Ethanol-petrol blending initiative helped farmers earn Rs 575 billion in 3 years: Centre
The Ethanol-Blended Petrol (EBP) programme has helped expeditious payment of about Rs 575.52 billion to the farmers and savings of more than Rs 750 billion of foreign exchange in the last three years, the Parliament was informed on Monday. Under the EBP programme, public sector oil marketing companies (OMCs) sell ethanol blended with petrol. Minister of State for Petroleum and Natural Gas, Suresh Gopi, informed the Rajya Sabha that in the last three years (as on September 30, 2024), the EBP programme also resulted in crude oil substitution of nearly 11 million metric tonnes and net CO2 reduction of about 33.2 million metric tonnes. Under the EBP programme, the blending of ethanol with petrol increased from 1886 million litres in ethanol supply year (ESY) 2018-19 to more than 7 billion litres in ESY 2023-24, with a corresponding increase in blending percentage from 5 per cent in ESY 2018-19 to approximately 14.6 per cent in ESY 2023-24. Since 2019, the number of retail outlets selling ethanol-blended petrol has increased steadily. In 2019, ethanol-blended petrol was sold from 43,168 retail outlets of Public Sector OMCs which increased to all retail outlets across the country in 2024, the minister said. In order to promote the blending of ethanol in petrol, the government has taken several measures which include the expansion of feedstock for the production of ethanol, an administered price mechanism for procurement of cane-based ethanol under the EBP Programme, Ethanol Interest Subvention Schemes (EISS) for ethanol production from molasses as well as grains, and Long-Term Offtake Agreements (LTOAs) by OMCs with Dedicated Ethanol Plants (DEPs), etc. From 1.53 per cent in 2014, ethanol blending has surged to almost 15 per cent in 2024, with the government advancing the target of 20 per cent blending to 2025 – five years ahead of schedule.
LNG imports surge 10.8% in October as domestic gas output falls by 1.6%
India’s natural gas landscape in October 2024 reflected a mixed bag of growth and challenges, with liquefied natural gas (LNG) imports rising sharply by 10.8% year-on-year to 2941 million standard cubic meters (MMSCM), while domestic production fell by 1.6% to 3111 MMSCM. The latest report from the Petroleum Planning & Analysis Cell (PPAC) highlights the country’s increasing reliance on imported LNG to meet burgeoning energy demands, as domestic output struggles to keep pace. Total natural gas available for sale in October stood at 5527 MMSCM, marking a 4.2% increase compared to the same month last year. However, consumption marginally dipped to 6019 MMSCM in October 2024 from September’s levels, underscoring uneven sectoral demand. Fertilizers accounted for the largest share at 29%, followed by city gas distribution (CGD) at 21%, and power generation at 11%. Refineries and petrochemicals collectively consumed 12% of the total gas available. (Source: Economic Times) UBS Upgrades Petronet To ‘Buy’ On India’s Rising LNG Demand UBS has upgraded Petronet LNG Ltd. to ‘buy’, raising the target price for the stock to Rs 400 from Rs 320, citing benefits for the company in meeting India’s growing LNG demand. The target price implies a significant upside as Petronet is strategically positioned to benefit from India’s rising LNG dependence, UBS said. Demand is set to grow at 5.6% CAGR over the next three years, outpacing domestic gas output growth at 1.8% CAGR, the brokerage said in a recent note. Petronet has secured five long-term LNG supply contracts starting from 2026, adding 4.2 MMTPA, a 20% jump from current levels as per the report. Around 80–85% of incremental gas demand over the next three years expected to be met through imports, stated UBS. Liquified natural gas imports into India are expected to increase by around 11 MMTPA over the fiscal 2024 to 2028. Petronet could cater for half of these incremental imports, the brokerage said. UBS has based its expectations on expansion of the company’s Dahej terminal from 17.5 MMTPA to 22.5 MMTPA by March 2025, and improved pipeline connectivity of its Kochi terminal by mid-2025. Delay in commissioning and ramp-up of competitive terminals in Dabhol and Chhara is also likely to aid the company, UBS noted. Expansion of the Dahej facility and use-or-pay agreements for new capacity showcase strong earnings visibility, said UBS. Terminal growth rates were increased by 1%, factoring in 3–4% free cash flow growth in later years. With price-to-earnings ratio for fiscal 2026 at 13.6 times, valuations remain attractive, trading at a 15% discount to the historical average, added the brokerage. Revenues are projected to reach Rs 788 billion by financial year 2029, supported by higher LNG import volumes. UBS expects Petronet’s EBIT margins to remain robust, even as aggressive capex is spread over the next four years. Dividend payout remains steady due to strong cash flow from operations.
India Removes Windfall Profit Tax On Crude Oil And Fuel Exports To Boost Energy Sector
The Centre on Monday eliminated the windfall profit tax that had been in place for 30 months on domestically-produced crude oil and fuel exports. Minister of State for finance Pankaj Chaudhary tabled a notification in the Rajya Sabha about the decision of removing tax on crude oil produced by companies like ONGC and fuel exports by firms such as Reliance Industries Ltd The notification cancelled the June 30, 2022 order and removed the special additional excise duty (SAED) on crude oil production and fuel exports, including aviation turbine fuel (ATF), diesel and petrol. Additionally, the government withdrew the road and infrastructure cess (RIC) previously imposed on petrol and diesel exports. On July 1, 2022, India implemented windfall profit taxes, joining other nations in taxing extraordinary profits of energy companies. Initially, export duties were set at Rs 6 per litre for petrol and ATF, and Rs 13 per litre for diesel. A domestic crude production tax of Rs 23,250 per tonne was also established.
India Sees 9% Jump in Gasoline Consumption in November
Gasoline sales in India hit 3.42 million metric tons in November, which was a 9.2% increase on the year, the Economic Times has reported, noting diesel demand also grew, with November sales adding 8.4% on the year to 8.158 million tons. Aviation fuel demand also grew last month, further evidence of India’s growing demand for energy across fuel categories and the growth trajectory of its economy, highlighted by the increase in demand for diesel fuel. India is the world’s third-biggest importer of crude oil with over 80% of its demand covered by foreign crude. This has made the country highly price-sensitive and open to opportunities to diversify its supply, from both domestic and foreign sources. Domestic resources may hold significant promise, with up to 22 billion barrels in hitherto unexplored regions of the subcontinent’s sedimentary basin. To tap these, India would need help from Big Oil. Until such time as these reserves are confirmed, India remains reliant on imports—and OPEC production policies. Last month, the country’s petroleum minister called on the cartel and other producers to get together and discuss ways to stabilize the price of crude. India and other large consumers need predictability and stability in oil prices, Hardeep Singh Puri told Reuters last month on the sidelines of the ADIPEC energy conference in Abu Dhabi. “I’m hoping as a professional that all the players in this game will see a reason that… both producers and consumers can sit down together, have a discussion on what is a realistic price because it is not as if some production is taken off,” Puri said. Natural gas demand in India is on a growth trajectory as well. Projections are for twofold growth by 2040 and threefold by 2050, despite a parallel increase in wind and solar capacity for electricity generation as planned by the government.
Iran, India, Uzbekistan to ease transit thru Chabahar Port
Officials from Iran, India, Afghanistan, and Uzbekistan in the third joint working group exchanged their views regarding the facilitating the trade transactions and transiting and transporting goods through Chabahar Port. According to the Iran Ports and Maritime Organization, the third joint working group was held in Mumbai, India, in the presence of Deputy Director of Port and Economic Affairs of Chabahar Hossein Shahdadi. The participants discussed the capacity and infrastructure of transportation and the obstacles in this field. Presenting the necessary proposals to facilitate commercial transactions through Chabahar Port was also on the agenda of the meeting. Transportation and transit of goods from Chabahar Port were also discussed in the working group. The 3rd joint working group was held with the participation of officials from the Ministry of Ports, Shipping and Waterways of India, along with ambassadors of Uzbekistan, Afghanistan, and Iran in India, and Indian diplomats.
U.S. LNG Demand Nears Record Highs as Winter Looms
U.S. liquefied natural gas (LNG) plants are running near full throttle, with demand from export facilities hitting 14.6 billion cubic feet (bcf) on Friday. That’s just shy of the all-time record of 14.7 bcf set last December, according to data from LSEG. The surge comes as cooler weather settles in and outages at key facilities, like Freeport LNG, ease. The second-largest LNG exporter in the United States, Freeport LNG, was expected to draw just over 2 bcf on Friday after resolving several outages earlier this year. The plant is closely watched since its operations—or lack thereof—can send global gas prices swinging. Meanwhile, Cheniere Energy’s Sabine Pass facility in Louisiana, the largest U.S. LNG exporter, operated near its capacity, pulling almost 5.2 bcf. The U.S. continues to dominate as the world’s largest LNG exporter, with more production expected soon as two new plants gear up to go online. This comes as global LNG demand ramps up, especially in Europe, where natural gas prices have surged by 40% in the last two months due to cold weather forecasts and geopolitical tensions. Natural gas prices in the U.S. remain far lower than in Europe, where the benchmark Dutch TTF prices are nearly five times higher. This price gap is driving more U.S. LNG exports to European markets, helping meet their rising energy needs ahead of winter. As global markets tighten and colder temperatures arrive, U.S. LNG facilities are expected to play a crucial role in keeping the gas flowing to international buyers, all while pushing domestic production to new limits. With LNG demand near record levels, the U.S. solidifies its position as a global energy powerhouse.
The Next Four Years Will Be All About Natural Gas
Earlier in the year, energy analytics firm Wood Mackenzie predicted that a second Trump presidency could place a huge part of renewable energy investments at risk, increase carbon emissions by 1 billion tonnes more by 2050 and delay peak fossil fuel demand by 10 years beyond current forecasts. Not surprisingly, WoodMac expects the fossil fuel sector to benefit from Trump: the analysts have predicted that less spending on low carbon energy could boost demand for natural gas by 6% or 6B cf/day by 2030. And now commodity analysts at Standard Chartered have concurred with that opinion. StanChart notes that following Scott Bessent’s recent nomination as Treasury Secretary, his Manhattan Institute June session where he spoke at a conference entitled ‘Towards a New Supply-Side: The Future of Free Enterprise in the United States’ is being scrutinised as a potential guide to policy. During that talk, Bessent was asked which version of the late Shinzo Abe’s three arrows economic plan he would recommend to an incoming President Trump. A keen admirer of Abe, Bessent put forward the three targets of 3% economic growth, cutting the budget deficit by 3% of GDP by the end of the administration and “Three million more oil barrels equivalent a day from U.S. energy production”. StanChart points out that many commentators are [incorrectly] interpreting Bessent’s comments to mean he would urge the Trump administration to raise U.S. crude oil production by 3 million barrels per day (mb/d), good for a huge 30% to about 16.5mb/d by 2028. The analysts say that Bessent meant the addition of 3 million per barrels of oil equivalent (mboe/d) to U.S. energy production by 2028, an objective well within the means of U.S. producers. StanChart points out that U.S. oil and gas output is currently ~40.7mboe/d. U.S. oil and gas output has grown by an average of about 123 kboe/d per month since 2015, meaning adding 3 mboe/d would take less than 25 months. The commodity experts have noted that 41% of the post-2015 increase has come from natural gas, 28% from natural gas liquids (NGLs) and just 28% from crude oil. StanChart has predicted that the crude oil element of the next 3 mboe/d increase is likely to be significantly less than 20%, with natural gas likely to be the main instrument for meeting the new administration’s energy goals as crude oil output growth becomes increasingly difficult. WoodMac and StanChart are not the only natural gas bulls. Last week, Morgan Stanley predicted that the U.S. natural gas market is poised to enter a new cycle of demand growth thanks to surging LNG exports and rising electricity demand. Over the past few years, dozens of pundits and industry experts have predicted that the ongoing Fourth Industrial Revolution will drive unprecedented electricity demand growth in the United States and globally. Last year, the power sector consulting firm Grid Strategies published a report titled “The Era of Flat Power Demand is Over,” which pointed out that United States grid planners—utilities and regional transmission operators (RTOs)—had nearly doubled growth projections in their five-year demand forecasts. For the first time in decades, demand for electricity in the U.S. is projected to grow by as much as 15% over the next decade driven by the Artificial Intelligence (AI), clean energy manufacturing and cryptocurrencies boom. Meanwhile, StanChart says oil market fundamentals would support an unwind of some OPEC+ cuts, but market sentiment justifies a pause. Earlier, StanChart predicted that actions by OPEC+ are likely to determine the near-and mid-term oil price trajectory. According to StanChart, much of the negative sentiment that has dominated oil markets over the past three months can be chalked up to misapprehensions about the tapering mechanism for the voluntary cuts made by eight OPEC+ countries. Many traders are worried that the balance of oil demand growth and non-OPEC+ supply growth might not offset the scale of restored OPEC+output, leaving oil markets oversupplied. However, the experts have pointed out that this assumption flies in the face of continued reassurances from OPEC+ members that the tapering would be fully dependent on market conditions rather than being automatic. Trader focus has been on the question of how many barrels could be returned before a surplus emerged; however, positioning and price dynamics imply that the answer to that question is zero. In a November 3 press release, OPEC announced that output increases would be postponed by a month until the start of 2025. StanChart says the delayed return of more barrels to the market does not necessarily mean that OPEC felt the physical market could not absorb the oil, but rather reflects its awareness that extremely pessimistic 2025 oil balance predictions have viewed the tapering through that lens. StanChart says the latest announcement by OPEC strengthens the case that the pace of tapering will be market-dependent and not automatic as traders fear.
ONGC Expands Global Reach with New Stake in Azerbaijan’s ACG Oil Field
ONGC’s wholly-owned subsidiary ONGC Videsh Ltd, has purchased a participating interest of 0.615% in the Azerbaijan located Azeri-Chirag-Gunashli oil field. The deal includes ONGC Videsh acquiring 0.737% equity in the pipeline company Baku-Tbilisi-Ceyhan through its wholly owned subsidiary ONGC BTC Ltd. The deal worth $60 million was sealed on 29 November 2024 and is a strategic one for ONGC Videsh to further build upon its presence in the country’s energy sector of Azerbaijan. The ACG field is a super-giant offshore asset and one of the largest contributors to oil production in Azerbaijan. Located on the Caspian Sea floor, it has been operated by BP since 1999. It is developed in phases, with the newest production platform, Azeri Central East, commissioned at the start of 2024. BTC pipeline is an important export route connecting the Sangachal terminal in Azerbaijan to the Ceyhan marine terminal in Turkey for Caspian oil and condensate. The other participants of the ACG field are SOCAR, MOL, INPEX, Exxon, Turkiye Petrolleri AO, and Itochu. A contract for the operations of ACG runs up to 31 December 2049, thus giving a steady stream of production and export. ONGC Videsh already holds a 2.31% equity in the ACG field and a 2.36% interest in the BTC pipeline, which gives this acquisition an edge. BTC pipeline is crucial for extracting oil and condensate out of ACG and Shah Deniz across Azerbaijan, Georgia, and Türkiye. During FY24, ONGC Videsh produced 10.518 MMtoe of O+OEG, working at an average rate of around 200,000 barrels per day. As of April 2024, ONGC Videsh had 476 MMtoe of oil and gas 2P reserves, whereas total 2P reserves in ONGC were 704 MMtoe. This acquisition matches the strategic focus of ONGC on expansion of its global energy portfolio with reliable energy supplies.
Trudeau Government Frets Over Trump Oil Tariffs
The federal government of Canada has signaled it worries about the possibility of the next U.S. administration imposing a 25% tariff on all Canadian exports south, Reuters has reported. “We have some work to do to make sure we are effectively articulating the way in which tariffs would be counterproductive, and that’s not just true of oil,” natural resources minister Jonathan Wilkinson said, as quoted by the publication. He added that “There’s a lot of time and effort that will need to go into ensuring that we’re having the appropriate conversations.” The Trudeau government has been highly critical of the oil and gas industry, singling it out as the largest contributor to the country’s carbon dioxide emissions and recently seeking to reduce these with a cap that would prompt a substantial reduction in production. The Canadian oil sands are essentially the only source of heavy crude for Gulf Coast refineries because of the sanctions on Venezuela and Russia, and the simple fact of Canada’s proximity to the United States. This essential nature of Canadian oil imports became reason for many to doubt Trump would go as far as to impose tariffs on Canadian imports. According to media reports, the president-elect has no plans for exceptions to his tariff regime but some observers have noted that this would push retail fuel prices in the United States higher and that would be the opposite of what Trump promised on the campaign trail. The Canadian government’s worry about the tariffs on oil they want themselves to greatly reduce in terms of supply echoes similar sentiment in the industry. Canadian oil and gas producers are worried about the possibility of Trump making their products 25% more expensive for their biggest clients south of the border—and so are the clients. A tariff of 25% on Canadian crude would put them in a tight spot because alternative suppliers are not really numerous and two of them are heavily sanctioned by Washington.
India cuts back cheap gas for vehicles even as bad air chokes Delhi
India is cutting back its supply of cheap gas for vehicles as it struggles to cope with domestic production shortages, a move that could add to toxic air woes in major cities including New Delhi. Supply constraints have left retailers like Indraprastha Gas Ltd and Mahanagar Gas Ltd increasingly reliant on more expensive imports — or costly production from new Indian fields, which have proven more technically challenging. Both have begun to raise prices for compressed natural gas, or CNG, which powers cars, buses, taxis and rickshaws across India. New Delhi, one of the world’s most polluted cities, was pushed into CNG well over two decades ago after a Supreme Court ruling that demanded the conversion of all public buses to cope with worsening air quality. It later banned all non-CNG cabs in the capital region. While the fuel is not entirely “green,” it does emit fewer smog-related pollutants and has a slightly lower carbon footprint than conventional alternatives. Now, as the city lives through some of the most toxic smog days on record, proponents fear that consumers previously attracted by low running costs may begin to look more closely at the disadvantages, including long queues at filling stations and fewer models to choose from. “This may deter the adoption of CNG vehicles and could even lead to a shift back to diesel and petrol, undermining efforts to promote cleaner transportation options,” said Amit Bhatt, managing director for India at the International Council on Clean Transportation. CNG vehicles have proven popular with India’s price-sensitive consumers, surging more than 13-fold between 2019 and now. Sales of vehicles powered by diesel and gasoline have fallen by 20 per cent and 13 per cent, respectively, during that period, according to data compiled by the transport ministry. “We need differential pricing policy to incentivize cleaner fuels and disincentivize polluting fuels,” said Anumita Roychowdhury, executive director at the Centre for Science and Environment. With its limited low-cost gas funneled to industrial use, India’s deliveries to retailers have been cut by as much as 40 per cent, according to exchange filings by the companies. That fuel, from older fields, is currently priced at $6.5 per million British thermal units — against about $10 for new local fields and $13 to $14 per mmbtu for imports. Mahanagar Gas has said it will explore options as it tries to ensure stability for its price-sensitive customers, but scarcity has already pushed prices for some areas up by more than 2 per cent this week. Further increases will be necessary to maintain margins, analysts say. India wants to increase the role of gas in the energy mix, and the government has announced plans to significantly increase the number of CNG stations across the country over the current decade from roughly 7,000 today, mostly in the north and west. That target may now be at risk. “The move also doesn’t gel with the government’s aim to almost triple the compressed natural gas station network in the country by 2030,” said Sabri Hazarika, analyst with Emkay Global Financial Services Ltd The underlying problem is the paucity of India’s homegrown output, which has not kept pace with a growing economy. Daily gas production has risen only about 3 per cent in the decade through March, while consumption has jumped 30 per cent, according to the oil ministry. That has been felt by consumers, with CNG prices in Delhi rising 73 per cent since 2021. Gasoline is up just 13 per cent and diesel has increased by close to a fifth, shrinking the price gap between gas and conventional fuels. “Lower prices have been working in our favor, despite long waiting times at fuel stations,” said Sukhdeep Singh, a taxi driver who was getting fuel for his car at a CNG outlet in New Delhi. “But if our costs jump without any commensurate increase in passenger fares, it will make life really very difficult for us.”