GAIL’s arm inks pact with process licensor for revival of PTA manufacturing plant
Gail (India) announced that its wholly owned subsidiary, GAIL Mangalore Petrochemicals (GMPL), re-engaged with process licensor INEOS to support the plant’s revitalization, formalizing renewed collaboration through an amendment agreement. This marks a significant step towards the revival of GMPLs 1.25 MMTPA purified terephthalic acid (PTA) manufacturing plant located in the special economic zone (SEZ), Mangalore. This collaboration marks a pivotal development in the efforts to bring the PTA plant back into production. The original agreement with INEOS was executed by JBF Petrochemicals (JBF), which could not be realized due to insolvency proceedings. Following GAIL’s acquisition of JBF through the Corporate Insolvency Resolution Process (CIRP) under the National Company Law Tribunal (NCLT) in June 2023, the company is now working to overcome the legacy challenges and ensure the plants successful on-streaming and long-term operational stability, it added.
Finance ministry weighs removing windfall tax amid falling crude prices: Report
The Finance Ministry is assessing the potential removal of the windfall tax and monitoring the trend of crude oil prices before making a decision, according to a Reuters report. Business Today was unable to verify the development independently. Introduced in July 2022, the windfall tax was a special levy on domestic crude oil production, aimed at capturing revenue from the unexpected profits of producers due to soaring global oil prices. In addition to the crude oil levy, the government imposed special taxes on the export of diesel, petrol, and aviation turbine fuel. By the end of August, the windfall tax on domestically produced crude oil was reduced to Rs 1,850 ($21.90) per tonne and was eventually eliminated on September 18. Taxes on the export of diesel and aviation turbine fuel were also removed. India first introduced windfall profit taxes on July 1, 2022, following the global trend of taxing extraordinary profits in the energy sector. The tax rates are reviewed every two weeks, based on the average oil prices of the previous fortnight. The finance ministry will evaluate scrapping windfall tax on domestic crude oil output, Tarun Kapoor, adviser to the Indian prime minister, said last month. Officials said after decline in global crude oil prices, there was little justification for maintaining the tax.
India to expand refinery capacity to 310 MMTPA by 2028, ethanol blending to hit 20% next year
India is set to expand its refinery capacity from 256.8 million metric tonnes per annum (MMTPA) in 2024 to 310 MMTPA by 2028, while ethanol blending in petrol is expected to reach 20% in 2025, Petroleum and Natural Gas Minister Hardeep Singh Puri said. He was addressing the FIPI Oil & Gas Awards 2023 ceremony, which celebrated innovation and leadership across the energy sector. Highlighting key reforms, Puri said India’s exploration acreage is on track to grow by 16% by 2025, aiming to cover 1 million square kilometers by 2030. He also noted that LPG affordability has been a priority, with PMUY households paying ₹6 per day and non-PMUY households ₹14 per day for cylinder refills. City Gas Distribution (CGD) coverage has expanded significantly, from 5.5% in 2014 to a projected 100% by 2024. The minister also highlighted the country’s dynamic start-up ecosystem, with over 1,400 deeptech patents filed in the last five years. India now ranks as the third-largest start-up ecosystem globally, with more than 1,00,000 start-ups and nearly 120 unicorns.
India’s Oil Imports See Major Shift: Russia Accounts For Over A Third, Reveals Union Minister Puri
India’s Evolving Energy Strategy: Russia Now Supplies 35% of Crude Oil Imports. Union Minister for Petroleum and Natural Gas, Hardeep Singh Puri, shed light on India’s changing energy landscape during the FIPI Oil and Gas Awards Ceremony. He revealed that Russia has emerged as the largest supplier of crude oil to India, contributing over 35% to the nation’s total imports. This marks a significant transformation from February 2022, when Russia’s share was a mere 0.2%. Highlighting the factors driving this shift, Minister explained that India has been navigating global price dynamics and availability, strategically balancing long-term contracts with spot market purchases. He also noted that Russia’s top position is not static, as monthly variations occur. Additionally, the minister underlined India’s diversified energy partnerships, pointing out key suppliers like Saudi Arabia, the UAE, Iraq, Kuwait, and the United States. These partnerships reflect India’s pragmatic approach to energy security, driven by both geopolitical and market considerations.
Gazprom Plans for End of Russian Gas Flows to Europe via Ukraine
Gazprom is assuming in its internal planning for 2025 that it would not be sending natural gas to Europe via Ukraine as of January 1, a source with knowledge of the Russian gas giant’s plans told Reuters. Gazprom’s management has yet to approve the plan for next year, but its base-case scenario is that there would be no flows via Ukraine to Europe, according to Reuters’s anonymous source. The gas transit deal for Russian flows to Europe via Ukraine expires on December 31, 2024. Ukraine has said multiple times that it would not pursue talks about renewing the agreement with Russia. Moscow, for its part, has said that it was open to talks about a possible extension of the deal. Last month, Vladimir Putin said that Russia is ready to continue delivering natural gas via Ukraine. Moscow is also ready to continue delivering gas to Europe using alternative routes, Putin said. Russia’s exports to Europe and Turkey, excluding ex-Soviet countries, are expected to fall by one fifth next year, to just below 39 billion cubic meters (bcm), due to the end of the Ukrainian transit deal, according to the Reuters source. That would be down from more than 49 bcm of Russian exports to Europe and Turkey expected for 2024. The European gas market is already bracing itself for the end of the gas transit deal for Russian flows via Ukraine. Earlier this month, Slovakia’s state energy company, SPP, signed a short-term pilot contract with SOCAR to buy natural gas from Azerbaijan as it prepares for a possible halt to Russian supplies via Ukraine. Europe’s natural gas market is in a precarious balance as winter begins and external factors will likely lead to a tight market at the end of 2024 and early 2025, according to Torgrim Reitan, chief financial officer at Norwegian energy major Equinor. The natural gas market and prices in Europe will be shaped in the coming months by the end of the Russia-Ukraine gas transit deal and demand for LNG in Asia, Reitan told Bloomberg TV in an interview last week. Equinor is the biggest producer of gas offshore Norway, which is now the single biggest supplier of natural gas to Europe, holding around 30% of the total European market.
Oil Prices Stable as Israel-Hezbollah Ceasefire Takes Effect
Crude oil prices remained stable today as a ceasefire between Israel and Hezbollah took effect, suggesting the end of violence in the oil region could be in sight. Separately, expectations that OPEC+ will extend its production cuts on Sunday helped keep the benchmarks steady. Brent crude was trading at $72.88 per barrel at the time of writing, with West Texas Intermediate at $68.80 per barrel, both slightly up from opening in Asia, after booking a dip on Tuesday, following the announcement of the Israel-Hezbollah ceasefire. However, Israeli strikes on Lebanon shortly after that announcement raised some doubts about the longevity of the deal. “Market participants are assessing whether the ceasefire will be observed,” Hiroyuki Kikukawa, head of Nissan Securities’ NS Trading, told Reuters. “We expect WTI to trade within the range of $65-$70 a barrel, factoring in weather conditions during the Northern Hemisphere’s winter, a potential increase in shale oil and gas production under the incoming Donald Trump administration in the U.S., and demand trends in China,” the analyst added. Goldman Sachs, meanwhile, said another extension of OPEC+’s production cuts at the Sunday meeting of the group would provide support for oil prices over the short term. “Any ramp-up in OPEC+ production will be gradual and data-driven,” the bank said, as quoted by Reuters, echoing OPEC+’s own repeated reminders that it would only roll back the cuts if market conditions—that is, prices—are right. Commodity trading majors Vitol, Trafigura, and Gunvor also do not expect more oil coming from OPEC+ after the Sunday meeting, per Reuters. This is keeping prices largely unchanged although it does not seem to be having any marked positive effect on them. What could have a positive effect on prices is the EIA’s inventory report, out later today. The American Petroleum Institute yesterday reported a crude oil inventory drop of almost 6 million barrels for the week to November 22. This was the largest inventory draw since August and if confirmed by the EIA, it would provide a boost for prices.
India’s PM Modi Says Guyana Crude Is Key For India’s Energy Security
Two weeks ago, U.S. oil and gas giant, Exxon Mobil Corp. (NYSE:XOM) announced it had reached 500M barrels of oil produced from Guyana’s offshore Stabroek block, just five years after it kicked off production at the location. According to Exxon, the first three projects–Liza Phase 1, Liza Phase 2 and Payara–are already pumping more than 650K bbl/day. The Exxon-led consortium which includes Hess Corp. (NYSE:HES) and China’s Cnooc (OTCPK:CEOHF) have set a target to reach production of at least 1.3M bbl/day of oil by year-end 2027, a feat it hopes to achieve when six approved offshore projects come online. And now one of the world’s biggest oil consumers is eyeing the light and sweet crude produced by the tiny South American country. Indian Prime Minister Narendra Modi said Thursday during a visit to Guyana that his government views Guyana as key to India’s energy security. Modi told a special sitting of Parliament that he views Guyana as an important energy source and that he will encourage large Indian businesses to invest in the country. Guyana did not immediately grant Modi’s wish, with India’s External Affairs Minister Jaideep Mazumdar saying talks will continue and that such a deal would ensure “greater predictability.” Guyanese Natural Resources Minister Vickram Bharrat told reporters that Guyana is willing to supply India with a large amount of crude, if Exxon Mobil, the main operator in Guyana’s offshore oil production, agrees to such an arrangement. “We know Exxon has to do some amount of changes to their lifting schedule and logistics because their preference is for the very large vessels that can accommodate two million barrels mainly because of distance and cost,” Bharrat said. According to Bharrat, Guyana prefers that Indian companies bid for oil blocks and negotiations can proceed once a bid is submitted. Enhancing Energy Security With India recently becoming the biggest buyer of discounted Russian oil ahead of China, it appears counterintuitive that it would be so eager to buy crude from a country located nearly three times farther away than its much larger neighbor. Russian crude exports to India in July reached a record 2.07 million barrels per day (bpd) compared with 1.76 million bpd to China. However, energy security has become a critical issue for India due to its surging energy demand and limited domestic resources. Previously, we reported that India’s energy security has been severely compromised by the ongoing Middle East conflict. Whereas a lot of focus lately has been on India’s surging imports of Russian oil, the country actually buys the lion’s share of its oil from the Middle East. In August, the Middle East accounted for 44.6% of India’s crude imports, up from 40.3% in July. Iraq, Saudi Arabia, the UAE and Kuwait are the main Middle Eastern suppliers of oil to India. In contrast, the share of Russian crude fell to 36% after five straight months of increases. Meanwhile, India imports nearly half of its liquefied natural gas (LNG) from Qatar. Back in February, India’s Petronet LNG (PLL) and QatarEnergy inked a long-term LNG Sale & Purchase Agreement (SPA) for the supply of around 7.5 million metric tons per annum (MMTPA) of LNG to India over the next 20 years. The deal involves LNG imports of $78 billion by the PLL during the contract period. India’s geostrategic positioning and access to two of the world’s most critical maritime chokepoints–the Malacca and Hormuz Straits–make it a critical player in the global oil trade. Hormuz is the world’s most important oil transit choke point. Chokepoints are narrow channels along widely used global sea routes that are critical to global energy security. Even temporary disruptions that occur along these critical routes can lead to substantial increases in shipping costs, increasing world energy prices. Located between Oman and Iran, Hormuz connects the Persian Gulf with the Gulf of Oman and the Arabian Sea. The Strait of Hormuz is the only maritime link to the rest of the world for Iraq, Kuwait, Bahrain, and Qatar, with their economies highly dependent on imports for basic necessities. Over 85% of India’s oil is imported via the Strait of Hormuz while key trade routes pass through the Malacca Strait. Together, these straits see over 60% of the world’s oil flow and a third of global trade, underscoring their strategic importance for not only India’s but the world’s energy security and economic continuity. Oil prices fell more $2 per barrel on Monday after reports emerged that Israel and Lebanon have agreed to the terms of a deal to end the Israel-Hezbollah conflict. Reuters reported on Monday that a senior Israeli official said the country’s cabinet would meet on Tuesday to approve a ceasefire deal with Hezbollah, while a Lebanese official said Beirut had been told by Washington that an accord could be announced “within hours”. “It seems the news of a ceasefire between Israel and Lebanon is behind the price drop, though no supply has been disrupted due to the conflict between the two countries and the risk premium in oil has been low already before the latest price decline,” said Giovanni Staunovo of UBS. It’s possible that these developments mark the beginning of de-escalation of tensions in the region. However, U.S. officials have warned that negotiations are not complete after previous hopes for Israel-Hezbollah ceasefire were dashed. Further, the fact that Israel has dramatically ramped up its campaign of air strikes in Beirut and other parts of Lebanon just hours after news of a potential deal came out does not inspire a lot of confidence.
Asian LNG Prices Could Soar Amid Tighter European Market
The price of liquefied natural gas in Asia could surge to above $20 per million British thermal units this winter as supply tightens in Europe, Goldman Sachs has predicted. “That’s the near term dynamic, given this vulnerability of Europe, the lack of spare capacity, the loss of the residual Russian volumes currently going through Ukraine, and I should say, a colder than average start of the winter,” the co-head of global commodities at the bank, Samantha Dart, said as quoted by Reuters. For the past two years, Europe has been lucky with milder than usual winters that led to lower than usual gas demand although the seasonal pick-up in demand did cause increases in LNG imports, tighter global markets, and higher prices then as well. Now, the European winter seems off to a regular start, which means low temperatures and significantly higher demand for electricity—and gas. Earlier this year, gas prices in Europe spiked following a production outage at a Norwegian platform and geopolitical jitters about the Middle East. Prices normalized soon enough but they did highlight the precarious situation that Europe has put itself in with regard to energy security. A massive buildout of wind and solar capacity, which both tend to underperform consistently during the winter months has been the chosen path. This has only boosted reliance on imported gas, leading to still higher prices—and prices wars with Asia. At the end of last week, the European gas benchmark, the Title Transfer Facility price, hit the highest in two years as winter began settling in and demand for heating jumped. LNG traders have already started diverting cargoes from their Asian destinations to send them to Europe, which is paying a premium. Per Argus data, at least 11 such cargoes have been diverted in the past few weeks. The price jump is only a matter of time.
Petrobangla cancels ongoing negotiations
The interim government has cancelled ongoing negotiations with several companies, including a couple of Indian ones, over inking contracts to import re-gasified liquefied natural gas (RLNG) from India through cross-border pipelines. State-run Petrobangla has cancelled the negotiations in line with directives from the Energy and Mineral Resources Division under the Ministry of Power, Energy and Mineral Resources, said sources. The potential deals that got axed during the negotiation stage include RLNG import by Petrobangla from India’s privately-owned H-Energy and that by Bangladeshi private firm Dipon Infrastructure Services from GAIL, a state-run corporation in the neighbouring country. Both Petrobangla and Dipon Gas had been involved in negotiations over the past several years to import RLNG via cross-border pipelines, said sources. With the two deals, India was eyeing its emergence as the world’s lone RLNG exporter by laying down 265 kilometres of cross-border pipelines. GAIL and H-Energy were planning to supply RLNG after importing LNG from global suppliers. Market insiders said both the Indian companies had moved to export RLNG to Bangladesh having noticed the sluggish LNG consumption in their country over the past several years. India imported around 23.3 million tonnes of LNG during the fiscal year 2023-24, which was 7.17 per cent lower than its highest import volume of 25.1 million tonnes in FY21, according to the country’s Petroleum Planning and Analysis Cell. Unlike Bangladesh, India’s fiscal year is from April to March. After importing its highest volume of LNG in FY21, India witnessed a slide in imports mostly due to LNG price spikes in the international market and Russia’s invasion of Ukraine. The two aforementioned Indian companies were to export around 1.6-2 million tonnes per year (MTPA) of RLNG to Bangladesh initially. The figures could have been increased on the basis of negotiations with the parties concerned. H-Energy, a subsidiary of Hiranandani Group, was eyeing to supply half of the volume, 0.8-1 MTPA, while the remaining half was to be exported by GAIL. H-Energy intended to supply RLNG from Digha in West Bengal to Khulna in Bangladesh by laying 155km cross-border pipelines from East Midnapore’s Kanai Chatta to Srirampur. 90km pipelines were to be laid in India and 65km in Bangladesh. The company was to lay the pipelines at its own expense, while Petrobangla was supposed to pay the wheeling charge for using those to import RLNG. H-Energy’s RLNG selling price was set to be linked to Brent Crude, keeping the price flexible to adjust with price changes in the international market. On the other hand, GAIL was supposed to supply RLNG to Bangladesh’s south-western Jashore district through the Benapole border after laying 110km cross-border pipelines. 65km pipelines were to be laid in India and 45km in Bangladesh. The corporation was to lay the pipelines in India at its own expense, while Dipon Gas was supposed to bear the expenses of doing so in Bangladesh. “Petrobangla was at the final stage of inking RLNG import deals with H-Energy. All relevant details, including the mode of payment, pipeline management, RLNG prices, and so on, have already been discussed,” said a senior Petrobangla official. H-Energy was supposed to supply RLNG to Bangladesh within two years of signing the deals, which included laying pipelines, RLNG purchase, and sales, he said. Petrobangla was expecting to get RLNG from H-Energy by 2027, said the official. He further said the RLNG from H-Energy was supposed to be used mainly to feed the 800MW Rupsha combined-cycle power plant, owned by the state-run North West Power Generation Company, for 22 years. The remaining RLNG was to be used in industries and other gas-fired power plants in the south-eastern region, he added. The Asian Development Bank provided around $600 million, and the Islamic Development Bank nearly $200 million, to implement the Rupsha power plant project with two gas-fired units, each with a capacity of 400MW. The Bangladesh government provided the remaining $150 million. GAIL could have started supplying RLNG in less time if it could avoid the major hassle of land acquisition to lay down the pipelines, said a top Dipon Gas official. Dipon Gas was eyeing to utilise funds from Saudi Arabia to implement the pipeline project on the Bangladesh side and then import RLNG. The company was planning to sell RLNG initially to Petrobangla and other interested private clients, including industries and power plants. It also had plans to set up a fertiliser factory and a power plant using GAIL’s RLNG. Keeping this end in view, Petrobangla inked a memorandum of understanding with H-Energy a couple of years ago. It also signed the first agreement with Indian Oil Corporation in 2018 for the same purpose. However, the deal was later shelved and still remains so.
OPEC Has Little Room to Revive Oil Supply, Iran Official Says
OPEC has little scope to reverse its oil production cuts, which have triggered a wave of rival supply from the US shale industry, Iran’s representative to the group said. “This strategy in support of prices has effectively encouraged higher supply outside the group, particularly on the part of the US,” Iranian OPEC governor Afshin Javan said of the curbs in an article on state-run news agency Shana. “That would leave a limited room for maneuvering by OPEC to ease its restrictions.” The article, unusually critical of OPEC policy for one of the group’s founding members, comes days before the producers meet to decide on plans for reviving halted supplies. Javan also wrote that some smaller African members, including Gabon and Congo, may quit the organization because they can’t afford to pay membership fees. OPEC , an alliance of OPEC nations such as Saudi Arabia and non-members led by Russia, is seeking to revive production halted since 2022, but has been forced to delay the restart amid faltering crude prices. The planned supply increases by OPEC are “likely to bring about oversupply in 2025,” Javan cautioned. Production cutbacks by the coalition over the past four years have financed a surge of US shale oil, which has climbed by 2 million barrels a day since 2020, he wrote. As governor, Javan assists the country’s oil minister, Mohsen Paknejad.