Muted natural gas output likely in FY25 on cautious Reliance Industries’ KG Basin fields outlook
India’s natural gasoutput is headed for a muted show in FY25 after three straight years of rise, as the production outlook is rather circumspect at Reliance Industries’ KG Basin fields that were at the vanguard of the industry’s growth in recent years. India produced 27.3 billion cubic meters in April-December 2024, compared with 27.2 billion cubic meters in the same period a year earlier. In the second and third quarters of the current fiscal year, output was lower than in the previous year. The growth over the past three fiscal years was primarily fuelled by Reliance Industries’ new fields in the KG basin, as output from state-run ONGC’s fields had been declining for several years. Domestic gas production had slumped 40% in nine years to 2020-21 but surged 19% year-on-year in 2021-22 after Reliance Industries brought to production some new fields in the KG D6 block. In 2022-23, domestic production rose 1% while in 2023-24, it increased 6%.
India likely to boost purchases of US oil, gas following Trump’s announcement
India may purchase more American energy as US President Donald Trump’s pro-oil and gas policies will increase US supplies to the global market, weighing on prices, Oil Minister Hardeep Singh Puri said on Tuesday “If you were to ask me whether more American energy is going to come on to the market, my answer is yes,” Puri said on the sidelines of SIAM’s International Symposium for Thriving Eco- Energy in Mobility. “If you say there is a potent possibility of more purchase of energy between India and the US, the answer is Yes.” The US is already a large supplier of oil and gas to India. Trump wants to leverage American oil and gas resources to spur manufacturing in the US. “We have something that no other manufacturing nation will ever have: the largest amount of oil and gas of any country on Earth. And we are going to use it,” Trump said at his inauguration ceremony on Monday. “We will bring prices down, fill our strategic reserves up again, right to the top, and export American energy all over the world.”
Refiners ask Abu Dhabi NOC to offer ‘oil delivered price’ as freight spikes
Indian state refiners have asked Abu Dhabi National Oil Co (ADNOC) to offer pricing of its crude on a delivered basis to manage costs, three refining sources said, after fresh US sanctions disrupted supplies and caused freight rates to spike. Refiners in India, which imports over 80 per cent of its oil, have been hit hard by a spike in global oil prices and shipping rates after Washington recently imposed sweeping new sanctions targeting Russian insurers, tankers and oil producers. The world’s No. 3 oil importer and consumer became the top buyer of discounted Russian seaborne oil after the European Union shunned purchases and imposed sanctions on Moscow following its invasion of Ukraine in 2022. Russian oil accounted for more than a third of India’s imports last year, but US sanctions are tightening supply, pushing the buyer back to traditional Middle East sources. While most Middle East crude producers sell oil on a free-on-board (FOB) basis via long-term contracts to Asian buyers, Russian oil traders have been supplying crude to India on a delivered at port (DAP) basis that includes insurance, shipping and other services borne by the seller. State-owned Indian refiners including Indian Oil Corp, Hindustan Petroleum Corp (HPCL) and Bharat Petroleum Corp have asked ADNOC for DAP price quotes, the sources said.
OMCs to register strong Q3FY25 on healthy marketing margins
The country’s oil marketing companies are expected to register strong earnings in the third quarter of the fiscal year on the back of healthy retail margins on diesel and gasoline led by a decline in crude oil prices, as per analysts. Elara Capital expects OMC’s retail margin on diesel to increase to Rs 9.3 per liter against Rs 0.4 per liter last year and Rs 5.8 per liter in the previous quarter. The retail gasoline margin may jump to Rs 12.8/liter against Rs 7.8/litre in the same period last year and Rs 9.4/liter in the previous quarter “We expect gross refining margins for PSU (public sector undertakings) refiners – Bharat Petroleum, Chennai Petroleum, Hindustan Petroleum, Indian Oil, and MRPL – to average at $5.1 per barrel in Q3FY25E from $1.6 per barrel in Q2FY25 and $9.3 per barrel in Q3FY24,” the brokerage said. It also expects the average crude inventory gain in the third quarter to be $0.3 per barrel against the loss of $2.7/bbl in the previous quarter. “We expect EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) for oil & gas companies to grow 7% on year and 31% sequentially in Q3FY25E, led by strong retail diesel and gasoline margin for OMCs, though partly offset by LPG losses and weaker gross refining margins from last year,” Elara Capital said in its preview. For the public upstream sector, analysts expect crude oil realizations to remain stable from last year at $72.6 per barrel, but down 2% from the previous quarter. Elara Capital sees Oil India’s crude production to grow by a marginal 1% from last year, while gas production is set to be flat due to a delay of a few quarters in Indradhanush Gas Grid gas pipeline connection and constraint in demand from the North-East (until the expansion of Numaligarh refinery by Q3FY26).
GAIL, BPCL to set up plants to produce compressed biogas in Chhattisgarh
The Chhattisgarh Biofuel Development Authority (CBDA) has inked an agreement with GAIL (India) and Bharat Petroleum Corporation (BPCL) for producing compressed biogas (CBG) from urban solid waste of six municipal corporations across the state. tripartite agreement was signed by the CBDA, GAIL, and BPCL for setting up CBG plants in municipal corporations of Ambikapur, Raigarh, Korba, Bilaspur, Rajnandgaon, and Dhamtari While GAIL will set up plants in Ambikapur, Raigarh, and Korba, BPCL will execute the agreement in Bilaspur, Dhamtari, officials said Through the deal, about 350 metric tonnes (Mt) of solid waste per day and nearly 500 Mt of surplus biomass from the six municipal corporations will be used for biofuel production. GAIL and BPCL will invest about Rs 6 billion. Similarly, the state will receive a goods and services tax of about Rs 60 million per year.
India likely to boost purchases of US oil, gas following Trump’s announcement
India may purchase more American energy as US President Donald Trump’s pro-oil and gas policies will increase US supplies to the global market, weighing on prices, Oil Minister Hardeep Singh Puri said on Tuesday. “If you were to ask me whether more American energy is going to come on to the market, my answer is yes,” Puri said on the sidelines of SIAM’s International Symposium for Thriving Eco- Energy in Mobility. “If you say there is a potent possibility of more purchase of energy between India and the US, the answer is Yes.” The US is already a large supplier of oil and gas to India. Trump wants to leverage American oil and gas resources to spur manufacturing in the US. “We have something that no other manufacturing nation will ever have: the largest amount of oil and gas of any country on Earth. And we are going to use it,” Trump said at his inauguration ceremony on Monday. “We will bring prices down, fill our strategic reserves up again, right to the top, and export American energy all over the world.” The US is the largest producer of oil and natural gas in the world. It is also the top exporter of liquefied natural gas (LNG) and its supplies helped Europe quickly replace much of Russian pipeline gas following the breakout of the Ukraine war in 2022. Trump wants US oil and gas production to further rise. “We will be a rich nation again. And it is that liquid gold under our feet that will help to do it.” Trump blamed energy prices for the cost-of-living crisis in recent years in the US. “The inflation crisis was caused by massive overspending and escalating energy prices. And that is why today I will also declare a national energy emergency. We will drill, baby, drill,” he said.
Indian students flock to petroleum and mining programs amid Trump’s second term buzz
As Donald Trump prepares for his second inauguration, a curious trend is emerging among Indian students aspiring to study abroad: a renewed focus on courses in extractive industries such as petroleum, mining and agriculture-related fields. Study abroad consultants report a surge in applications to programmes tied to sectors Trump has historically championed, likely due to expectations of regulatory leniency and job creation under his administration. “The United States is a top destination for Indian students pursuing courses like petroleum engineering, mining engineering and agricultural sciences,” said Piyush Kumar, regional director – South Asia, IDP Education. He notes that programmes offering STEM (science, technology, engineering and mathematics) designations are particularly popular as they provide students with up to 36 months of work experience through optional practical training (OPT). Courses in petroleum and mining, such as natural gas engineering, geotechnical engineering and mineral & energy economics, are seeing increased demand. On the agriculture side, programmes in animal sciences, livestock business management and agronomy are drawing attention. Universities in energy hubs like Texas and Colorado and agricultural powerhouses in the Midwest are the preferred choices for these aspirants.
India Seeks Alternatives To Russian Oil
Following Russia’s invasion of Ukraine in 2022, India emerged as a major buyer of Russian oil that was widely and rapidly sanctioned by the West. However, all that may be about to change, courtesy of a fresh wave of U.S. sanctions on Russia and India’s own scramble to find alternatives. Such a shift is unlikely to be quite as simple or swift. India’s imports from Russia currently make up for a remarkable 40% of its total oil purchases on the global market, up fourfold from around 10% in 2021 – the year before hostilities began in Ukraine. A noticeable jump in the flow of Russian oil to India happened in the second half of 2022. That’s when the U.S. and its allies slapped a price cap of around $60 per barrel for cargoes of Russian crude to access Western services needed for shipping, including insurance and tankers. While the idea was to limit both Russian crude volumes on the global market as well as earnings from the sale of oil, India headed the pack of buyers that took advantage of the bind Moscow found itself in. Gradually, a monthly oil trading partnership between Delhi and Moscow worth nearly $3 billion or 1.85 to 1.95 million barrels per day took shape, according to the Centre for Research on Energy and Clean Air (CREA). Much of the oil was delivered via fleets of dark or ‘shadow’ tankers, i.e. tankers with unclear ownership structures created through various entities that make it difficult to pin down who actually owns or controls them, as well as compel them to follow Western sanctions. Last year, CREA noted that: “81% of the total value of Russian seaborne crude oil was transported by ‘shadow’ tankers, while tankers owned or insured in countries implementing the price cap accounted for 19%. “Russia’s reliance on tankers that are owned or insured in G7 countries has fallen due to the growth of ‘shadow’ tankers. This subsequently impacts the coalition’s leverage to lower the price cap and hit Russia’s oil export revenues.” But on January 10, the U.S. announced a fresh wave of sanctions to target such tankers carrying Russian oil, along with maritime insurance providers based in the country. In a statement, the U.S. Treasury said it was imposing further sanctions on Russian oil and gas exploration and production firms Gazprom Neft and Surgutneftegas, networks that trade Russian oil and 183 vessels that may have shipped such cargoes.
OPEC’s share in India’s annual oil imports rises after 8-yr drop
OPEC’s share in India’s crude oil imports edged up in 2024, rising for the first time in nine years, while top supplier Russia’s share remained steady, data obtained from trade sources showed. Russia’s share in the world’s third-biggest oil importer and consumer is expected to drop in 2025 after Washington last Friday announced sweeping sanctions targeting Russian producers and tankers, disrupting supply from the world’s No. 2 producer to India and China and tightening ship availability. India imported 4.84 million barrels per day of oil in 2024, up 4.3% from the previous year, the data showed. The share of Organization of the Petroleum Exporting Countries (OPEC) in India’s 2024 crude imports rose to nearly 51.5%, up from 49.6% in 2023, while Russia’s share in 2024 remained at about 36%, the data showed. There is higher demand for Middle Eastern barrels from Asia refiners, especially India, due to lower Russian supplies, said Priti Mehta, senior research analyst at consultancy Wood Mackenzie. Indian refiners have stepped up purchases of Middle Eastern grades since late 2024 as Russian supplies fell, refining sources told Reuters last month. The share of Middle Eastern oil in India’s December crude imports rose to a 22-month high to about 52%, the data showed. However, Russia continued to be the top oil supplier to India, followed by Iraq and Saudi Arabia in December. In recent years, Russia became India’s top supplier as its refiners were drawn to Russian oil sold at a discount after Western nations imposed a price cap and shunned purchases from Moscow. That caused OPEC’s market share in India to shrink to nearly 50% in 2023 from 64.5% in 2022. OPEC’s share has also been consistently declining since 2016 as Indian refiners diversified their purchases to reduce costs.
2025 is a Highly Unpredictable Year For OPEC+
Another year, another set of challenges and dilemmas for OPEC+. The group is set to start unwinding its oil production cuts, but it will have to contend – once again – with many uncertainties and be ready to react to unpredictable events in 2025. From demand concerns to supply uncertainties, OPEC+ has its work cut out for this year, too. The alliance of OPEC and a dozen non-OPEC producers led by Russia will closely watch several major factors for global oil markets this year. These include whether China’s oil demand will rebound in 2025 following lackluster consumption and imports last year, how the incoming U.S. Administration will tackle China, Russia, and Iran, and whether incoming President Donald Trump will choose to impose tariffs not only on China but on major trade partners and allies, too. All these are outside OPEC+’s control. But there is something the group can – or at least should – control: the level of compliance with its own oil production ceilings. Elusive Compliance Rather than targeting a specific price of oil (preferably above $80 per barrel) or market share to recoup from non-OPEC+ producers, the key consideration for OPEC+ in both 2025 and 2026 is full compliance and compensation for historical overproduction, according to Bassam Fattouh, the Director of the Oxford Institute for Energy Studies (OIES), and Andreas Economou from OIES. “These criteria are essential for the group’s cohesion and for the agreement to have its desired effects on market balances and shaping market expectations,” Fattouh and Economou wrote in an analysis this month. “Achieving these criteria will also provide OPEC+ with more flexibility to navigate the current market uncertainties,” they added. OPEC+, in early December, decided to delay the start of the easing of the 2.2 million bpd cuts to April 2025, from January 2025. The group also extended the period in which it would unwind all these cuts into the following year, until September 2026. The alliance reiterated the importance of compliance with the cuts and the timely compensation for those producers who haven’t adhered to their assigned quotas. The OPEC+ overproducers – OPEC’s Iraq and non-OPEC+’s Russia and Kazakhstan – still have work to do to fall in line. All three have pledged to compensate for previous overproduction with deeper cuts. Russia, Iraq, and Kazakhstan submitted in July 2024 their compensation plans to the OPEC Secretariat for overproduced crude volumes for the first six months of 2024. The cumulative overproduction in these six months was about 1.184 million bpd for Iraq, 620,000 bpd for Kazakhstan, and 480,000 bpd for Russia, OPEC said back then. Russia’s plan envisages Moscow mostly compensating for its overproduction in the months of March to September due to the more challenging conditions in the winter. Now the compensation period is also being extended until the end of June 2026. Supply and Demand Uncertainties This change in compliance and compensation timelines could alter market balances at a time when many other factors are at play. Due to the OPEC+ decision to delay the start of supply additions to April 2025, the market surplus in 2025 may not be as large as previously feared, but a surplus we will see, analysts say. The next OPEC+ moves will depend on a variety of market movers. OPEC and the wider OPEC+ group pride themselves on being proactive in managing oil market balances, but they may have to be reactive once again this year. Supply from Russia and Iraq is already coming under pressure. On its way out, the Biden Administration just sanctioned Russia’s oil exports, traders, and tankers with the heaviest set of sanctions yet. This sent oil prices rallying above $80 per barrel in just two days. The Trump Administration begins formally its term in office at the start of next week and more expansive sanctions from Trump on Iran are widely expected to follow soon. India and China are already looking to source alternative supply as they are reluctant to deal with tankers, traders, and insurers explicitly sanctioned by the U.S. If Russian and Iranian supply drops materially, the other OPEC+ producers could opt to return more barrels sooner rather than later. However, non-OPEC+ supply is set to grow this year, too, led by the U.S., Brazil, Guyana, Canada, and Argentina. This growth could be enough to meet the expected growth in global oil demand, and the market could find itself in a surplus with additional OPEC+ barrels. Moreover, the Trump Administration’s trade policies (read: tariffs) could slow economic growth in China, the U.S., and other major economies, potentially denting global oil demand growth in the near and medium term. Geopolitics and the foreign and trade policy choices of the new U.S. administration will impact the world order and economy, and OPEC+ will have to carefully navigate through all these to remain a relevant force in the oil market.