China’s Energy Tariffs Shake Up Global Oil and LNG
China’s retaliatory tariffs on imports of U.S. crude oil, LNG, and coal will have a limited effect on Chinese purchases as Beijing’s oil and gas imports from the United States were modest, at best, even before the renewed trade war. However, the Chinese tariffs on U.S. energy, expected to take effect on February 10, have the potential to disrupt global commodity trade flows with impacts on other regional markets and on energy prices, analysts say. On the day on which the U.S. blanket tariff of 10% on all Chinese imports took effect, China responded with several measured retaliatory tariffs, including a 15% levy on LNG and 10% on crude oil imports from the United States. Considering the small volumes of U.S. oil and LNG ending up in China in recent months, the tariffs will not hurt either the U.S. or China too much in the near term, according to analysts. But the reluctance of Chinese importers to buy the more expensive American crude with the tariff is set to tighten the lighter sweeter crude markets as Beijing will seek alternatives to the U.S. crude and source more barrels from West Africa, for example. With the tariffs, China effectively killed U.S.-Chinese energy trade in the near term, Reuters columnist Clyde Russell notes. The impact on China is likely to be limited, as U.S. crude has most recently accounted for less than 2% of Chinese imports, while U.S. LNG has represented no more than 12% of all LNG imports into China in recent months, according to Kpler data quoted by Russell. In 2024, U.S. crude accounted for 1.7% of total Chinese crude imports, per Chinese customs data. That’s down from a 2.5% share in 2023. China could replace the U.S. volumes without much effort. But the recent crackdown on Russian oil trade and the expected “maximum pressure” campaign on Iran from President Trump could mean that China will have to tap more crude from the Middle East and West Africa, tightening the availability of these grades and driving up prices and shipping costs. The changes in the global LNG trade flows are expected to be bigger. China has long-term agreements with U.S. LNG exporters for deliveries beginning next year or in 2027. So far it has purchased a lot of American cargoes on the spot market. With a 15% tariff, the economics of buying spot LNG volumes just isn’t there—unless Chinese buyers take advantage of the flexible destination clause for U.S. LNG deals. Unlike Qatar, for example, U.S. LNG exporters allow reselling of cargoes as they are not bound by destination. Chinese LNG buyers are already sounding out other buyers in Asia and Europe about swapping U.S. cargoes for supply from elsewhere, anonymous traders told Bloomberg this week. However, in the medium and long term, if trade disputes continue and escalate, Chinese importers are unlikely to commit to long-term supply from new U.S. LNG export facilities, analysts say. This would be bad news for U.S. LNG developers who rely on capacity booked under long-term agreements before making final investment decisions on new export projects. “These tariffs on U.S. LNG directly undermine the Trump administration’s efforts to expand American energy exports and strengthen our geopolitical influence,” Charlie Riedl, Executive Director of the Center for LNG, a trade group representing many U.S. LNG exporters and developers, told Reuters. All of the above expectations could be swept aside if the trade war escalates and Trump pursues tariffs on Mexico and Canada, after the one-month pause, or on the European Union, which appears to be next on his list to address the U.S. trade deficit with tariffs. An escalating trade war between the U.S. and China, the world’s two biggest economies, could slow global growth and weigh on demand for commodities, including in the world’s biggest crude oil and LNG importer, China.
India’s natural gas production to peak in 2025, decline thereafter: Wood Mackenzie
India’s natural gas production is expected to peak in the current calendar year, after which it is likely to decline at a rate of 3.6 per cent annually until 2030, Wood Mackenzie said in a report. Besides, falling production amidst rising demand for the commodity—considered the best transition fuel—is expected to push up imports. India is likely to become the world’s third largest importer of liquefied natural gas (LNG), after China and Japan, by 2032, with inbound cargoes accounting for 75 per cent of its gas consumption. “We expect Indian domestic gas production to increase by 4.5 per cent and peak in 2025, then decline by an average 3.6 per cent annually over the next five years, due to structural declines in mature fields and delays in development of new projects,” the consultancy said. Falling production After 2030, production is expected to see a 9 per cent annual decline through 2040, driven by the exhaustion of mature fields and slower-than-expected discoveries, Wood Mackenzie said. “The narrative could change, however, if the Oilfields (Regulation and Development) Amendment Bill introduced in August 2024 is implemented effectively,” it added. Read: Natural gas: Key support ahead The bill aims to increase investment in oil and gas exploration and production. Key ultra-deepwater discoveries, such as UD-1 in the eastern offshore basin, could transform India’s gas landscape in the future, contingent on favourable policies, faster project execution and advanced exploration techniques. Exploration and production blocks‒OALP-VIII and OALP-IX‒were tendered in recent licensing rounds, but the participation of private players and international oil companies was muted, it pointed out. Rising imports India’s LNG imports totalled 26 million tonnes per annum (mpta) in 2024, accounting for more than half of the country’s gas consumption. “We expect LNG demand to continue to grow in the coming years, exceeding 37 mtpa by 2030 and 88 mtpa by 2050, as India’s demand for gas rises while its domestic production shrinks. By 2032 already, LNG should account for around two-thirds of India’s gas consumption and will become the third largest importer of LNG after China and Japan,” Wood Mac said. LNG consumption saw a whopping 11.5 per cent compound annual growth rate (CAGR) from 2022 to 2024, thanks to lower prices, a rise in industrial demand, subsidies for the Fertiliser sector and changes to pipeline tariff mechanism. Industrial gas demand, primarily from the fertiliser and refinery sectors, alone posted a 9 per cent CAGR in 2022-24. Greater gas availability for new industrial units and the potential expansion of refineries and petrochemical plants will boost Indian industrial gas demand to around 63 billion cubic meters (bcm) by 2040, it projected.
Good news for India? Crude oil prices to stay in $75-$80/bbl range over next six months
After a sharp rise in January 2025, global crude oil prices are expected to average between $75-$80 per barrel over the next six months. This trend is primarily driven by the new Trump administration’s plan to ramp up crude production, OPEC’s decision to maintain output levels, and no major disruption in Russian crude supply. Meanwhile, demand growth is projected to remain subdued amid a slowdown in major global economies, according to CareEdge Ratings. Indian Oil Marketing Companies (OMCs) saw a decline in their gross refining margins (GRMs) during the first nine months of FY25, averaging $4.80/bbl—down from $11.75/bbl in FY24 and $17/bbl in FY23. This drop resulted from reduced discounts on Russian crude and lower product cracks, particularly diesel, which had surged after the Russia-Ukraine war. Going forward, GRMs for Indian PSU OMCs are expected to remain in the range of $4-$6/bbl. Blended retail margins on petrol and diesel surged to approximately Rs 9/litre in Q3FY25, supported by lower crude prices and moderating GRMs. With crude oil prices expected to remain stable and GRMs staying within a narrow range, blended retail margins are projected to stay healthy at Rs 7-9/litre, creating potential for petrol and diesel price adjustments that have remained largely stagnant.
GAIL issues swap tender for 12 LNG cargoes
GAIL (India) Ltd has issued a swap tender offering 12 liquefied natural gas (LNG) cargoes for loading in the United States in exchange for 12 cargoes to be delivered to India in 2026, two industry sources said on Tuesday. GAIL, India’s largest gas distributor, is offering the cargoes for loading, one in each month of the year, from Sabine Pass on a free-on-board (FOB) basis. In exchange, the company is seeking the cargoes for delivery to the Dhamra terminal on a delivered ex-ship (DES) basis in the same timeframe. The swap tender closes on Feb. 19.
India’s green hydrogen sector may belong to big players
India’s green hydrogensector is expected to be increasingly dominated by big players going forward as high capital requirements, economies of scale, and financial challenges will drive out small players, according to experts. “It is indeed true that the initial excitement around the green hydrogen business in India stands reduced with the early enthusiasm from companies of all sizes entering the sector has diminished, leading to a landscape increasingly dominated by large firms,” said Ravi Shekhar, founder and managing director, Eninrac, a research consultancy. One of the key reasons behind big firms dominating the sector includes their advantage on economies of scale. “While it’s challenging to predict with certainty, there are a few trends and factors that suggest big players might have a significant role. Big players in the energy sector typically have the advantage of economies of scale, which can reduce production costs and make green hydrogen more competitive,” said Manoj Bansal, Partner, Grant Thornton Bharat.
Why Oil Prices Could Spike in February
Oil prices are set to finish this week some $2 per barrel lower than a week ago as the January ICE Brent futures contract expires just below $77 per barrel. However, the second straight weekly decline could be cut short very quickly if Donald Trump’s February 1 deadline for Canada and Mexico leads to the US slapping punitive 25% sanctions. If the threat does become a reality, the oil bulls will not stop until Brent is back above $80 per barrel. Former IEA Employees Turn Against It. Just as the International Energy Agency came under severe criticism from Donald Trump due to its marked focus on climate change, a new report penned by the IEA’s former head of analysis identified 23 false assumptions in the organization’s peak-demand scenarios. Investments into Clean Energy Hit New Record. According to BloombergNEF, global investment in low-carbon energy reached $2.1 trillion for the first time on record in 2024, but the 11% year-over-year growth is slower than 25% previously and only 37% of what is required to meet net zero emissions by 2050. Coffee Is The New Cocoa of 2025. Prices of arabica coffee continued to hit record highs this week as front-month ICE futures hit $3.74 per pound on Thursday, on the back of drought-hit tight supplies from Brazil and low coffee bean inventories from top roasters such as Nestle (SWX:NESN) or JDE Peet’s. UK Says No to Oil Development. The Scottish Court of Sessions ruled that government approval for the Rosebank oil field and Jackdaw gas field was unlawful as it did not take into consideration Scope 3 emissions, indefinitely blocking the United Kingdom’s two largest oil and gas projects. Ukraine Claims Huge Hit on Russian Refinery. Ukraine’s military struck Russia’s fourth largest refinery in Nizhny Novgorod in an overnight drone attack, causing a large fire and halting operations at the 340,000 b/d refinery’s integrated petrochemical plant, allegedly also attempting a drone strike on a nuclear reactor. Japan Eyes Alaska LNG to Appease Trump. Japan is mulling support for the $44 billion Alaska LNG project in order to forestall potential trade friction with the United States, eyeing liquefied gas supplies from the port of Nikiski that would be connected to gas fields in the north of Alaska via an 800-mile pipeline. Appetite for Wind Energy Has Never Been Thinner. UK-based energy major Shell (LON:SHEL) reported a $1 billion write-down on its sole remaining offshore wind energy venture, the Atlantic Shores project jointly developed with EDF Renewables, eyeing 2.8 GW of generation capacity in offshore New Jersey. Iraq Claims Huge Flaring Breakthrough. Historically one of the worst flarers globally, Iraq claims to have cut the amount of natural gas it releases by 70% after partnering with TotalEnergies and Baker Hughes, with 2023 flare volumes as high as 637 BCf and almost identical to the country’s gas consumption. Trump Cabinet Moves to Repeal Biden Fuel Standards. The new US Transportation Secretary Sean Duffy directed US regulators to rescind President Biden’s landmark fuel economy standards, hiking CAFE requirements for light-duty vehicles to 50.4 miles per gallon by 2031 from 39.1 miles per gallon now. Kazakhstan Sticks to OPEC+ Balancing Act. Under pressure from Chevron (NYSE:CVX) ramping up production at its giant Tengiz field to 800,000 b/d, the government of Kazakhstan claimed it would make a final decision on OPEC+ production cut compliance after the next joint OPEC+ meeting in June. US Oil Majors Double Down on Gas Generation. US oil major Chevron (NYSE:CVX) announced it plans to build natural gas-fuelled power plants next to data centers in the US Southeast, Midwest and East, partnering with investment firm Engine 1 and using gas turbines made by GE Vernova (NYSE:GEV). Norway’s Government Collapses over Clean Energy. Norway’s government has collapsed after the ruling Labour Party pushed to implement EU clean energy directives, only to see the Centre Party pull out of the coalition and 8 out of 20 government ministers resign, including the finance and defense ministers. Calcasieu Pass LNG to Start in March. According to US energy regulator FERC, the remaining construction work at Venture Global’s (NYSE:VG) 12.4 mtpa Calcasieu Pass LNG facility will be finalized by the end of February, paving the way for a full start of operations after a two-year regulatory limbo.
Budget 2025 | Puri says there’s more than enough for oil companies, LPG beneficaries
Hardeep Singh Puri, the Union Minister for Petroleum and Natural Gas, on Saturday reitered the government’s commitment to compensating for losses incurred by Oil Marketing Companies (OMCs) and said this does not require a separate budgetary provision. Puri explained that his ministry can seek funds from the finance ministry when required and said oil manufacturers have previously received ₹220 billion after they faced under-recoveries to the tune of ₹280 billion. The minister explained that OMCs that engage in good corporate behaviour need to be compensated for their losses. Puri sought to allay concerns over the reduction in the Pradhan Mantri Ujjwala Yogana — a scheme aimed at providing clean cooking gas to poor households — saying there is sufficient provision to meet the beneficiaries’ needs.
From Russia to the US: Europe’s Shift in Energy Reliance Sparks Debate on Vulnerability
Ursula von der Leyen, the president of the European Commission, expressed her regret at the Davos Forum that energy prices in Europe are substantially higher than those in the United States and China. Von der Leyen’s conduct so far can be characterized as a rabid anti-Russian and pro-Ukrainian cheerleader. Although she turned the facts upside down on who stopped the Russian cheap energy, she insisted that given the EU’s steadfast policy of refusing to purchase hydrocarbons from Russia, it is necessary to diversify supplies and shift towards renewable energy sources. In the interim, Donald Trump, the newly elected president of the United States, is abandoning the globally cherished green agenda. He has directed an increase in gas and oil extraction in the United States and has suggested to Europe that only America can serve as its sole dependable source of natural energy resources. In a virtual address at the same Davos Forum, Trump announced that the United States is prepared to supply the European Union with large-scale energy supplies, including liquefied natural gas (LNG). The fundamental principle of this “deal” is straightforward: Europe grants the United States monopoly status in its energy market, and in exchange, Washington refrains from initiating a trade conflict with the economically disadvantaged European Union. At first, this appears to be absurd, as Trump appears to be providing Europeans with an option without a choice. Nevertheless, it would be extremely naive to underestimate the gravity of his threats and his capacity to implement them.
Bangladesh Govt signs LNG deal with US firm
The government has signed a heads of agreement (HOA) with the US-based Argent LNG to import up to 5 million tonnes of liquefied natural gas per year for 20 years. Argent LNG is developing a 25 million metric tonnes per annum LNG facility in Louisiana, a southeastern US state on the Gulf of Mexico. The facility is slated to go into operation in early 2030. The HOA is a non-binding agreement, meaning neither party is obligated to agree to the terms listed in the document.
GAIL Chairman Sandeep Kumar Gupta Predicts Continued High Oil and Gas Prices Amid Market
Expecting the second term of US President Donald Trump to be overall good for the energy sector, public sector major GAIL India’s chairman Sandeep Kumar Gupta has said that any softening in oil and gas prices may still take some time. Speaking during the World Economic Forum Annual Meeting, Gupta also said GAIL is looking to scale up its capital expenditure in the next 3-5 years to Rs 100-120 billion as work is underway on several gas pipelines and other projects. He also expected that the Union Budget would give relief on compression charges on CNG and some steps are taken to bring natural gas under the GST coverage. Asked about the impact of Trump’s second presidency, Gupta said: “President Trump is committed to more energy for the US. He has already declared an energy emergency whereby he wants more oil and gas to be explored so that there is energy efficiency in the US. While this bodes well for oil and gas sector with more availability of oil and gas which will definitely ease pressure on the prices but this will take time because presently all the Liquefied natural gas (LNG) export facilities were on pause by the Biden administration. So lifting those pauses and putting these projects will take time. So the softness in the prices will take some time. For the time being these higher prices will rule,” Gupta said. Talking about his company, Gupta said: “We are the largest natural gas pipeline of the country and we have already laid lion’s share of the existing natural gas pipeline of the country. In the current year also, we are completing many pipelines.” Gupta also exuded optimism about GAIL’s growth, as he talked about the company’s projects in the pipeline. “We are working on Kochi-Mangalore-Bangalore pipeline where the Tamil Nadu section was pending. Work on the Gurdaspur-Jammu pipeline is on. A lot of pipeline projects are underway. “We have presence in petrochemicals too. Our project at Usar is the country’s first Propane Dehydrogenation Polypropylene unit will hopefully get completed this year. We have acquired PTA facility from erstwhile JBF petrochemicals at Mangalore, which is a 1.25 million tonne PTA project,” Gupta said.