LPG distributors issue 3-month ultimatum; threaten indefinite countrywide shutdown
The LPG Distributors Association has warned of an indefinite countrywide strike if its long-pending demands, including a significant hike in distributor commission, are not addressed within the next three months. The warning follows a resolution passed at the national convention of the association held in Bhopal on Saturday. “A proposal has been approved by the members from various states about the charter of demands. We have also written to the Petroleum of National Gas Ministry about the demands of LPG distributors. The present commission being given to LPG distributors is very low and it is not commensurate with the operational cost,” the association’s president BS Sharma said in a statement on Sunday. According to the letter submitted to the Union government, the commission on LPG distribution should be revised to a minimum of ₹150 to align with rising operational costs. The association also raised concerns over alleged irregular practices by oil companies. “LPG supply is based on demand and supply. But oil companies are forcibly sending non-domestic cylinders to distributors without any demand, which is against legal provisions. It should be stopped immediately,” the letter stated.
India Attracted $ 36 billion investment from pre-2014 NELP bid rounds: Oil ministry
India attracted over $36 billion investment from nine NELP bid rounds held before 2014, and has so far yielded 177 oil and gas discoveries, according to a report commissioned by the Petroleum Ministry. Under the New Exploration Licensing Policy (NELP), blocks were awarded to bidders promising maximum exploration, allowing them to recover investments from oil and gas they discover and produce before sharing profits with the government. In 2016, this was replaced by a revenue-sharing model, where blocks go to firms offering the highest share of output to the government. The 254 blocks awarded in nine bid rounds of NELP between 1999 and 2010 attracted USD 17.6 billion investment in exploration that led to 67 oil discoveries and 110 gas finds, and another USD 18.64 billion in development of some of those discoveries. The 144 blocks awarded in eight big rounds of Open Acreage Licensing Policy (OALP) from 2018 to 2022 saw USD 1.37 billion investment in exploration, leading to 6 oil discoveries and 4 gas finds, the report said. Reliance Industries and its partner BP Plc’s eastern offshore KG-D6 block, which produces a third of all natural gas produced in the country, as well as the showpiece KG-DWN-98/2 (KG-D5) block of state-owned Oil and Natural Gas Corporation (ONGC) were awarded in NELP rounds. The interim report of the Joint Working Group constituted by the ministry on issues related to Ease of Doing Business in the Indian Upstream Sector said NELP helped increase area under exploration and attract private and foreign investment into India’s exploration and production (E&P) sector. “Major international companies such as British Gas, Cairn Energy, Eni, BHP Billiton, and BP participated in the NELP bidding rounds, bringing advanced exploration technologies and capital into India’s upstream industry.” Despite its successes, NELP rounds had its challenges, it said. “One of the major issues was the delays in obtaining clearances, including environmental and regulatory approvals, which often resulted in significant project delays. “Additionally, disputes over cost recovery under the PSC regime led to disagreements between contractors and the government, with both parties interpreting the contracts differently.” Recognizing the need to improve the Ease of Doing Business in the sector, the government introduced a series of policy reforms and incentives aimed at addressing these inefficiencies. In 2016, the Hydrocarbon Exploration and Licensing Policy (HELP) was introduced to address the challenges faced under NELP and create a more investor-oriented regime. HELP replaced the production sharing contract (PSC) model with a Revenue Sharing Contract (RSC) model, simplified the licensing framework, and introduced greater flexibility in exploration and production activities. “This marked a transformational shift in India’s E&P regime, with a stronger focus on reducing operational complexities, increasing transparency, and providing greater autonomy to operators,” the report said, adding RSCs reflected the government’s vision to create a more transparent, efficient, and competitive environment in India’s oil and gas sector, aligning with global best practices.
India targets reducing taxes on US ethane, LPG
India is preparing to scrap import taxes on U.S. ethane and liquefied petroleum gas (LPG) as part of ongoing trade negotiations with Washington, according to sources familiar with the talks. The plan is aimed at easing India’s tariff load and narrowing its trade surplus with the United States, as pressure mounts on Asian economies to address trade imbalances under U.S. President Donald Trump’s tariff regime. The proposal follows discussions to also eliminate duties on U.S. liquefied natural gas (LNG) and expand energy imports from the U.S. India currently applies a 2.5% import tax on ethane, used primarily in petrochemical production, and on propane and butane, which are key components of cooking gas. In fiscal year 2023-24, India imported 18.5 million metric tons of LPG valued at $10.4 billion, most of it sourced from the Middle East. India is the world’s second-largest importer of U.S. ethane after China, bringing in 65,000 barrels per day last year, U.S. Energy Information Administration data shows. China imported 227,000 barrels per day, although those volumes may fall amid the U.S.-China trade war and rising tariffs. Reliance Industries, which operates the world’s largest petrochemical complex, is India’s top ethane importer. India and the U.S. agreed in February to work towards the first phase of a broader trade deal by the end of this year. The goal is to grow bilateral trade to $500 billion by 2030 and reduce India’s $45.7 billion trade surplus with the U.S. Officials from India’s commerce and finance ministries will make the final call on any tax cuts, according to the sources, who requested anonymity. While removing duties may open the door to more imports, analysts say infrastructure limits could constrain India’s ability to significantly increase ethane shipments in the short term. “It will be challenging for the U.S. to increase ethane exports to India, as India seems to have already maximised its use of ethane as a feedstock,” said Cheryl Liu of Energy Aspects, as quoted by Reuters. India’s current cracker capacity supports up to 92,000 barrels per day of ethane use.
Russia’s Economy Ministry Lowers 2025 Oil Price Forecast
Russia’s Economy Ministry has lowered its forecast for oil prices this year in an update for its baseline scenario, reflecting the latest trends on global oil markets. Per the new scenario, Brent crude will average $68 per barrel, down from $81.7 per barrel in the September 2024 scenario, Interfax reported today. The ministry also updated its oil price forecast for the next two years, expecting Brent crude at an average of $72 per barrel for 2026, down from $77, to remain at $72 in 2027 as well, down from an earlier projection of $74.5 per barrel. For Urals, Russia’s flagship export blend, the Economy Ministry expects an average price of $56 per barrel this year. This price would be below the G7 price cap aimed at curbing Russia’s oil revenues, meaning exporters could use Western insurance and tankers to ship the oil—unless the G7 decides to lower the cap, as some in the group have suggested previously. “You can see how forecasters oscillate between total pessimism and total optimism,” a spokesperson for the ministry told Interfax, referring to the 2025 oil price forecast. “We believe this is a fairly conservative price forecast and with regard to the budget and to the sovereign wealth fund, we also believe it is a normal and realistic forecast.” Earlier this year, oil prices dropped 24% below the level stipulated in the country’s federal budget for the year. The decline came as a result of Trump’s tariff offensive, a persistent perception of an oversupplied market, and a stronger ruble. The prospect of peace in the Ukraine, fueled by the Trump administration also contributed to the oil price route from the past month. The situation prompted a warning from the governor of the central bank, who said the oil price rout could have an adverse effect on the Russian economy. “If the escalation of the tariff wars continues, this usually leads to a decline in global trade and the global economy and, possibly, demand for our energy resources. Therefore, there are risks here,” Elvira Nabiulina said.
Private players win big in new E&P round
For both public and private players in the oil and gas exploration and production (E&P) business, April 15, 2024, could well go down as a new dawn for the sector. As Hardeep Singh Puri, Minister of Petroleum and Natural Gas, argued: “The Indian hydrocarbon sector is entering a new era of accelerated exploration and development through investor-friendly reforms, swift approvals, scientific exploration, and a strong emphasis on sustainability.” The minister was addressing the Open Acreage Licensing Policy(OALP) Round-IX and Special Discovered Small Field (DSF) Signing Ceremony on Tuesday. The fact that seven out of a total of 28 blocks were won by Cairn Oil and Gas and one by BP-Reliance in partnership with Oil and Natural Gas Corporation (ONGC) has not only given credence to the increasing importance of the private sector in the upstream sector but also the government’s unwavering commitment to reducing its import dependence and securing its energy future. Says Krishan G Insan, an Energy Expert, a Fellow of European University Institute, Italy and Global Co-Chair of Sustainability Network of Chevening Alumnus: “The success story of the private players– both domestic and foreign majors—in the Indian oil and gas exploration and production (E&P) sector has already been well established under the NELP regime.”
EU Considers Lifting Methane Requirements for U.S. LNG
The European Union is considering what Reuters called tweaks to its methane emissions regulation in order to stimulate higher LNG imports from the United States, the publication has reported, citing unnamed sources in the know. The goal, per these sources, was to allow for “equivalent” methane standards to be applicable to U.S. liquefied natural gas exports to the European Union without weakening the overall regulation, Reuters noted in its report. The Biden administration pressured the energy industry in the U.S. to invest in methane emission tracking and control, which puts producers in a relatively favorable position. “The Commission has an ongoing dialogue with industry on all relevant matters related to our legislation,” a spokesperson for the EU’s executive organ told Reuters. The EU’s so-called methane regulation was approved by the European parliament last year and essentially requires all suppliers of liquefied natural gas to the bloc to accompany their cargos with documentation certifying that the methane emissions related to the production of the LNG were tracked, monitored, and, most importantly, minimized. Qatar did not take kindly to that regulation, stating it would simply stop selling LNG to European buyers, leaving said European buyers with a more limited pool of sellers. Now, it seems LNG supply security has trumped emission fears in Brussels, and not a moment too soon—methane emission reporting by LNG suppliers to the European Union was set to enter into effect from next month. LNG suppliers, by the way, were not overnight fans of the regulation. “The methane regulation in general is a good thing,” Ralf Dickgreber, chief of global LNG and biomass at France’s Engie, told an industry event recently. However, “we don’t know exactly how to interpret the rules out there . . . How to comply with it is very difficult at this stage,” the executive said, as quoted by the Financial Times.
Asia Offers to Buy More U.S. Energy to Avoid Steep Tariffs
Most Asian countries are racing to pledge increased imports of U.S. energy to avoid the high tariffs slapped on them in early April. Delegations from many Asian countries are heading to Washington D.C. these days to discuss the U.S. tariffs, now suspended for 90 days, which are the highest for economies in Asia and Southeast Asia. Thailand is looking to import higher volumes of American energy as a way to convince the U.S. Administration not to slap high tariffs on Thai goods sold in the United States. The tariff on Thailand, which U.S. President Donald Trump announced on the so-called “liberation day” on April 2, was as much as 36%–one of the highest among all economies and jurisdictions. Earlier this week, Indonesia, threatened with a 32% tariff, said it would offer to buy an additional $10 billion worth of American oil and liquefied petroleum gas (LPG). South Asian nation Pakistan is actively considering the idea of importing U.S. crude oil for the first time to seek a reduction of its trade surplus with America. South Korea is reportedly looking at more LNG imports to get Washington to drop the tariffs. India is weighing the option to scrap its import tax on American liquefied natural gas to increase U.S. LNG imports and reduce its trade surplus with the United States. However, commitments and contracts to buy more U.S. energy will not necessarily spare any buyer from tariffs. Taiwan, for example, was slapped with a now-halted 32% tariff, although it had just made some big commitments to invest in the U.S., including in U.S. energy projects. Last month, Taiwan’s state-held oil and gas company CPC Corporation signed a letter of intent to invest in the $44-billion Alaska LNG export project and buy LNG from it as part of a move to bolster its gas supply and energy security. Taiwan wasn’t spared from one of the highest now-suspended tariffs despite being the only early committed investor in the huge Alaska LNG project, while Japan and South Korea are hesitating. Unfortunately for Taiwan, in any negotiations with deficit-fixated President Trump, the value of its exports to the U.S. – predominantly semiconductors – vastly outstrips the value of the goods it imports from America.
Sanctioned Russian Oil Exports to China Jump as STS Transfers Rise
Chinese imports of Arctic Russian crude grades are on the rise as ship-to-ship (STS) transfers from sanctioned vessels on non-sanctioned tankers offshore Malaysia and Singapore are booming, according to traders and analysts. The Biden Administration’s farewell sanctions on Russian oil trade and exports sanctioned dozens of vessels carrying the ARCO, Novy port, and Varandey crudes from Russia’s Arctic oil projects. The sanctions, slapped in early January, blacklisted dozens of vessels that Russia used to ship the ESPO crude blend from the Far Eastern port of Kozmino to China’s independent refiners. Many of the vessels, specialized tankers, and shuttle tankers transporting Russia’s oil from the Arctic and Far East Pacific fields and production clusters to Asia have now been sanctioned. Since Chinese buyers began demanding oil to be delivered on non-sanctioned vessels, STS transfers in the South China Sea and near Singapore have been picking up, Russian oil traders have told Reuters. As many as 4 million barrels of Russia’s Arctic crude oil was transferred via STS last week, Emma Li, senior analyst at energy flows analytics firm Vortexa, told Reuters. Another 16 million barrels of Arctic crude from Russia have either arrived or are planned to arrive in the South China Sea in April, Li added. Last month, Chinese crude oil imports rebounded to a 20-month high, also due to increased imports of Russian and Iranian oil. A massive reshuffling of tankers following the sanctions on Russia and Iran has allowed non-sanctioned vessels to pick up trade with Russian and Iranian oil. Iranian crude imports into China surged to a record 1.8 million bpd in March, with Shandong alone absorbing more than 1.5 million bpd and marking a nearly 50% jump from the 2024 average, according to Vortexa. Russian crude is also on the rebound in China, with many cargoes on sanctioned tankers finding buyers in Shandong. Moreover, stranded Russian Arctic cargoes are now targeting Chinese teapot buyers via STS transfers using the dark fleet, Vortexa’s Li noted.
Oil Prices Are Recovering, But Can Exporters Outlast the Tariff Circus?
Oil prices have been on the mend this week after taking a dive following President Trump’s global tariff offensive launch. Yet they still have a long way to go to return to where they were just four months ago—and many oil-exporting countries can’t wait for this to happen. The question is, will it? For now, the situation does not look good for oil producers. The rebound in prices this week came as a result of indications that Trump was willing to consider some tariff exemptions for things like smartphones and semiconductors. It didn’t last, however, because the latest from the tariff front is that the U.S. president has ordered an investigation into the country’s reliance on imported critical minerals with a view to tariffing those, too. In other words, Trump is very much not done with the tariffs. However, Chinese crude oil imports surged in March, which was taken as a strong positive sign by traders, contributing to the oil price recovery that saw Brent crude rebound to $66 per barrel and West Texas Intermediate regain ground to above $61 per barrel. Crude oil intake hit the highest in 20 months in March, topping 12 million barrels per day as flows of Iranian and Russian crude rebounded from the lows seen early this year with the U.S. sanctions. Whether China will keep this rate of imports going forward is an open question, with U.S. exports of crude to the world’s top importer clearly set to get decimated if not outright sapped. For oil exporters, however, the more pressing issue is how long the tariff war will continue. Alas, this is also an open question at this part, although there is a chance of good news down the road. Until then, there will be some suffering, especially among the less wealthy oil exporters. Reuters reported this week that countries such as Angola, Colombia, Nigeria, and Venezuela were set to feel some pain from the oil price rout that the tariff offensive triggered. The publication cited analysts as saying the longer the tariff war continued, the worse the pain would get for these oil exporters. One example came from Angola, which had to cough up $200 million for a margin call issued by JP Morgan last week on a $1-billion total return swap, Reuters noted in its report. Nigeria is also vulnerable with regard to Treasury bills tied to the local currency in carry trades, betting that the naira will not depreciate fast against the U.S. dollar. Of course, besides these specific examples, oil exporters’ general problem with lower oil prices is that it means lower oil export revenues and, consequently, lower budget income in hard currency. Saudi Arabia is feeling that pinch, with its budget deficit set to swell to $75 billion if the rout persists, according to Goldman Sachs analysts. It is not the only one, either. The whole Middle East is going to see higher deficits. “The deficits on the fiscal side that we’re likely to see in the GCC [Gulf Cooperation Council] countries, especially big countries like Saudi Arabia, are going to be pretty significant,” Goldman’s Middle East and North Africa economist Faruk Soussa told CNBC last week. Russia is also feeling the pain, with Urals, its flagship blend, dropping to less than $55 per barrel last week versus $69.70 per barrel set in Russia’s budget for this year. Oil and gas revenues account for some 30% of the country’s budget revenue. By the way, the government just released a new energy strategy this week, which sees oil production stable over the next 25 years at an average daily rate of 10.8 million barrels. Yet, while exporters suffer, importers are set to benefit from the very same price trends—for a while. “The lower oil price outlook is positive for oil importers, albeit unlikely to counterbalance the significant headwinds from the trade war and the significant downside risks,” the chief economist of Abu Dhabi Commercial Bank, Monica Malik, told Reuters. JP Morgan earlier this month raised the odds of a global recession to 60% from 40%. The International Monetary Fund also saw an increased likelihood of global-scale trouble resulting from the tariff war. So, for both exporters and importers of crude oil, the big question is whether the tariff war will get resolved within weeks or will drag on for months, possibly even years. For now, the signs are good: the 90-day negotiations window Trump opened for everyone, but China put a quick end to the stock market rout, suggesting any trade deals closed during that window would have a similar effect on market moods. As optimism returns, oil prices will climb higher, giving exporters a much-needed break but retaining a ceiling from Trump’s focus on China, keeping oil affordable for importers.
Assessing the viability of LNG trucks
India is considering liquefied natural gas (LNG) fuelled trucks as the long-haul road freight solution to replace the highly polluting diesel trucks. While there is little doubt that diesel trucks, a primary source of freight transport in India, require a cleaner alternative, the conundrum for policymakers is which technology to adopt – LNG trucks or electric ones. Carbon emissions from the road transport sector require urgent solutions. Road transport is already responsible for 12% of India’s energy-related carbon emissions. Within the road transport sector, medium-to-heavy duty trucks account for 45% of on-road emissions in the country, even though they form only 3% of the total vehicle population. Further, trucks are responsible for 53% of particulate matter (PM) emissions. With the road freight movement likely to result in 17 million trucks on the road by 2050, from four million in 2022, according to the NITI Aayog, adopting zero-emission trucks (ZETs) is imperative and urgent. The government realises this, and its Bharat Zero Emission Trucking policy advisory outlines potential interventions to achieve 100% ZET deployment by 2050. While LNG trucks lower carbon emissions, they do not entirely eliminate them. According to some studies, trucks powered by LNG lower carbon emissions by 28% to 30% compared to diesel trucks. Another study points to negligible benefits when all greenhouse gases are considered when switching to LNG trucks instead of diesel trucks. According to the study, there are two to five times more nitrogen oxide emissions from LNG trucks than diesel trucks. This could vary for trucks with new emission standards, such as the China VI emission standard, largely equivalent to Euro VI, which requires heavy-duty vehicles to be equipped with remote emissions monitoring systems. Studies also point to the possibility of increased ammonia emissions from China VI emissions standards-aligned LNG trucks due to changes in the type of combustion. The emission benefits of LNG trucks over diesel would perhaps need more research. For instance, lifecycle emissions analysis of LNG extraction, production and transportation could indicate possibly higher overall emissions due to the methane emissions from using LNG.