Bloomberg showed on Wednesday, in a sign that the world—including Europe—is scrambling to reduce dependence on Russian gas. In October, Russia’s LNG exports increased by 1.1% compared to October 2021 to the level last seen in March, just after the Russian invasion of Ukraine. Europe hasn’t sanctioned Russian LNG or pipeline gas, but buyers have tried to shun Russian cargoes where possible. The EU is considering a price cap on gas, but deliberations continue as the member states are divided on the issue. Unlike the rise in LNG exports, Russia’s pipeline gas exports to Europe are at very low levels after Gazprom cut off all gas supply to several EU countries for their refusal to pay in rubles for gas. Gazprom also started to reduce supply via the Nord Stream pipeline to Germany in June, claiming an inability to service gas turbine maintenance outside Russia due to the Western sanctions against Moscow for the invasion of Ukraine. The Russian gas firm halted Nord Stream in early September, while the pipeline was found to have been sabotaged at the end of that month. Still, Russia’s LNG exports remain strong, and the top importers of the cargoes – although nearly half of them are still en route to their final destinations – were France, China, and Japan, according to the data compiled by Bloomberg. Traders have told Bloomberg that China is buying a lot of Russian LNG to take advantage of a discount for Russian cargoes compared to the prices on the spot market. In September, Chinese imports of LNG from Russia rose by one-third compared to the same month of 2021, according to Chinese customs data cited by Bloomberg. All imports of LNG into China were down by 12% in September.
China’s Natural Gas Consumption Set To Fall For First Time In Two Decades
Natural gas consumption in China may fall this year for the first time in two decades, albeit moderately, because of the slowdown in the economy, Reuters has reported, citing officials from state energy companies. According to a researcher with CNOOC, gas demand in the country could see a one percent decline this year, to 363.6 billion cubic meters. China is also expected to cede to Japan the title of the world’s biggest LNG importer as lockdowns have sapped demand for energy this year. Winter demand for gas is also seen as weaker than usual, at between 168 billion and 190 billion cubic meters. However, this does not mean that all gas imports will decline, according to the report. Imports of liquefied natural gas, which is more expensive, are already on the decline but pipeline gas imports from Russia and the Central Asian republics are on the rise. “Our winter supply policy is stabilizing piped gas imports from Central Asia, boosting volumes from Russia, and increasing domestic production,” a PetroChina official told Reuters. The higher imports will be used both directly and to fill storage, which currently equals just 7 percent of China’s total demand or 26 billion cubic meters. The gas from storage will be used at the height of heating season this winter if necessary. Domestic gas production is also rising as the government pushes the energy industry to reduce its reliance on imported commodities. Despite these efforts, however, imports have been on the rise over the last decade, as has local gas production, Reuters’ John Kemp noted in a recent column. Domestic production of natural gas has been rising at an annual rate of some seven percent over the past decade, turning into the world’s fourth-largest gas producer. Yet demand rose by a rate of around 11 percent during the same period.
Russia becomes the No. 1 oil supplier for India in October
Russia has become India’s top oil supplier, edging past the traditionally dominant suppliers Saudi Arabia and Iraq, according to the energy cargo tracker Vortexa. Russia supplied 946,000 barrels per day of crude to India in October, the highest ever in a month. It accounted for 22% of India’s total crude imports, ahead of Iraq’s 20.5% and Saudi Arabia’s 16%. Compared to September, overall crude import went up 5% in October and that from Russia rose 8%, according to Vortexa, an energy intelligence firm that has offices in Singapore and London and tracks oil and gas tankers across the globe, providing freight and inventories analytics. For the first time, India imported more seaborne Russian crude than the European Union – the volumes were 34% higher than the EU’s. With imports of 1 million barrels per day in October, Chinaremained the largest buyer of Russian seaborne crude. India also imported about 106,000 barrels per day of fuel oil from Russia in October, a new high.
Sri Lanka’s Trinco Petroleum Terminal to invest up to US$70mn in tank farm
Sri Lanka’s Trinco Petroleum Terminal Ltd, a joint venture between state-run Ceylon Petroleum Corporation and India’ Lanka IOC, plans to invest up to 70 million dollars in refurbishing 61 oil tanks in Trincomalee, an official said. TPTL has control of 51 tanks in a World War II era tank farm in a 600 acre land by the Trincomalee port in North Eastern Sri Lanka. The tank farm has 99 tanks of which 15 is operated by Lanka IOC. The balance is expected to be used by CPC. In the first phase 10 tanks with a capacity of 10,000 metric tonnes each will be refurbished and pipelines for white and black oils will be laid Managing Director of Lanka IOC Manoj Gupta said during Sri Lanka’s Colombo International Maritime & Logistics Conference. Phase 1 is estimated to cost between 15 to 20 million US dollars. Phase 1 is expected to be completed in 2023.
IGX clocks over 4.105 million mBtu gas trade volumes in October
Indian Gas Exchange (IGX) on Wednesday said its platform traded 41,05,400 million British thermal unit (mBtu), or around 38 million standard cubic meters (mscm), gas volumes in October, a whopping 298% jump on year. A total of 254 trades were executed, the highest in a single month At 22,48,550 mBtu, IGX traded a record single-day domestic ceiling price gas at $12.46/mBtu during the month, said a statement from the exchange. The exchange witnessed participation from more than 50 buyers from various sectors such as CGDs, petrochemical, Power, Glass, Ceramics, Aluminium, Marketers etc. During the month, major stakeholders such as Reliance Industries Limited and Vedanta Limited joined IGX as Proprietary Members, while BP Exploration (Alpha) Limited and Invenire Petrodyne Limited joined IGX as Clearing Members. “The average gas price discovered at the Exchange during the month was ₹1,858 /$22.65 per MMBtu almost 30% down over last month. Different spot gas benchmark prices of were – HH about $6/MMBtu and TTF at ~$39/MMBtu LNG benchmark indices were – WIM ~30 $/MMBtu,“ Indian Energy Exchange (IEX) said in a statement. “ The prices discovered at IGX for India’s inland gas demand and supply have been in line with the international benchmarks, where similar downtrend in prices of close to 30% was observed,“ it added.
Haliburton: The Era Of Exponential Growth In U.S. Oil And Gas Is Over
The era of “exponential” growth in the U.S. oil and gas industry is over as most shale firms are returning cash to investors instead of going into debt to drill more, according to Halliburton, the world’s largest fracking services provider. “We’ll see growing investment, but quite frankly, nothing even close to what we saw from 2008 to 2014,” Halliburton’s CEO Jeff Miller said at a panel at the ADIPEC energy conference in Abu Dhabi on Tuesday, as carried by The National. “Companies were spending at a rate of 120 percent of their cash flow and that can’t go on indefinitely,” Miller said. Since the pandemic crash, however, the U.S. shale patch has focused on returning money to shareholders, paying down debt, and healing balance sheets. U.S. oil and gas production has rebounded but the growth rate is nowhere near the record growth from 2018 or 2019. This year, supply chain delays and cost inflation have combined with U.S. shale’s newfound spending discipline to hold back production growth. Pioneer Natural Resources CEO Scott Sheffield has said that U.S. oil production growth would likely disappoint both this year and next. Sheffield has forecast that U.S. oil production will add 500,000 bpd this year but in 2023 the production gains may be lower than this, due to constraints, Reuters reported in September. In its October Short-Term Energy Outlook, the EIA suggests that U.S. crude oil production will average 11.7 million bpd in 2022 and 12.4 million bpd in 2023, which would surpass the record high set in 2019. But the EIA has revised down its growth forecasts since the start of this year, while analysts say its current estimates are too optimistic. The U.S. oil and gas industry continues to be frustrated with the mixed messages from the Biden Administration, which continues to blame oil companies for high gasoline prices and demands that oil firms “lower the prices for consumers at the pump.” Commenting on President Biden’s latest remarks on gasoline prices and the threat that oil firms are “going to pay a higher tax on their excess profits and face other restrictions” if they don’t increase output, American Petroleum Institute (API) President and CEO Mike Sommers said this week, “Rather than taking credit for price declines and shifting blame for price increases, the Biden administration should get serious about addressing the supply and demand imbalance that has caused higher gas prices and created long-term energy challenges.” “Oil companies do not set prices—global commodities markets do,” API’s Sommers said.
Japan Will Retain Its Stake In Russia’s Sakhalin-1 Oil And Gas Project
Japan will remain a stakeholder in the Russian Sakhalin-1 oil and gas project after the government asked the Japanese companies that participated in the original consortium to retain their stakes in the new entity that will operate the project. Russia’s president signed a decree to change the ownership of Sakhalin-1 last month, with the state setting up a new entity to manage the project. Previous shareholders such as Japan’s SODECO consortium were offered the chance to retain their stakes. SODECO, or Sakhalin Oil and Gas Development Co, comprises Itochu, the conglomerate, Marubeni, and Japan Petroleum Exploration Co. The Japanese government has a 50-percent stake in the consortium. “The Sakhalin-1 is extremely important for Japan’s energy security as it is a valuable source outside of the Middle East,” said trade minister Yasutoshi Nishimura this week, as quoted by Reuters. Previously, the Sakhalin-1 project was operated by Exxon but Russia removed the super major from the operatorship position earlier this year, amid the company’s own total pullout from Russia. India’s ONGC is also reportedly considering taking a stake in the new entity operating Sakhalin-1. The Indian state oil major was a shareholder in the consortium running Sakhalin-1 before Exxon’s pullout and wanted to retain its interest in the project. The news that the Japanese companies will retain their interest in Sakhalin-1 is not a surprising development. The trade minister has repeatedly indicated that the offshore project is important for Japan, despite Western sanctions that have forced the country to shrink its import of Russian oil. “From the standpoint of diversifying Japan’s crude oil import, that’s a very important project,” trade minister Nishimura said last month. The chief executive of Itochu went further, saying in an interview with the Financial Times that Japan could not afford to follow its Western allies in cutting off all energy trade relations with Russia because, unlike them, Japan’s survival depended on energy imports.