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.”
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.