EU Finalizes Ban On Gasoline And Diesel Cars From 2035
The European Union has finalized an agreement to phase out internal combustion engine cars by 2035 by enforcing a zero-emission regulation on carmakers in the bloc. National government negotiators, the European Parliament, and the European Commission all agreed to make carmakers reduce their emissions to zero by 2035, which is an effective ban on the sales of fossil-fuel-powered vehicles after that year. “This deal is good news for car drivers… new zero-emission cars will become cheaper, making them more affordable and more accessible to everyone,” Jan Huitema, chief negotiator for the European Parliament said. The EU’s lead on the Green Deal, Frans Timmermans, also welcomed the news, saying “Europe is embracing the shift to zero-emission mobility,” as quoted by Reuters. The proposal for the ban of internal combustion engine vehicles across the European Union was made earlier this year and drew criticism from the car manufacturing industry. The head of the German car industry association, Hildegard Mueller, said in June, when the proposal was first made, that Europe’s charging infrastructure is insufficiently developed for the EV targets the shift would entail. She also warned that the Commission, which made the proposal, was acting prematurely. Besides such concerns, however, there are even more direct ones that will in all likelihood interfere with the zero-emission plans of the EU. Chief among them is an expected shortage of copper, which is used heavily in electric vehicles. The world is already short on the basic metal and the deficit is only set to widen in the coming years as there is no new supply coming on stream soon, aside from a few mine expansions. Battery technology is also a potential challenge—with raw materials getting costlier due to strong demand and catching up supply, battery costs continue keeping total EV costs higher than ICE car costs, too, discouraging drivers from making the switch.
U.S. LNG Cannot Replace The Russian Natural Gas That Europe Has Lost
Europe cannot rely solely on imports of U.S. LNG to offset the pipeline gas supply it will have lost from Russia when it starts rebuilding inventories after the end of this winter, according to BloombergNEF. So far this year, American LNG has been crucial in meeting demand in Europe, which is scrambling for gas supply and willing to pay up for spot deliveries, outbidding most of Asia. The United States is shipping record volumes of LNG to Europe to help EU allies and nearly 70% of all American LNG exports were headed to Europe in September, according to Refinitiv Eikon data cited by Reuters. However, the significant drop in Russian gas supply this year occurred only in June, meaning that Europe could still stock up on some Russian gas earlier this year. Ahead of the 2023/2024 winter, however, the gap in gas supply in Europe will be much wider without Russian gas. Europe will not be importing much Russian gas—or none at all if Russia cuts off deliveries via the one link left operational via Ukraine and via TurkStream—compared to relatively stable imports from Russia in the first half of this year, before Moscow started gradually cutting volumes via Nord Stream in June until shutting down the pipeline in early September. “The year-on-year increase is not sufficient to offset a total cut in Russian piped supply with under half of these volumes met by LNG increases,” BNEF analyst Arun Toora said. “The good news is that Russia looks close to having played its last card in terms of gas leverage over Europe. However Europe’s challenges will not disappear with the daffodils next spring,” London-based consultancy Timera Energy said in a winter gas market outlook at the beginning of October. Without most of the Russian gas supply, Europe will likely need to offset around 40 bcm of additional lost Russian flows next year. LNG alone cannot meet this volume, considering a lack of new global liquefaction capacity in the short-term, including in the U.S., limited further demand elasticity in Asia, and European regasification capacity constraints. Therefore, European demand will need to fall, Timera Energy said.
How India’s Bingeing On Russian Oil Is Hitting Middle East
India’s total oil imports in September fell to a 14-month low of 3.91 million barrels per day (bpd), down 5.6% from a year earlier, due to maintenance at refiners such as Reliance Industries and Indian Oil Corp, the data showed. India’s oil imports from the Middle East fell to a 19-month low in September while Russian imports rebounded although refining outages hit overall crude imports, data from trade and shipping sources showed. Iraq remained the top supplier while Russia overtook Saudi Arabia as the second biggest after a gap of a month, the data showed. India’s total oil imports in September fell to a 14-month low of 3.91 million barrels per day (bpd), down 5.6% from a year earlier, due to maintenance at refiners such as Reliance Industries and Indian Oil Corp, the data showed. India’s imports from the Middle East fell to about 2.2 million bpd, down 16.2% from August, the data showed, while imports from Russia increased 4.6% to about 896,000 bpd after dipping in the previous two months. Russia’s share of India’s oil imports surged to an all-time high of 23% from 19% the previous month while that of the Middle East declined to 56.4% from 59%, the data showed. The share of Caspian Sea oil, mainly from Kazakhstan, Russia and Azerbaijan, rose to 28% from 24.6%. India has emerged as Russia’s second biggest oil buyer after China, taking advantage of discounted prices as some Western entities shun purchases over Moscow’s invasion of Ukraine. “The discount on Russian oil has narrowed now but when you compare its landed cost with other grades such as those from the Middle East, Russian oil turned out to be cheaper,” said a source at one of India’s state refiners. Imports for Saudi Arabia fell to a three-month low of about 758,000 bpd, down 12.3% from August, while imports from Iraq plunged to 948,400 bpd, their lowest level in a year, the data showed. Imports from the United Arab Emirates declined to a 16-month low of about 262,000 bpd. Higher intake of Caspian Sea oil has hit the share of other regions in India’s imports in April-September, the first half of the fiscal year, and also cut OPEC’s market share in the world’s third biggest oil importer and consumer to its lowest ever.
India to see biggest jump in energy demand globally: IEA
India is likely to see the world’s biggest rise in energy demand this decade, with demand climbing 3 per cent annually due to urbanisation and industrialisation, the International Energy Agency (IEA) said in its World Energy Outlook released on Thursday. While the push for renewable energy will see it meeting as much as 60 per cent of the growth in demand for power, coal will continue to meet a third of overall energy demand by 2030 and another quarter will be met by oil. “India becomes the world’s most populous country by 2025 and, combined with the twin forces of urbanisation and industrialisation, this underpins rapid growth in energy demand, which rises by more than 3 per cent per year in the Stated Policies Scenario (STEPS) from 2021 to 2030,” IEA said. “It sees the largest increase in energy demand of any country.” Even though India continues to make great strides with renewables deployment and efficiency policies, the sheer scale of its development means that the combined import bill for fossil fuels doubles over the next two decades, with oil by far the largest component. “This points to continued risks to energy security,” IEA said. IEA said the world is in the midst of the first global energy crisis, triggered by Russia’s invasion of Ukraine. “Pressures in markets predated Russia’s invasion of Ukraine, but Russia’s actions have turned a rapid economic recovery from the pandemic – which strained all manner of global supply chains, including energy — into full-blown energy turmoil,” it said. Russia has been by far the world’s largest exporter of fossil fuels, but its curtailments of natural gas supply to Europe and European sanctions on imports of oil and coal from Russia are severing one of the main arteries of global energy trade. All fuels are affected, but gas markets are the epicentre as Russia seeks leverage by exposing consumers to higher energy bills and supply shortages. In India, coal meets a third of growth with demand rising above 770 million tonnes of coal equivalent (Mtce) by 2030, and continuing thereafter before peaking in the early 2030s. Oil demand meets a further quarter of the energy demand growth and rises to nearly 7 million barrels per day by 2030 from 4.7 million bpd in 2021. Coal generation is projected to continue to expand in absolute terms, peaking around 2030, though its share of electricity generation falls from just below 75 per cent to 55 per cent over this period. Renewables meet more than 60 per cent of the growth in demand for power, and account for 35 per cent of the electricity mix by 2030 — solar PV alone accounts for more than 15 per cent. “However, coal still meets a third of overall energy demand growth by 2030, and oil, mainly for transport, another quarter,” IEA said. In the Announced Pledges Scenario (APS), more rapid progress in deploying low-emission alternatives in power, industry and transport sectors in particular puts India on a trajectory in line with its goal of net zero emissions by 2070. IEA projected India’s oil demand to rise from 4.7 million barrels per day (bpd) in 2021 to 6.7 million bpd by 2030 and 7.4 million bpd by 2040 in STEPS. Under APS, the demand is projected to rise to 5.9 million bpd in 2030 before falling to 5.4 million bpd in 2040 and further to 3.9 million bpd in 2050. However, oil imports double between 2021 and 2050 because of limited local resources. Natural gas demand reaches 115 billion cubic meters (bcm) by 2030 from 66 bcm in 2021. “Most of the growth comes from manufacturing and other industry, helped by the expansion of city gas distribution networks,” it said. Gas satisfies less than 5 per cent of the increase in total power generation, but this is enough to raise demand by 10 bcm. “The government recently announced a doubling of its licence area for oil and gas exploration; however, this is unlikely to contribute significant volumes in this decade,” IEA said, adding that gas imports double to reach nearly 70 bcm by 2030 before growth moderating to reach 90 bcm by 2050. Coal demand rises by 25 per cent to 2030. “Strong economic growth — the economy expands 90 per cent between 2021 and 2030 — brings with it more demand for coal-fired power generation and in the use of coal to produce iron and steel and cement.” Coal-fired power capacity increases from 240 GW in 2021 to 275 GW in 2030. India became the world’s second-largest coal producer in 2021 (in energy terms), overtaking Australia and Indonesia, and it plans to increase domestic production by more than 100 Mtce from current levels to 2025. Coal supply increases from about 450 Mtce in 2021 to 550 Mtce in 2030 in the STEPS and just over 500 Mtce in the APS, IEA said.
Saudi Arabia Energy Minister Warns About Misusing Oil Stockpiles
Saudi Arabia’s Energy Minister has warned countries against misusing their crude oil stockpiles to manipulate the oil markets. According to the Kingdom’s Energy Minister, Prince Abdulaziz bin Salman, who has been sparring with U.S. President Joe Biden in recent weeks, strategic crude oil stockpiles are designed to be used to manage supply shortages, not to bring down prices. “It is my profound duty to make clear to the world that losing (releasing) emergency stocks may be painful in the months to come,” the Energy Minister said at the Future Initiative Investment conference in Riyadh. The comment was quickly interpreted as a barb aimed specifically at President Biden, who lashed out at OPEC+ over its recent decision to lower its crude oil production targets by 2 million barrels per day after the United States spent months releasing more than a hundred million barrels of crude oil from its Strategic Petroleum Reserves to alleviate high prices at the pump ahead of midterm elections. The warning is just the latest in the tiff between Saudi Arabia and President Biden, after the U.S. President said there would be consequences for Saudi Arabia’s decision—with Russia—to lower crude oil production. “I am in the process, when the House and Senate gets back, they’re going to have to – there’s going to be some consequences for what they’ve done with Russia,” President Biden said last week, without getting into specifics. The United States has released 192 million barrels of crude oil from its emergency stockpiles so far this year, according to EIA data, with plans to release even more next year. Other IEA countries have released oil from their crude oil stockpiles this year as well “to address significant market and supply disruptions related to President Putin’s war on Ukraine,” the IEA said in a March press release.
ExxonMobil exits Russia after ‘expropriation’ of Sakhalin-1
EXXONMOBIL has safely exited Russia following the Government’s “expropriation” of Sakhalin-1, a major oil and gas project in Russia’s Far East. The 250,000 bbl/d Sakhalin-1 project was owned (30%) and operated by Exxon, with partners including Russia’s Rosneft and companies from India and Japan. ExxonMobil announced that it would exit the project in March, following Russia’s invasion of Ukraine. Reuters reports that Exxon had been attempting since then to transfer its role in Sakhalin-1 to a partner. Exxon said the Russian Government had “unilaterally terminated” its interest in Sakhalin-1, which has been transferred to a Russian operator. According to press, Russian President Vladimir Putin signed a decree earlier this month to create a new operator managed by state-owned Rosneft to take over the project. Reuters says that the decree also gave Russia authority to decide whether foreign shareholders could retain stakes in the project, and foreign partners were given a month to apply to retain ownership stakes. This is, reportedly, similar to the approach that Russia used to seize control of Sakhalin-2, another major oil and gas project in Russia’s Far East. The move to take control of Sakhalin-1 is the latest cause for clash between Exxon and Russia, where the project is concerned. Prior to the decree this month, Bloomberg reported a Russian decree which Exxon said “inhibits our rights and impedes our ability to exit operations safely”. Reuters reports that the company filed a “note of difference”, adding that this was a legal step prior to arbitration. Highlighting Exxon’s previous legal action against Venezuela after its assets were seized by late leader Hugo Chávez in 2007, the Financial Timessaid Exxon’s accusations that it had been forced out of Sakhalin-1 could hint at a push to recoup its losses in international arbitration. Exxon told The Chemical Engineer: “We’re reserving our legal rights under the production-sharing agreement and international law.” While Exxon exited Russia on 14 October, the Financial Timeshighlighted that India and Japan have sought to maintain energy ties with Russia. The news company speculated that project partners, Indian state-backed ONGC Videsh and Japan’s Sodeco, may seek to remain part of Sakhalin-1 as they have at other oil and gas fields. Reuters reported that Sodeco was not immediately available for comment, but an official of the industry ministry – which owns a 50% stake in the company – said it was gathering information and talking with partners. Sakhalin-1 was designed to produce 250,000 bbl/d of oil; press states that it was producing about 220,000 bbl/d prior to Russia’s invasion of Ukraine, falling to just 10,000 bbl/d following the conflict. Exxon said it was keeping minimal amounts of oil and gas flowing to maintain fuel supplies for local market, to avoid blackouts and shortages, the Financial Times reports. According to Reuters, the company has also moved staff out of the country.
China Imports Record Levels Of LNG And Coking Coal From Russia
China ramped up its imports of coking coal and liquefied natural gas from Russia to record levels last month despite a decline in overall LNG imports, Chinese customs data showed on Tuesday. Chinese imports of LNG from Russia rose by one-third in September compared to the same month of 2021, the data cited by Bloomberg showed. All imports of LNG into China were down by 12% last month. Amid tepid demand and high spot prices, China is expected to see an unprecedented slump in its liquefied natural gas imports this year, ceding the world’s top LNG importer status back to Japan, analysts say. China, however, is importing more LNG from Russia while Europe shuns Russian cargoes. Chinese imports of Russian coking coal, used in steelmaking, nearly tripled to 2.5 million tons last month from 900,000 tons in September last year. Coking coal imports this past month were also higher than the 1.9 million tons of imports in the previous month of August, according to the customs data. Combined imports of thermal coal and coking coal from Russia jumped by 20% year over year in Sept to nearly 7 million tons. In recent months, China has been taking advantage of discounted cargoes of Russian energy products, including oil, LNG, and coal. China also imports natural gas via a pipeline from Russia, the Power of Siberia, but Beijing hasn’t disclosed its pipeline import volumes this year. China and India have become Russia’s key energy buyers after the Russian invasion of Ukraine, as most Western countries shun, ban, or are about to embargo imports of Russian energy products. The EU implemented a ban on coal imports in August and is set to introduce an embargo on seaborne imports of Russian crude oil starting December 5 and Russian refined oil products beginning on February 5, 2023.
Petronet LNG in talks with Vitol and Trafigura to rent out storage tanks at Kochi LNG terminal
Petronet LNG Ltd is said to be in talks with global oil traders such as Vitol Group and Trafigura Group to rent out storage tanks at its grossly underutilised 5 million tonne capacity LNG regasification terminal at Kochi as India’s biggest gas importer looks at ways to raise utilisation levels by tapping into the energy crisis in Europe that has sent LNG prices soaring. Petronet LNG is in talks with many entities including Vitol Group – the world’s largest independent oil trading company – and Trafigura Group, the world’s second largest oil trader, for renting its storage tanks for re-export purposes, an official said. The capacity utilisation of the Kochi LNGterminal, built with an investment of some Rs4,500 crores and opened in 2013, is only about 16-17 percent, as a lack of pipeline connectivity to Bengaluru, crimped sales. Unless the terminal is connected to the national grid, there is no way it can raise capacity utilisation, the official said. Work on the Kochi-Bengaluru pipeline has languished for years due to resistance from people in areas through which it passes. The terminal is currently supplying natural gas to Bharat Petroleum Corporation Ltd and FACT Ltd in Kochi besides a few small customers in Mangaluru through a pipeline. The terminal has two storage tanks, each with a capacity to store about 1,60,000 cubic metres of LNG. The Kochi terminal is capable of re-exporting LNG unlike other terminals in India that can only import the cargo and re-gasify it ahead of selling to customers within the country. Petronet LNG is also weighing plans to offer gassing up and cooling down (GUCD) services to LNG ships. LNG carriers that are newly built, fresh out of dry-dock or completely emptied at their previous discharge port need to have their cargo tanks cooled from ambient to cryogenic temperatures (minus 160 degrees Celsius) before loading their next LNG cargo. In this exercise, a ship will require some 600 to 3,000 metric million British thermal units (mmbtu) of LNG. By offering re-exporting services to oil traders, Petronet LNG reckons that it can boost the capacity utilisation of the Kochi terminal by at least 10-15 percent to 30-35 percent. “That is why we are putting efforts in this direction,” the official said, noting that the company has built the infrastructure to undertake re-gasification, re-loading, gassing up and cooling down as well as LNG bunkering services. Petronet LNG has formed a subsidiary – Petronet Energy Ltd – to carry out these activities. “Nowadays the LNG price is high in the spot market and global oil traders are keen on renting storage capacity at LNG terminals for arbitrage activities,” said the official. To be sure, Petronet LNG rented out storage capacity at its Kochi terminal for a brief period to Singapore-based Trafigura Group, after it started operations in 2013. “We stopped that business because the LNG price was not conducive for renting out storage tanks as rates dipped to about $ 2.5-3 per metric million British thermal unit (mmbtu),” the official said. LNG is currently trading at around $27-28 per mmbtu in the spot market after soaring to about $80 per mmbtu two months ago as Europe battled an energy crisis in the backdrop of the Russia-Ukraine conflict. “Now, the situation is completely different, and many parties are showing interest. That’s why we are thinking of renting out storage tanks again for better utilisation of the terminal facilities,” he added. The re-export of LNG and gassing up and cooling down services to LNG carriers are expected to bring more ship calls to Cochin Port, where the LNG regasification terminal is located, fetching extra revenue to Cochin Port Authority.
Americans See Another 10-Cent Drop In Gasoline Prices
Prices at the gas pump have declined 10 cents in a week, according to AAA, which says recession fears and further releases of America’s strategic petroleum reserve (SPR) have contributed to the further declines. On Monday, average national gasoline prices per gallon were $3,793, nearly 10 cents lower than this time last week. The prices are less than one cent higher than they were a month ago, when the average was $3.700 per gallon, but still off the year-ago average of $3.385. “Global recession fears coupled with the Biden Administration’s plan to continue tapping the Strategic Petroleum Reserve into December has helped temper oil prices,” said Andrew Gross, AAA spokesperson. “This will help take the pressure off pump prices, benefitting drivers and their wallets.” The biggest drops in gasoline prices took place in Alaska, which saw a 33 cent fall in prices at the pump, followed by Calfironia (down 30 cents), Oregon (down 26 cents), Washington (down 24 cents, Nevada (down 20 cents) and Indiana and Michigan both down 15 cents. Gasoline is now cheapest in the states of Georgia and Texas, where consumers are paying an average of $3.20 per gallon. California remains the most expensive gasoline state, due to state taxes, with prices at the pump averaging $5.75 per gallon despite recent declines. The price of gasoline is a crucial factor in November 4 midterm elections. AAA notes that domestic gasoline demand is around 1 million barrels lower than at the same time last year, noting that better gas mileage could also be limiting demand and helping prices move downwards. “If demand remains low and oil prices don’t spike, pump prices will likely keep falling,” the club stated.
Rs 183.50 million fine may delay HPCL refinery expansion
The recent adverse judgement passed by the National Green Tribunal (NGT) may further delay the commissioning of the project to expand capacity of HPCL Visakh Refinery from 8.33 million tonne per annum to 15 mtpa at an estimated cost of nearly Rs 270 billion. The expansion project is in an advanced stage of completion and the work got delayed due to continuation of Covid-19 pandemic for a long spell. In response to a complaint lodged by Visakha Pawan Praja Karmika Sangham, NGT south zone recently directed the HPCL authorities to pay a penalty of Rs 183.50 million for failing to comply with environmental norms. The complaint was lodged for failure to take remedial measures and maintaining 33 per cent of area as green belt as per the decision of the Ministry of Environment, Forests and Climate Change (MOEF&CC) and the recommendations of the Joint Committee set up after study by an experts committee from the Indian Institute of Science, Bangalore. The complaint mainly expressed concern over a fire accident that occurred in the Crude Distillery Unit-3 of Visakh Refinery on May 25, 2021. The tribunal took strong exception to regular complaints from the residents living in the vicinity on breathlessness, nausea, lung and heart ailments and dermatological infections due to frequent leakage of pungent smell from the refinery. Ever since there was a vapour cloud explosion in 1997 killing 56 people, there is no let-up in accidents at the refinery. “The management also stage-managed a public hearing and got environmental clearance for expanding capacity to 15 million tonne despite strong objections from the local residents and opinion leaders,” CITU State president Ch Narsinga Rao told Bizz Buzz. Jana Sena corporator Peethala Murthy Yadav said pending 100 per cent compliance of environmental norms and the directive of NGT, HPCL should not be permitted to commission the expansion project. NGT in its order directed HPCL to take all the required initiatives and comply with the observations of the Joint Committee, IISC-Bangalore and enquiry report within a period of six months. “APPCB is to monitor the same and it is not debarred from taking any action against HPCL for any fresh violation under the Water (Prevention and Control of Pollution) Act, 1974 and Air (Prevention and Control of Pollution) Act, 1981 and also initiate appropriate action against the erring officials as per the statutes. HPCL is directed to deposit the environmental compensation assessed at Rs 8,35,20,000 forthwith.”