Pak Cabinet approves MoU with US, oil import from India
The cabinet which met here under Prime Minister Raja Pervez Ashraf also approved the memorandum of understanding (MoU) with the United States on new terms of engagements and restoration of Nato supply routes. Briefing the media representatives later, Information Minister Qamar Zaman Kaira said this is in line with parliamentary committee’s guidelines that there would be no hidden or unwritten agreement with any foreign country and every agreement would be in black and white. Draft of the MoU was finalised after extensive consultations and input from all relevant ministries and armed forces which reflects transparency in government’s foreign relations, he noted. Referring to POL imports from India, the minister said: “For import of gas from Iran, we will have to lay about 1,000km pipeline but for import of natural gas from India, we will have to lay only 60km pipeline and if it is feasible, it can provide instant relief to the nation.” Import of these products could be inexpensive due to proximity factor. Pakistan may export Naphtha to India. The ministry of petroleum was further permitted to initiate talks with India for RLNG import
Dip in international oil prices hits Indian petroleum product exports
Subdued international oil prices have depressed India’s per unit realisation of petroleum product exports that plunged over two-and-a-half times to $312.50 per tonne in the first half of 2024-25 from around $792 a tonne in H1 of 2023-24 despite a robust jump in volume-wise shipments, according to official data. Poor realisation through exports of refined petroleum products has been a major drag for India’s overall export performance, an official said requesting anonymity. “This is not because of the demand contraction as India’s petroleum product exports jumped significantly in volume terms during this period,” the official added.
Goldman Sachs Expects Brent Oil to Average $76 Per Barrel in 2025
Brent Crude oil prices are set to average $76 per barrel next year, down from an expected average of $80 a barrel in 2024, amid an expected surplus on the market, according to Goldman Sachs. “Our base case is that Brent stays in a $70-85 range, with high spare capacity limiting price upside, and the price elasticity of OPEC and shale supply limiting price downside. However, the risks of breaking out are growing,” the investment bank’s analysts wrote in a note carried by Reuters. Goldman Sachs expects 400,000 barrels per day (bpd) of surplus on the market in 2025. This surplus is expected to grow to 900,000 bpd in 2026. Therefore, the Wall Street bank sees Brent Crude prices averaging $71 per barrel in 2026. Goldman Sachs kept its 2025 average price forecast from last month when it said that it sees limited upside for oil prices next year amid sufficient supply and ample spare capacity. However, there is an upside risk to prices in the near term, if the U.S. enforces stricter sanctions on the Iranian oil industry and exports, according to Goldman Sachs. Brent Crude prices have the potential to spike to the mid-$80s early next year if Iran’s oil supply declines by about 1 million bpd in case of stricter sanction enforcement when Donald Trump becomes U.S. President, the bank’s analysts noted. Early on Friday, Brent Crude prices were up by 0.4% at $74.57, and the U.S. benchmark, WTI Crude, traded 0.36% higher at $70.40, amid renewed Ukraine-Russia tensions. Oil prices were on track to post a weekly gain after Russia shot a new kind of ballistic missile at Ukraine in the latest sign that the escalation there continues. The strike, featuring a hypersonic medium-range missile that has not been used before in warfare, came in response to a Ukrainian attack with U.S. and British ATACMS missiles on Russian territory.
Reliance Industries: Navigating Retail and Refining Challenges
Reliance Industries is tackling two significant challenges impacting its performance. The first challenge, a rebound in refining margins, signals a shift in market dynamics, while sluggish retail growth poses a more unpredictable hurdle, according to a JP Morgan report. Reliance’s stock has fallen 22% from its July peak as the NIFTY index dipped just 3.3%, erasing earlier gains. Despite this, its relative market valuations remain attractive amid generally high market pricing. The company, led by Mukesh Ambani, leverages its oil-to-chemical unit, telecom arm Jio, and retail sector, now constituting 50% of its 2023-24 EBITDA. A potential listing of Jio/retail could be delayed due to market conditions.
Guyana: No agreement with India to sell oil
The Guyana government says it has not entered into any agreement with India regarding the sale of crude oil to the Asian country, even as it left open the possibility of that being undertaken in the future. “We have not discussed any element of direct transaction for the sale of our crude to India,” Vice-President Bharrat Jagdeo told reporters as the Indian Prime Minister Shri Narendra Modi ended an official visit to Guyana. The communique issued following bilateral talks between the two countries “is very clear” and the two countries have expressed an interest in collaborating in several areas. “India has enormous expertise in many areas, but also clean energy, India is leading in solar in the world…on the fertiliser plant they are doing some studies for us to use the gas to build a fertiliser plant. “So in the whole hydrocarbon sector, there are lots of areas we can utilise Indian skills, Indian technology and also Indian investments. “We have not discussed any element of a direct sale to India at this stage because our crude for the next year, we have people who will market our crude. We just went through a public process for tender, and two companies won the right to market our crude for next year,” said Jagdeo. Jagdeo said in the communique “there’s lot to work on and in the future, I think, if it makes sense for both parties…we should work towards something like that. We don’t have a problem with that, but there is nothing that we have worked on that will result in any sale of crude in the next year or so because we already have people to market our crude,” Jagdeo said. He told reporters some of the Indian companies do buy from other places “that market our crude, so some of our crude have gone to India already”. Asked what would make it more likely for an agreement to be reached in the future, Jagdeo replied, “I do not want to speculate before there is a specific proposal on the table. But those concerns have been raised a long while a back, not now.
India’s Domestic Oil Production Dips While Refinery Output Surges in October 2024
India’s domestic crude oil and condensate production experienced a 4 per cent year-over-year decline in October 2024, reaching 2.3 million metric tonnes (MMT), according to recent data released by the Petroleum Planning and Analysis Cell (PPAC). Oil and Natural Gas Corporation (ONGC) remained the dominant producer, contributing 1.6 MMT, while PSC/RSC and Oil India Ltd. (OIL) added 0.5 MMT and 0.3 MMT, respectively. Despite the downturn in domestic production, Indian refineries demonstrated robust performance, processing 21.3 MMT of crude oil in October 2024, marking a 4.4 per cent increase from the previous year. Public sector and joint venture refineries handled 14 MMT, with private refiners processing the remaining 7.3 MMT. The vast majority of processed crude—19.2 MMT—came from imports, while domestic crude accounted for just 2.1 MMT. The petroleum product sector showed significant growth, with total output reaching 23 MMT in October 2024, representing a 5.3 per cent increase compared to the same period last year. Refineries contributed 22.7 MMT to this total, with fractionators adding 0.3 MMT. High-speed diesel dominated the product mix at 41 per cent, followed by motor spirit at 16.8 per cent, naphtha at 6.8 per cent, aviation turbine fuel at 6.6 per cent, and petcoke at 5.3 per cent. Import trends revealed mixed patterns, with crude oil imports rising by 4.2 per cent in October 2024 and showing a 3.5 per cent increase during the April-October period of FY 2024-25. While petroleum product imports declined by 2.2 per cent in October, they registered a 7.7 per cent growth during the seven-month period, driven primarily by increased imports of petcoke, LPG, and lubricants. Export performance remained particularly strong, with petroleum products showing a substantial 12.7 per cent increase in October 2024 and a 4.2 per cent rise during the April-October period. This growth was largely attributed to increased international sales of petcoke/CBFS, fuel oil, motor spirit, and aviation turbine fuel. The cumulative data for April-October FY 2024-25 indicates a 1.8 per cent growth in crude oil processing compared to the previous year. The PPAC findings suggest that while enhanced refinery throughput and export growth have helped counterbalance the decline in domestic crude production, India’s dependence on imported crude oil continues to grow as the nation works to meet its expanding energy requirements.
Gautam Adani’s company announces another 13% reduction in gas supply from GAIL
Adani Total Gas has announced a 13 percent reduction in its gas supply from GAIL (India) starting November 16, 2024, according to reports. This follows an earlier cut of 16 percent in October under the Administered Price Mechanism (APM). The company warned that this reduction would negatively affect its profitability. In a regulatory filing, Adani Total stated, “This reduction impacts the entire City Gas Distribution (CGD) industry. While discussions with key stakeholders are ongoing, this will have an adverse impact on the company’s profitability.” The company is reviewing the situation and may adjust retail gas prices to minimise the impact while ensuring uninterrupted supply to consumers, according to reports. The October reduction, effective from October 16, was communicated by GAIL, citing lower APM gas allocations for Compressed Natural Gas (CNG) and Domestic Piped Natural Gas (PNG). Adani Total had then emphasised the need for industry-wide resolutions to support end consumers and the growth of CNG vehicles in India.Despite these challenges, Adani Total reported strong financial results for the quarter ending September 30, 2024. The company’s consolidated net profit rose by 7.5 percent year-on-year to Rs 1.86 billion, while its revenue from operations increased by 12 percent to Rs 13.18 billion.
BPCL CMD inaugurates BPCL’s 1st LNG Fueling Station
Bharat Petroleum Corporation Limited, CMD G Krishnakumar, inaugurated BPCL’s 1st LNG Fueling Station at Ghar Outlet BP-Avinashi, located on National Highway 544 (formerly NH 47) in Chengapalli, connecting Salem in Tamil Nadu to Kochi in Kerala. As India’s trucking market expands from 4 million trucks in 2022 to an estimated 17 million trucks by 2050, liquefied natural gas (LNG) emerges as a promising alternative fuel.
U.S. Looks to Ensure Long-Term Demand for Its LNG in Europe
The United States is looking to keep its LNG flowing to Europe in the long term when the EU will have standards for methane emissions for all imported fossil fuels. The EU’s methane regulation will require imports of oil and gas, including LNG, to have equally strong or more stringent requirements of thresholds for these emissions than the European Union, starting in 2030. These requirements, yet to be deliberated and announced in detail, would mean that U.S. LNG developers and exporters would need to clean up their operations to ensure their product would be EU-emission compliant by the end of the decade. U.S. Seeks Methane Regulation Alignment Days before the U.S. presidential election, the Biden Administration sought to begin discussions with the EU to ensure that LNG supply compliant with U.S. methane rules would automatically be considered compliant with the EU regulation. The Department of Energy (DOE) and the Environmental Protection Agency (EPA) co-signed a letter addressed to European Commission Director-General for Energy Juul Jorgensen, requesting a determination of “equivalency” for U.S. exports of LNG to Europe. The letter was signed by DOE Assistant Secretary for Fossil Energy and Carbon Management, Brad Crabtree, and the Environmental Protection Agency’s (EPA) Assistant Administrator for the Office of Air & Radiation, Joseph Goffman. “We understand that this process will take time. However, we would like to begin discussions as soon as possible, to ensure the continued reliable and stable supply of natural gas from the United States to Europe,” they wrote in the letter dated October 28. Related: US LNG Exports Poised to Hit 9-Month High “We are confident that the United States’ extensive domestic regulatory regime to monitor, measure, and reduce greenhouse gas emissions (especially methane) from the oil and gas sector is consistent with the goals of the EU’s regulations,” they noted. With an alignment of methane emission standards, the U.S. is looking to keep its now largest LNG export market well into the next decade. It is also seeking to have methane regulation on U.S. LNG regardless of what President-elect Donald Trump would do with U.S. environmental protection requirements over the next four years—most likely repeal most of them. U.S. LNG Exports to Europe The United States, the world’s top LNG exporter last year ahead of Qatar and Australia, continued to export two-thirds of its LNG volumes to Europe, including Turkey, in 2023, according to data from the U.S. Energy Information Administration (EIA). Similar to 2022, Europe and Turkey remained the primary destination for U.S. LNG exports in 2023, accounting for 66% of U.S. exports. Asia, the top destination of America’s LNG before the Russian invasion of Ukraine in early 2022, now trails Europe with about a quarter of U.S. LNG going there. Moreover, the U.S. remained the largest LNG supplier to the EU and the UK in 2023, accounting for nearly half, 48%, of total LNG imports. Qatar and Russia remained the second- and third-largest LNG suppliers to Europe last year, with market shares of 14% and 13%, respectively. As the EU seeks to ditch Russian gas, it could consider replacing imports of Russian LNG with U.S. LNG, European Commission President Ursula von der Leyen suggested last week. “We still get a lot of LNG from Russia and why not replace it by American LNG, which is cheaper for us and brings down our energy prices,” von der Leyen told reporters. LNG Supply with the Methane Regulation The EU methane regulation has yet to determine how and when methane rules in a country outside the bloc would be considered “equivalent or stronger” to the methane emissions legislation in the European Union. In view of this regulation, a lot is at stake for both the United States and Europe in terms of LNG supply in the medium and long term. Europe needs U.S. LNG as it severs ties with Russian gas, while the EU, the UK, and Turkey combined is the top export market of U.S. LNG producers and developers. U.S. trade groups, including the American Petroleum Institute (API) and the U.S. Chamber of Commerce, have expressed concerns that the EU regulation could undermine the EU’s energy security by depriving the bloc from U.S. LNG supply if it is found to be more polluting than the EU requirements. President-elect Trump will likely target for immediate repeal or rollback the methane emissions fees finalized by the Biden Administration, while also lifting the current pause on new LNG project permitting. However, regardless of any U.S. rollbacks on methane fees and emissions requirements, and a possible boost to LNG export developments under Trump, America’s exporters will be closely watched for emissions reporting and emission profiles over the next few years. The EU hasn’t decided how exactly these methane regulations would actually work. It may have to juggle between its energy security and climate goals in finalizing the methane requirements for fossil fuel imports.
EIA: India leads global oil consumption growth in 2024, 2025
India has emerged as the top contributor to expected global oil consumption growth, accounting for 25% of the increase for 2024 and 2025, according to the US Energy Information Agency (EIA)’s latest Short-Term Energy Outlook (STEO). EIA expects global liquid fuel consumption to rise by 1.0 million b/d in 2024 and 1.2 million b/d in 2025. This growth is below the pre-pandemic 10-year average of 1.5 million b/d of annual growth, as well as below the oil demand growth seen in the 2021-23 pandemic recovery. “We expect consumption of liquid fuels in India to increase by 300,000 b/d in both 2024 and 2025, driven by rising demand for transportation fuels. We forecast China’s petroleum and liquid fuels consumption will grow by less than 100,000 b/d in 2024 before recovering to almost 300,000 b/d 2025,” EIA said. “We have revised China’s 2024 consumption downward several times over the past year. In China, rapidly expanding electric vehicle ownership, rising use of liquefied natural gas for trucking goods, and decelerating economic growth have limited consumption growth for transportation fuels.” Meantime, EIA forecasts more distillate fuel consumption in the US next year after 2 years of declines, largely because US manufacturing activity is expected to increase. Oil prices The Brent crude oil spot price averaged $76/bbl in October, up $2/bbl from the average in September. Crude oil prices increased in October in part because of market concerns that an Israeli response to Iran’s missile attack would reduce Iran’s ability to produce or market oil. However, Brent fell to $71/bbl on Oct. 29 after Israel’s military response did not target Iran’s oil infrastructure. Despite the drop in oil prices in late October, EIA expects that geopolitical risks and OPEC+ cuts are likely to raise oil prices, with Brent crude averaging $78/bbl in first-quarter 2025. As production grows, inventories will build in second-quarter 2025, reducing prices to $74/bbl in second-half 2025. “By second-quarter 2025, we expect OPEC+ production increases and supply growth from countries outside of OPEC+ will outweigh global oil demand growth and cause oil to be put into inventory. We expect that global oil inventories will increase by an average of 400,000 b/d in second-quarter 2025, before inventories rise by an average of 600,000 b/d in second-half 2025. We forecast that inventory builds will put downward pressure on crude oil prices, with Brent falling to an average of $74/bbl in second-half 2025. In our forecast, the Brent price averages $76/bbl for the full year of 2025,” EIA said. However, EIA sees at least two main sources of oil price uncertainty: the future course of the ongoing Middle East conflict and OPEC+ members’ willingness to adhere to voluntary production cuts.