Panic buying leaves up to 90% of fuel pumps dry in major British cities
Up to 90% of British fuel stations ran dry across major English cities on Monday after panic buying deepened a supply chain crisis triggered by a shortage of truckers that retailers are warning could batter the world’s fifth-largest economy. A dire post-Brexit shortage of truck drivers in Britain has sown chaos through supply chains in everything from food to fuel, raising the spectre of disruptions and price rises in the run up to Christmas. Just days after Prime Minister Boris Johnson’s government spent millions of pounds to avert a food shortage due to a spike in prices for natural gas and its byproduct, carbon dioxide, ministers repeatedly asked people to refrain from panic buying. But queues of dozens of cars snaked back from petrol stations across the land on Sunday, swallowing up supplies and forcing many gas stations to simply close. Pumps across British cities were either closed or had signs saying fuel was unavailable, Reuters reporters said. “Some of our members, large groups with a portfolio of sites, report 50% are dry as of yesterday, some even report as many as 90% are dry as of yesterday,” Brian Madderson, chairman of the Petrol Retailers Association told Sky. The Petrol Retailers Association (PRA) represents independent fuel retailers who now account for 65% of all UK forecourts. “So you can see it is quite acute,” Madderson said. “Monday morning is going to start pretty dry.” BP said on Sunday that nearly a third of its British petrol stations had run out of the two main grades of fuel as panic buying forced the government to suspend competition laws and allow firms to work together to ease shortages. Business secretary Kwasi Kwarteng said the suspension would allow firms to share information and coordinate their response. “This step will allow government to work constructively with fuel producers, suppliers, hauliers and retailers to ensure that disruption is minimised as far as possible,” the business department said in a statement. The government on Sunday announced a plan to issue temporary visas for 5,000 foreign truck drivers. But business leaders have warned the government’s plan is a short-term fix and will not solve an acute labour shortage.
British PM to consider using army to supply fuel to petrol stations
The British army could be called on to deliver fuel to petrol stations running dry across the country under an emergency plan expected to be considered by Prime Minister Boris Johnson on Monday, the Guardian reported on Sunday. The fuel panic comes as Britain faces several crises: an international gas price surge that is forcing energy firms out of business, a related shortage of carbon dioxide that threatens to derail meat production, and a shortage of truck drivers that is playing havoc with retailers and leaving some shelves bare. BP said nearly a third of its British petrol stations had run out of the two main grades of fuel on Sunday as panic buying forced the government to suspend competition laws and allow firms to work together to ease shortages. Lines of vehicles formed at petrol stations for a third day running as motorists waited, some for hours, to fill up with fuel after oil firms reported a lack of drivers was causing transport problems from refineries to forecourts. Some operators have had to ration supplies and others to close gas stations. “With the intense demand seen over the past two days, we estimate that around 30% of sites in this network do not currently have either of the main grades of fuel,” BP, which operates 1,200 sites in Britain, said in statement. “We are working to resupply as rapidly as possible.” Anglo-Dutch oil group Shell said that it had also seen increased demand for fuel. In response business minister Kwasi Kwarteng said he was suspending competition laws to allow firms to share information and coordinate their response. “This step will allow government to work constructively with fuel producers, suppliers, hauliers and retailers to ensure that disruption is minimised as far as possible,” the business department said in a statement. Transport minister Grant Shapps had earlier appealed for calm, saying the shortages were purely caused by panic buying, and that the situation would eventually resolve itself because fuel could not be stockpiled. “There’s plenty of fuel, there’s no shortage of the fuel within the country,” Shapps told Sky News. “So the most important thing is actually that people carry on as they normally would and fill up their cars when they normally would, then you won’t have queues and you won’t have shortages at the pump either.” After meeting Kwarteng, industry figures including representatives from Shell and Exxon Mobil Corp said in a joint statement issued by the business department that they had been reassured, and stressed there was no national fuel shortage. ‘Manufactured situation’ Earlier, Shapps said the shortage of truck drivers was down to Covid-19 disrupting the qualification process, preventing new labour from entering the market. Others pinned the blame on Brexit and poor working conditions forcing out foreign drivers. The government on Sunday announced a plan to issue temporary visas for 5,000 foreign truck drivers. But business leaders have warned the government’s plan is a short-term fix and will not solve an acute labour shortage that risks major disruption beyond fuel deliveries, including for retailers in the run-up to Christmas. Shapps called the panic over fuel a “manufactured situation” and blamed it on a hauliers’ association. “They’re desperate to have more European drivers undercutting British salaries,” he said. An Opinium poll published in the Observer newspaper on Sunday said that 67% of voters believe the government has handled the crisis badly. A majority of 68% said that Brexit was partly to blame. Opposition Labour Party leader Keir Starmer, speaking at his party’s annual conference in southern England, said ministers had failed to plan for labour shortages following the 2016 Brexit vote and called for a bigger temporary visa scheme.
Govt offers 15 CBM blocks in first bidding round in more than a decade
The government has offered 15 blocks for extracting gas from coal seams (CBM) in the first bid round in more than a decade. The blocks are located in Maharashtra, Madhya Pradesh, West Bengal, Jharkhand, Odisha and Chhattisgarh, according to a notice inviting offers put out by the Directorate General of Hydrocarbons (DGH). Bids under the Special CBM Bid Round-2021 are due on February 20, 2022. This is the first CBM bid round in more than a decade. The last round was held in 2010. CBM is gas or methane found below coal seams in coal fields. It is similar to natural gas and can be used as fuel to fire power plants, run fertiliser units, or be used as CNG in automobiles. The maximum number of five coal-bed methane (CBM) blocks have been offered in Madhya Pradesh, and two blocks each in Jharkhand, Maharashtra and Odisha. Three blocks are on offer in Chhattisgarh and one in West Bengal. The government has awarded 29 CBM blocks in the previous four rounds of bidding. “Companies are invited to bid for exploration, development and monetisation of 15 CBM blocks likely to contain both conventional and/or unconventional hydrocarbon resources, distributed in the sedimentary basins of India,” DGH said. All the 15 blocks are in Category-III basins that hold prospective resources to be explored and discovered. India’s sedimentary basins are divided into three categories — Category-I are basins with reserves being produced and exploited, and Category-II are ones with contingent resources to be developed and monetised. Under the current CBM round, bidders offering to do maximum exploration work will be awarded the block, DGH said. The bid round is part of the government’s attempt to raise domestic oil and gas production to cut reliance on imports. India imports roughly 85 per cent of its oil needs and about half of the gas requirement. Last month, the government offered 21 conventional oil and gas blocks for bidding in the sixth round under the Open Acreage Licensing Policy (OALP). Bids under OALP-VI are due on October 6. In parallel, the government has offered 32 small and marginal discovered fields. These were discovered by state-owned Oil and Natural Gas Corp (ONGC) and Oil India Ltd (OIL) but they could not develop them for a variety of reasons, including uneconomical size. Now, 32 such areas have been offered under the third Discovered Small Field (DSF) round. “Bid submission timeline of DSF-III (has been) extended till January 31, 2022,” DGH said. These are part of government efforts to more than double the share of natural gas in the country’s energy mix to 15 per cent by 2030 from the current 6 per cent. State gas utility GAIL (India) Ltd is adding around 15,000 kilometers of gas pipelines in east India to an existing network of around 17,000 km to form a national grid that will tie into city gas networks.
Oil looks set to test 3-year high as supplies tighten
Oil prices rose for a fourth day on Friday, taking Brent towards three-year highs, as investors focused on tighter supplies amid strong appetite for riskier assets like crude and high hopes for recovery from the pandemic. Brent crude was up 40 cents, or 0.5 per cent at $77.65 a barrel, by 0037 GMT, after touching a two-month high on Thursday and closing at its highest since October 2018. U.S. oil was up 27 cents, or 0.4 per cent, at 73.57 a barrel, having closed 1.5 per cent in the previous session, the highest since the start of August. “Crude prices appear to be on a one-way street that is headed higher … with risk appetite running wild,” said Edward Moya, senior market analyst at OANDA. In a sign of strengthening fuel demand, capacity utilization rates at U.S. East Coast refineries increased to 93 per cent, the highest since May 2019, Energy Information Administration (EIA) data showed. Inventories fell to the lowest in almost three years after damage from two hurricanes kept draws elevated in the United States, EIA data earlier in the week showed. Some members of the Organization of the Petroleum Exporting Countries (OPEC) and allies, known as OPEC+, have also struggled to raise output following under-investment or delays to maintenance work during the worst global health crisis in 100 years. Still, U.S. oil refiners on the hunt for replacements for the U.S. Gulf crude lost to storms have been able to turn to Iraqi and Canadian oil, while Asian buyers have been switching to pursuing Middle Eastern and Russian grades, analysts and traders said.
Why Europe is facing a gas price surge
Prices for gas and electricity are soaring in Europe as winter approaches, forcing governments to react. Here is what’s behind the winter increase: – Why is gas so expensive? – European reference prices for natural gas have quadrupled in just six months, with the International Energy Agency (IEA) identifying a number of factors behind the surge. On the demand side, the global economic rebound from coronavirus shutdowns has increased gas usage, while stocks were left low after a long, cold winter that prompted Europeans to heat their homes more. Supply has been hit by lacking maintenance during the pandemic and aging infrastructure. Deliveries by pipeline from Russia have been slowed by engineering work and an August fire. And liquid natural gas (LNG) imports from Asia are failing to fill the gap as demand is also high there. Consumers as well as businesses have been hurt by the price surge, with ratings agency Fitch warning fertiliser makers and agribusinesses are especially exposed. The British government on Tuesday said it would step in to pay CF Fertilisers to restart two factories that had become unprofitable, as their by-products include carbon dioxide vital for the wider food industry and other applications. – What about electricity? – Records are also tumbling on electricity markets, with 2022 contracts reaching 109 euros ($128, £97) per megawatt-hour in France, 112 in Britain and 105 in Germany. “Essentially 1-year forward baseload power prices have nearly doubled in most major power markets and are now at their highest level ever,” Barclays bank analysts wrote in a research note. They highlight two reasons for the increase: an 80-percent rise this year in prices for carbon emissions permits as the European Union ups its climate ambitions for 2030, and knock-on effects from more expensive coal and gas used to generate power. – Is there light at the end of the tunnel? – “Gas prices could remain high until the end of the winter heating season, given low levels of natural gas in European storage facilities,” Fitch analysts wrote in a note published Wednesday. And the IEA warned that “the European gas market could well face further stress tests from unplanned outages and sharp cold spells, especially if they occur late in the winter”. The Paris-based body on Tuesday urged Russia to pump more gas to Europe, as Moscow faces accusations it is holding back until a divisive new pipeline to Germany is given regulators’ green light to begin operating. US Energy Secretary Jennifer Granholm on Wednesday attacked “players who may be manipulating supply in order to benefit themselves,” while stopping short of naming Russia. – What are governments doing? – While London has stepped in to support CF Fertilisers, several other countries have also intervened. In Spain, a special tax on electricity will be lowered for businesses and consumers, while France will issue a 100-euro energy coupon to almost six million less well-off households. Portugal has intervened on electricity prices and Italy is considering a similar move. But while the European Commission says it is in talks with member states, there has been no action from Brussels so far. – What about the rest of the world? – Energy prices are rising in the US, where some sectors are nervous despite the measure of protection afforded by domestic shale gas production. The Industrial Energy Consumers of America business grouping called on the government to throttle LNG exports to keep the country’s reserves full. Pressure on gas is also lower in Asia, although Barclays predicted that “demand for LNG is likely to remain strong in Asia ahead of the Beijing Winter Olympics” in February — likely keeping European prices higher as a knock-on effect.
Petronas CEO says gas price at $7-$8/mmBtu is ‘sweet spot’ for customers
The chief executive of Malaysia’s state energy firm Petronas said on Tuesday that a gas price at $7-$8 per metric million British thermal units (mmBtU) could be a “sweet spot” for customers and allows investments to continue to happen. “Natural gas needs to be embraced as a transition fuel. A decarbonised future does not mean hydrocarbon-free future,” Tengku Muhammad Taufik said at the Gastech industry conference in Dubai. Global gas prices have been rallying all summer due to low storage inventories, high demand for gas in Asia, less Russian and LNG supply to Europe than usual, high carbon prices and outages. The average liquefied natural gas price for November delivery into Northeast Asia was estimated at about $24 to $25 per mmBtu last week. Benchmark Dutch natural gas prices in northwest Europe have surged to around $25/mmBtu from around $6-7/mmBtu at the start of the year.
India refiners’ August crude oil processing lowest in 10 months
Indian refiners’ crude oil throughput in August dipped to its lowest in 10 months due to ongoing maintenance activities at multiple refineries, government data showed on Wednesday. Refiners processed 4.36 million barrels per day (18.44 million tonnes) of crude oil last month, the lowest since October 2020 and about 4.8% lower than 4.58 million bpd processed in July. Maintenance activities at some facilities limited production in August, Refinitiv analyst Ehsan Ul Haq said, adding that demand was likely to resume as the festival season approaches, provided cases of COVID-19 remain low. On a year-on-year basis, however, refiners’ crude oil throughput in August jumped about 14.2%, while crude oil production fell about 2.3% to 596,000 bpd (2.52 million tonnes), the data showed. Indian refiners operated at an average rate of 86.89% of capacity in August, down from 91.34% of capacity in July, the government data showed. India’s top refiner, Indian Oil Corp (IOC), last month operated its directly owned plants at 82.83% capacity, as per the data. Reliance, owner of the world’s biggest refining complex, operated its plants at 88.22% capacity in August. Reliance’s oil imports in August declined 11.8% from last year, preliminary tanker data from shipping and industry sources showed on Tuesday. Natural gas output jumped 20.2% to 2.92 billion cubic metres from a year earlier, data showed. “Natural gas numbers might provide some cold comfort at a time when the whole world is complaining about high gas prices, which could incentivise even more production of the fuel,” Ul-Haq said. European and Asian Liquefied Natural Gas prices have soared over the past few weeks, pushing up energy bills and raising fears over shortages for the upcoming winter.
OVL seeks another 2-yr extension for exploring Vietnamese oil block in South China Sea
ONGC Videsh Ltd, the overseas arm of Oil and Natural Gas Corp (ONGC), has for the seventh time sought an extension to explore a Vietnamese oil block in the contested waters of the South China Sea. Officials said OVL has applied for a two-year extension to explore Block-128, the licence for which was valid till June 15, 2021. While India wants to maintain its strategic interest in the South China Sea, Vietnam wants an Indian firm to counter China’s interventions in the contested waters. OVL had signed a production sharing contract (PSC) with PetroVietnam for deepwater exploratory Block- 128 having an area of 7,058 square kilometers in Offshore PhuKhanh Basin, Vietnam in May 2006. An investment licence was issued to it on June 16, 2006, thereby giving effect to the PSC. Officials said the company continues to explore for oil and gas in the block that lies in a water depth of 200-2,000 meters. No discovery has yet been made on the block, they said. OVL during the exploration period acquired 3D seismic data, reprocessed 2D seismic data and carried out G&G studies. But it is yet to drill the one well it had committed as part of the minimum work programme, they said adding further G&G studies are being carried out. Vietnam on October 29, 2019, had granted a two-year extension from June 16, 2019 to June 15, 2021 and a request for a further two years of extension of Exploration Phase-1 of the PSC was made on March 12 this year. “We are hoping they will agree to extend the PSC till June 15, 2023,” an official said adding the Vietnamese national oil company PetroVietnam has agreed to share some of the technical data pertaining to the nearby area of Block 128 for Petroleum System Modelling and other related studies for better geological understanding. Another official said the company had a couple of years ago drilled a well on the block but it could not reach the target depth and so it now has to drill the well all over again. “If we don’t drill, we are liable to pay penalties,” he said. The company has not found any hydrocarbon in the block but is continuing to stay invested to maintain India’s strategic interest. OVL first took a two-year extension of the exploration period till June 2014 and then another one year. A third extension was granted on May 28, 2015, and a fourth in 2016. It got the fifth extension for two years in 2017. The block lies in the part of the South China Sea over which China claims sovereignty. In 2011, Beijing had warned OVL that its exploration activities off the Vietnam coast were illegal and violated China’s sovereignty, but the company continued exploring for oil and gas. OVL made a foray into Vietnam as early as 1988 when it bagged the exploration licence for Block 6.1. OVL owns a 45 per cent stake in Block 6.01 and its share of condensate and oil equivalent gas production from the block was 1.330 million tonnes during 2020-21 fiscal. The 955 sq km Block 06.1 located in Nam Con Son basin has two producing fields — Lan Tay and Lan Rosneft — and has a 35 per cent stake while the remaining 20 per cent is with PetroVietnam. The firm in 2006 got two exploration blocks — Block 127 and Block 128. While Block 127 was relinquished due to poor prospects, the other block was retained. The first extension for Block 128 followed China putting the area under Block 128 for global bidding. China claims sovereignty over most of the South China Sea where the two blocks are located and had warned the Indian arm from drilling in the region.
Petrol prices not coming down as states don’t want it under GST: Puri
Petrol prices in the country are not coming down as the states do not want to bring fuel under the ambit of the GST, Petroleum Minister Hardeep Singh Puri said. In an interview to PTI here, Puri said petrol prices crossed the Rs 100-mark in West Bengal as the TMC government is levying heavy taxes. “If your question is do you want the petrol prices to come down then the answer is yes. Now, if your question is why the petrol prices are not coming down, then the answer is because the states don’t want to bring it under GST,” he said. “The Centre charges Rs 32 per litre (as taxes on petrol). We charged Rs 32 per litre when the fuel price was USD 19 per barrel, and we are still charging the same even when the price rose to USD 75 per barrel. With this Rs 32 per litre, we provide free ration, free housing and Ujjawala, among several other schemes, to the people,” he said. Puri said the West Bengal government increased prices by Rs 3.51 per litre in July, resulting in the petrol crossing the century-mark. “The combined taxation is around 40 per cent here (West Bengal). It is very easy to make statements. Had you (TMC government) not increased the price by Rs 3.51, then it would have been still under Rs 100 per litre,” he said. Puri was in Kolkata on Wednesday to campaign for the Bhabanipur bypoll in which Chief Minister Mamata Banerjee is the TMC candidate against BJP’s Priyanka Tibrewal and CPI(M)’s Srijib Biswas. “If the result of the Bhabanipur by-election is a foregone conclusion, then why is the entire state cabinet campaigning there? We are confident about a victory, and post-poll violence is a major issue in this poll,” he claimed. On the political developments in Punjab, Puri said it reflects the “terminal decline” of the Congress. “Definitely it is an indication of Congress party’s terminal decline. I am choosing my words very carefully. In Bengal, they fought with one set of allies. In Kerala, they fought with a different set of allies. They are drawing almost blank everywhere. In UP, where the Congress party grew up, I don’t know who wants to partner them,” he said. “What is going with the Congress in Punjab is a comedy and theatre of the absurd,” Puri added. Pitching for the Citizenship Amendment Act (CAA), the minister said the Afghanistan crisis proved why it was necessary. “When the legislation was conceptualised, it was very clear that minority community in our neighbourhood would be facing a challenging situation,” he said. “In CAA, the cut-off date is 2014, and those who had opposed it are now saying that the cut-off date should be made 2021. CAA is to deal with persecuted minorities who fear for their life. As part of our overall philosophy, India as a country has accepted refugees. Those who had opposed CAA then are now looking silly,” he said.
IEA presses Russia to end Europe gas shortage
The International Energy Agency on Tuesday urged Russia to step up gas deliveries to Europe in anticipation of higher winter demand, as tight global supply pushes prices skywards. “Russia could do more to increase gas availability to Europe and ensure storage is filled to adequate levels in preparation for the coming winter,” the IEA said in a statement. Opening the tap would be “an opportunity for Russia to underscore its credentials as a reliable supplier to the European market,” it added. Higher demand, including from extremes of hot and cold weather this year, and squeezes on supply due to “a series of unplanned outages and delays across the globe and delayed maintenance from 2020” have boosted gas prices, the IEA said. Prices for electricity in Germany and Spain “have been around three or four times the averages seen in 2019 and 2020” in recent weeks, in part down to higher gas prices, it added. But Moscow has made clear that it is waiting for its divisive Nord Stream 2 pipeline to Germany to come online before delivering more gas. “There’s no doubt that the quickest possible entry into service of Nord Stream 2 will largely balance out the price parameters of natural gas in Europe,” Kremlin spokesman Dmitry Peskov said this week. The pipeline was completed this month in the face of objections from Germany’s eastern EU and NATO allies like Poland, the Baltic states and the US, which say it gives Moscow too much control over Europe’s energy supply. Washington’s State Department has called Nord Stream 2 “a Russian geopolitical project that’s a bad deal for Europe.” And Ukraine — in conflict with Russia since Moscow’s 2014 annexation of Crimea — has warned Europe that the pipeline could be used by Moscow as “a dangerous geopolitical weapon”.