Petrol Bunk Owners Observe ‘No Purchase Day’
About 150 petrol bunk owners, under the banner of Federation of Mysore Petroleum Traders (FMPT) and Akhila Karnataka Federation of Petroleum Traders (AKFPT) staged a ‘No Purchase’ protest in front of the oil company depots in city this morning. The protestors accused the State-run oil companies such as Indian Oil Corporation Limited, Hindustan Petroleum Corporation Limited and Bharat Petroleum Corporation Limited of reducing fuel prices by cutting excise duty during weekends, which has resulted in huge losses to them and also for not increasing the dealer margin. Speaking to media persons, AKFPT State President Basavegowda said that the oil companies give loads during weekends that too on credit when excise duty on petrol and diesel are being reduced, but will not give loads when there are chances of hike in fuel prices, thus putting them into huge losses. He said that people need not panic and resort to panic purchasing of fuels as there is enough stock for three days. AKFPT General Secretary Ranjith Hegde, speaking to Star of Mysore said that the recent reduction in fuel prices had a huge impact on petrol bunk owners, who have suffered a minimum loss of Rs. 3,50,000 to Rs. 2.5 million depending on the individual bunk storage capacity. Pointing out that one petrol bunk purchases 20,000 litres each of petrol and diesel on Saturdays as there will be no supply of fuels on Sundays, Ranjith said that petrol which was sold at Rs. 110 per litre was reduced to Rs. 101 causing a loss of Rs. 9 per litre. This has resulted in a loss of Rs. 1,80,000 to the dealer, who had purchased 20,000 litres from the depot. Similarly, diesel, which was sold at Rs. 94 per litre was reduced to Rs. 87 per litre resulting in a loss of Rs. 7 per litre and Rs. 1,40,000 for 20,000 litres. In total, one bunk owner has suffered a total loss of Rs. 3,20,000. Other petrol bunks with more storage capacity have suffered more losses, he said. “We are not against reduction of fuel prices, but we are against reduction of fuel prices during weekends (Saturdays) that too when we have purchased more stocks as we do not want to inconvenience fuel consumers during holidays,” he added. Added to this, the dealer margin has not been increased since August 2017, despite the Committee, consisting of Petroleum Ministry officials and others, recommending enhancing dealer margin twice a year. “It has become very difficult for us to maintain and manage petrol bunk and staff with very less dealer margin. We hike the salaries of the staff every year, pay more taxes each year and even power bills. But with dealer margin not increased since 2017, it is becoming near impossible to maintain the bunk,” Ranjith added. He said that the oil companies should reimburse the losses suffered by bunk owners and also increase the dealer margin, which are two major demands. FMPT President Shashikala, Manjesh, Lokesh and others were present.
India shows no sign of slowing its purchase of Russian oil
India’s appetite for cheap Russian oil is swelling, even as the West continues to hit Moscow with unprecedented sanctions. Russian Crude flows to India are expected to reach 3.36 million metric tonnes in May, according to estimates from Refinitiv. This is nearly 9 times higher than the 2021 monthly average of 382,500 metric tonnes. Overall, the country has received 4.8 million metric tonnes of discounted Russian oil since the Ukraine war started, Refinitiv added. Urals oil from Russia currently trades at about $95 a barrel, while the global benchmark Brent crude is above $119 a barrel. Part of the reason for the price disparity: The West has shunned Russian oil. On Monday, the EU agreed to ban 90% of Russian oil imports by the end of the year. Europe is the biggest buyer of Russian energy. The United States, Canada, United Kingdom and Australia have already banned imports. The embargo from a huge importer like Europe would pile pressure on the Russian economy, but Moscow has found other buyers in Asia. India, which imports 80% of its oil, usually buys only about 2% to 3% from Russia. But with oil prices shooting up this year, the government has steadily increased its intake from Moscow, taking advantage of the heavy discounts. According to Refinitiv, Russia crude flows to India soared to 1.01 million metric tonnes in April from 430,000 metric tonnes in March. India’s Ministry of Petroleum and Natural Gas did not immediately respond to a query on the impact EU’s partial ban will have on the South Asian economy’s oil ties with Moscow. Earlier in May, India played down the import spike. In a statement, the Ministry of Petroleum and Natural Gas said the country imports oil from all over the world, including a significant volume from the United States. “Despite attempts to portray it otherwise, energy purchases from Russia remain minuscule in comparison to India’s total consumption,” the ministry said in a statement. “India’s legitimate energy transactions cannot be politicized,” it added. The world’s biggest democracy has refrained from taking a tough stance against Moscow over the war in Ukraine. Russia and India have a long history of friendly relations, which stretch back to the Soviet era when the USSR helped India win its 1971 war with Pakistan. India isn’t the only Asian giant buying Russian oil. China, historically the single biggest buyer of Russian oil, is expected to go on a shopping spree, too. OilX, which uses industry and satellite data to track oil production and flows, found that China’s imports from Russia by pipeline and sea rose by 175,000 barrels per day in April — an increase of about 11% over average volumes in 2021. Seaborne imports are rising more sharply in May, according to early data. Demand is expected to pick up as the world’s second largest economy begins loosening its strict Covid-related restrictions in major cities. EU moves ahead with partial ban While Asia’s purchase of Russian crude is surging, the EU on Monday resolved to block most of it by the end of this year. Russian crude accounted for 27% of the bloc’s imports in 2021, according to Eurostat. Russian oil delivered by tankers would be banned, while an exemption will be made for the southern segment of the Druzhba pipeline, said Ursula von der Leyen, president of the European Commission, in a press conference. The northern segment of the pipeline serves Poland and Germany — who have agreed to the embargo. The southern part goes to Hungary, Slovakia and Czech republic and accounts for 10% of imports of Russian oil. After the embargo, Moscow may look for new customers more aggressively, but it won’t be easy. A significant portion of Russia’s oil exports to Europe travel to the bloc via pipelines. Rerouting those barrels to markets in Asia would require costly new infrastructure that would take years to build.
ONGC sees oil production rising 11%, gas jumping 25% by FY25
Reversing the declining trend of the past few years, ONGC said its crude oil production will rise 11 per cent and natural gas output will jump 25 per cent after newer discoveries in the western and eastern offshore start producing. In an investor presentation post FY22 earnings, Oil and Natural Gas Corporation (ONGC) said crude oil production will rise from 19.545 million tonnes in the financial year ended March 31 (2021-22) to 19.88 million tonnes this year and 21.588 million tonnes in the next year. The output will climb to 21.701 million tonnes in 2024-25 (FY25) Similarly, gas production will rise from 20.907 billion cubic meters in 2021-22 to 21.097 bcm in current fiscal and 24.387 bcm in the next. In FY26, the output will reach 26.124 bcm. The output increase will be aided by projects to bring gas, found on both the east and the west coast. ONGC is betting on discoveries in KG-DWN-98/2 in the Bay of Bengal to do most of the heavy lifting, while the Cluster-8 marginal fields in the western offshore will supplement the production. ONGC said it is also implementing the fourth phase of the redevelopment of the Mumbai High oil and gas fields, which will increase the recovery factor from the five-decade-old mature fields. India’s dependence on imports to meet its crude oil needs has, in recent years, risen to 85 per cent as output from domestic fields continued to decline. ONGC, the biggest crude oil and natural gas producer in the country, has over the years seen a steady decline in production from its mature and aging fields. But the firm is now stepping up on exploration campaign to find more reserves. ONGC said it will spend Rs 310 billion from 2022 to 2025 on the exploration campaigns throughout the country. It is in a view to “add around 1,00,000 square kilometers of new exploration area annually up to 2024-25,” the firm said, adding, “increase of acreage holding likely to further establish the resource potential of undiscovered plays and realisation of YTF (yet to find) reserves.” This is a part of the company’s Vision 2040 that calls for raising capacities and production across its portfolio of oil and gas exploration and production, downstream oil refining and petrochemicals and new energy businesses. The company, which started with an equity infusion of Rs 3.43 billion by the government more than six decades back, has generated a wealth of over Rs 9000 billion since then, and is now venturing on a new road to further enhance value. The new Energy Strategy 2040 aims to raise domestic production from 50 million tonnes of crude oil and oil equivalent gas to 70 MMtoe (Million Metric tonne of oil equivalent) by 2040, the presentation said. Overseas output is seen rising from 15 MMtoe to 40 MMtoe. With 35 million tonnes per annum of oil refining capacity vested in its two subsidiaries — HPCL and MRPL, ONGC is targeting to raise this capacity to around 100 million tonnes by 2040. Also, expansion in petrochemicals will be prioritised. ONGC is also looking to scale up its renewable energy portfolio to 10 Gigawatts from less than 200 MW currently. Also, the firm has set up a USD 1 billion venture fund corpus for the incubation of new technologies that will aid in raising the output and finding newer resources, the presentation said.
Russia suspends gas deliveries to Dutch trader GasTerra
GasTerra will no longer receive gas from Russia’s Gazprom from May 31 after refusing to agree to Moscow’s demands for payment in roubles, the two companies said on Monday. GasTerra, which buys and trades gas on behalf of the Dutch government, said it had contracted elsewhere for the two billion cubic meters (bcm) of gas it had expected to receive from Gazprom through October. The company is 50 percent owned by Dutch government entities and 25 percent each by Shell and Exxon. “We understand GasTerra’s decision not to agree to Gazprom’s unilaterally imposed payment conditions,” Dutch Energy Minister Rob Jetten wrote on Twitter. “This decision will have no consequences for the physical delivery of gas to Dutch households.” A GasTerra statement said the Dutch company had decided not to adopt the system that Russia had demanded, which involved the setting up of accounts that would be paid in euros and then swapped for roubles. The company said such measures could violate European Union sanctions and also said the payment route presented too many financial and operational risks. A statement from Gazprom said that its suspension of gas supplies to GasTerra will continue until payments are settled in line with the Russia-proposed scheme. GasTerra said that it had repeatedly asked Gazprom to adhere to its contractual payment methods and delivery obligations. “It is not possible to say in advance what impact the dropping off of two bcm of Russian gas will have on the supply and demand situation in the European market,” the Dutch company added. Economy Affairs Ministry spokesperson Pieter ten Bruggencate said the Netherlands would not initiate its emergency gas plan to ask industrial users to reduce consumption. “This is not yet seen as a threat to supplies,” he said. A spokesperson for the country’s national grid operator, Gasunie, said it does not expect disruption to the grid as a result of Gazprom ceasing deliveries to GasTerra.
India’s imports of cheap Russian crude surge since Ukraine invasion: Data
India has received 34 million barrels of discounted Russian oil since Moscow invaded Ukraine on Feb. 24, according to Refinitiv Eikon data, more than trebling the value of total imports from Russia, including other products, compared with the same period of 2021. The volumes of India’s seaborne oil imports from Russia exclude CPC Blend oil, which is also exported via Russia’s Black Sea port, but mostly supplied by Kazakhstan’s subsidiaries of western countries as transit volumes. India’s oil imports from Russia have been rising since February, as Asia’s third largest economy and the world’s third biggest oil importer, turned to deeply discounted Russian oil, mostly Urals crude, to cut its imports bill. The country received more than 24 million barrels of Russian crude this month, up from 7.2 million barrels in April and about 3 million in March, and is set to receive about 28 million barrels in June, according to Refinitiv Eikon oil flows. Surging energy imports helped push India’s total goods imports from Russia between Feb. 24 and May 26 to $6.4 billion, compared with $1.99 billion in the same period last year, according to government figures seen by Reuters. India’s exports to Russia, however, fell nearly 50% to $377.07 million over that period, as its government is yet to set up a formal payment mechanism. As the West responded to the invasion with a barrage of sanctions, India has come under fire for its continued purchases of Russian energy. New Delhi has brushed off the criticism, saying those imports made only a fraction of the country’s overall needs and has said it will keep buying “cheap” Russian oil, arguing a sudden stop would drive up costs for its consumers. Russian and Indian energy companies have also been discussing term supply agreements and possible acquisitions of stakes in Russian oil and gas projects.
Firms to submit bids for third round of discovered small fields on May 31
India is also set to see the curtains for yet another round of oil and gas auctions as companies are set to submit the bids for the third round of discovered small fields on May 31. These fields are spread over nine sedimentary basins covering over 13,000 square kilometers with in-place hydrocarbons estimated to be around 230 million metric tonne. Business Standard takes a look at the history these auctions and the investments so far in these rounds. Starting from the pre-New Exploration Licensing Policy (NELP) fields to the nine rounds of NELP, discovered small fields (DSF) and the Open Acreage Licensing Policy (OALP) rounds, at least 216 blocks are active now, that saw an investment of $45.18 billion. Majority of the investments in OALP and DSF blocks are set to come up in the coming years. Based on the estimates, India’s reserves increased 41.872 billion tonnes of oil equivalent in 26 sedimentary basins, up from 28.09 BTOE in 15 sedimentary basins.
GAIL seeks 1 mil mt LNG term deal as demand soars
GAIL is eyeing a one million mt LNG import deal for 10 years starting 2023 to quench the country’s growing appetite for cleaner fuels amid rising energy needs, company Chairman and Managing Director Manoj Jain said May 27. “The main consideration of buying LNG will be competitive prices from anywhere including Russia,” Jain said at a presser to coincide with the company’s latest quarterly results announcement, adding that GAIL did not rule out procuring extra LNG from Russia’s Gazprom, even though the West is seeking to phase out Russian gas imports due to Moscow’s invasion of Ukraine. Currently, GAIL has a term LNG import deal in place with Gazprom’s Singapore-based trading arm. The average size of the current term deal is 2.5 million mt/year, which Gazprom has been increasing progressively on GAIL’s demand. GAIL imported 2 million mt LNG from the Russian supplier in 2021, while imports have been pegged at 2.5 million mt for 2022 and 2.85 million mt in 2023, company officials said at the same event. Jain said GAIL’s total natural gas imports could increase 5%-6% on the year in fiscal year 2022-23 ending March 31, 2023. “We aren’t looking at short-term contracts as they are costlier,” Jain said. He forecast global LNG spot prices to be in the range of $20-$24/MMBtu in the medium term even though prices would stay volatile in the short run. Stable long-term supplies The company officials said Gazprom recently had rescheduled delivery of one LNG cargo to June delivery from May amid difficult market conditions. GAIL remained confident of receiving regular supplies from Gazprom, they said. “We don’t see any disruption in our supplies under the deal as ours is a portfolio contract, meaning Gazprom can supply gas from anywhere in the world,” Jain said. Meanwhile, GAIL has also been mandated to import more LNG for city gas distribution networks. A policy guideline from the Ministry of Petroleum and Natural Gas Division on May 6 said GAIL will supply pooled natural gas 2.5% over and above the 100% requirement of the compressed natural gas for transport, and the piped natural gas domestic segments of each geographical area mentioned in the quarterly allocation period. For now, GAIL will buy one LNG cargo from the spot market every 30-40 days to meet city gas demand, Jain said. India aimed to raise the share of gas in its overall energy mix to 15% by 2030 from the current 6.7%. However, the plan to reach this level will likely be delayed by 12-24 months due to the Ukraine-Russia war, he said. Sustainability In a release May 27, Jain also said GAIL had awarded a contract to set up India’s largest electrolyzer to produce hydrogen. The company was embarking on development of alternative energies like green hydrogen, renewables and biofuels projects of national importance to offer a viable energy transition pathway, he said. GAIL has also carried out a prefeasibility and techno-commercial study to assess the potential for installation of solar power plants at its sites across India, according to its website. The objective of this project is in alignment with the government’s aspirational target of achieving 175 GW of renewable energy installed capacity by 2022. As the study has been completed, the installation of rooftop solar plants has already begun at feasible locations, it said.
Can Qatar Really Replace Russia As Germany’s Gas Supplier?
Long before the re-emergence of the ‘Pan-Arab’ ideology now increasingly evident among several leading Middle Eastern countries, Qatar had sought to go its own way, neither aligning fully with the U.S.-led power bloc on the one side nor the China/Russia-lead bloc on the other. This is in part a reflection of the hard facts that it shares the huge North Dome/South Pars natural gas reservoir with China/Russia’s key proxy in the region, Iran, and is geographically positioned directly between what was the U.S.’s key ally in the region, Saudi Arabia, on its west and Iran on its east. It is also a function of nationalist sensibilities of self-reliance, and all of these factors combine into Qatar’s decision to put itself forward as a key means by which Germany may finally be able to consider enacting a ban on importing oil and gas from Russia, catalyzing more European Union (E.U.) member states to do the same. Just over a week ago, Qatar signed a declaration of intent on energy cooperation with Germany aimed at becoming the de facto E.U. leader’s key supplier of liquefied natural gas (LNG) going forward. These new supplies of LNG from Qatar would come into Germany through existing importation routes augmented by new infrastructure approved by the German Bundestag on 19 May. This includes the deployment of four floating LNG import facilities on its northern coast, and two permanent onshore terminals, which are even now under development, according to sources within the E.U.’s energy security apparatus exclusively spoken to by Oilprice.com last week. These plans, said one of the sources, will run in parallel with, but are likely to be finished significantly sooner than, plans for Qatar to also make available to Germany sizeable supplies of LNG from the Golden Pass terminal on the Gulf Coast of Texas, in which QatarEnergy holds a 70 percent stake, with ExxonMobil holding the remainder. The Golden Pass terminal’s estimated send-out capacity will be around 18 million metric tons per year (mtpy) of LNG and the facility is expected to be operational in 2024. To correlate the figures, then: last year, Germany imported 142 billion cubic meters (bcm) of gas in 2021, down 6.4 percent from 2020, an average of around 12 bcm per month (although real month-by-month use would not reflect this arithmetical mean average due to differing seasonal usage). This figure comes from data sources that do not quantify the individual sources of these supplies, but as a guide, according to data from Independent Commodity Intelligence Services (ICIS), for the month of December 2021, natural gas coming via pipelines from Russia amounted to 32 percent of Germany’s total imports that month, followed by supplies from Norway (20 percent of the total) and the Netherlands (12 percent of the total). Using this December percentage gives a figure for the entire year of just over 45 billion cubic meters of natural gas being imported by Germany from Russia, which equates to just under 33 million metric tons of LNG, or just over 40 million tons of oil equivalent. The 33 million metric tons of LNG for the year for Germany from Russia compares to the entire Golden Pass figure over the year of 18 million metric tons per year of LNG. So, clearly, for Qatar to make a meaningful dent in Germany’s gas imports from Russia – let alone to allow for Germany to substitute Qatari gas for Russian oil imports as well (in 2021 Germany imported an average of 555,000 bpd, or 34 percent of its total, the most crude oil from Russia of any country in the E.U.) – more would have to be done by Qatar, and as quickly as possible. The cornerstone of these efforts from Qatar comes in its plans to dramatically expand its flagship North Dome natural gas field capacity, but this is unlikely to be fully achieved before the target point of 2027 at the earliest. The supergiant North Dome natural gas field, together with the neighboring 3,700 square kilometer area of Iran’s South Pars field, comprises by far the largest non-associated natural gas field in the world. By conservative estimates, the entire 9,700 square kilometer site holds at least 1,800 trillion cubic feet of non-associated natural gas and at least 50 billion barrels of natural gas condensates. This abundant resource had, for many years, allowed Qatar to be the number one LNG exporter in the world, although it did lose that spot for a time to Australia. Qatar’s loss of standing had been a product of the moratorium it had imposed in 2005 on the further development of the North Dome site but this was then lifted in the first quarter of 2017. As it stands, Qatar can produce more than the 77 million metric tons per year (around 106 bcm per year) of LNG official capacity of the North Dome – last year it produced around 110 bcm – and the plans are to increase this to 110 mtpy with the addition of four more trains from 2025 and to 126 million mtpy with the addition of two further trains by 2027. To recap, Germany’s estimated yearly imports of natural gas from Russia are around 45 bcm, or just under 33 million metric tons of LNG. In order, then, to fully become Germany’s substitute for Russian gas right now – assuming that Germany’s LNG importation infrastructure was ready now, rather than at an as-yet-undecided date – Qatar would have to send over 58 percent of all its LNG to Germany, ignoring all other calls on that gas. As of the end of last year, not only did Qatar have long-term supply contracts in place for domestic consumers, of course, and also for its prized clients in Asia (Asia was Qatar’s biggest market for LNG deliveries last year, with a total of 78.5 bcm delivered), but also it various other countries in Europe, accounting for around 5 percent of total European consumption. Notable European customers last year were Italy (6.6 bcm) and
Israel renews gas exploration, expects export deal to Europe
Israel is renewing offshore natural gas exploration and hopes to reach an agreement soon for exporting gas to Europe, Israel’s energy minister said on Monday. Energy Minister Karine Elharrar had said exploration for new gas fields would be put on hold to focus on meeting renewable energy targets but due to the war in Ukraine, Europe is now looking for a quick replacement of supply from Russia. “Alongside the real and sincere concern in Europe, there is a real opportunity for Israel to export natural gas to Europe,” Elharrar said at a news conference. Because of this, she said she instructed the ministry to prepare for a new round of tenders for gas exploration off Israel’s Mediterranean coast, which is expected to begin in the third quarter. “We established a three-way working group with Israel, Europe, and Egypt. We will sign, I hope in the near future, a memorandum of understanding that will create the framework agreement for export,” she said. The idea for now is for gas to be sent to Egypt through an expanded pipeline network for liquefication and then shipped to Europe. Other options, like the long-discussed Eastmed pipeline connected Israeli gas fields directly with Europe, are also on the table, Elharrar said. Officials have said it would be at least a couple of years before significant amounts of Israeli gas could reach Europe.
Do not see govt slapping windfall tax after rise in energy prices: ONGC
The government is not looking to impose any new tax on windfall gains that oil and gas producers earned from shooting energy prices, India’s top producer ONGC said Monday. Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL) reported bumper profits in the March quarter (when international prices soared to a near 14-year high of USD 139 per barrel) and record earnings in 2021-22, triggering talks of the government slapping a windfall tax. “We have not received any communication on this,” ONGC chairman and managing director Alka Mittal told a news conference here. Last week, Oil India Ltd (OIL) Chairman SC Mishra stated the same. “The government has been conveying to us to go aggressively on (oil and gas) exploration and production spending so as to augment domestic output and cut import reliance,” Mittal said. While the government earns 65-66 paise in taxes on every rupee that ONGC earns, the remaining is ploughed back into finding more oil and gas. The absence of investment in exploration due to low oil prices in the past few years has been one big reason for global oil and gas production not keeping pace with demand globally. The explorer had, however, not cut exploration and production spending even when oil prices were low, helping find and bring newer finds on to production to offset the natural decline that has set in old and mature fields. “I don’t think they (government) will be talking about this (windfall tax),” Mittal said. In recent days, the UK levied a 25 per cent tax on “extraordinary” profits from North Sea oil and gas production to raise USD 6.3 billion to help fund its support package. The Indian government cut excise duty on petrol and diesel to ease inflationary pressure. This move cost the government Rs 1 lakh crore and talk of a windfall tax is to cover this deficit. Mittal said ONGC is spending Rs 30,000-32,000 crore annually to maintain output from ageing fields and find new reserves. Without this spending, the output will fall and India’s 85 per cent import reliance will increase. She said ONGC will spend Rs 31,000 crore over the next 3 years just on exploration. It is implementing 6 projects at a cost of Rs 5,740 crore. ONGC reported a record net profit of Rs 40,306 crore on a revenue of Rs 1,10,345 crore in the 2021-22 fiscal. OIL posted Rs 3,887.31 crore net profit in the fiscal.