Russia Expands ‘Dark Fleet’ to Evade LNG Sanctions
Russia’s push to navigate sanctions and maintain its foothold in the global LNG market is gaining momentum with the deployment of a second vessel from its Arctic LNG 2 project. The tanker, Asya Energy, part of what’s being dubbed a “dark fleet,” recently departed from the sanctioned terminal in northern Russia, signaling Moscow’s continued efforts to circumvent Western restrictions. This development is similar to its first LNG tanker that was part of the Arctic LNG 2 project, known as the Pioneer. That vessel was last tracked in the Mediterranean. These vessels, reportedly part of a fleet assembled through discreet ownership transfers and minimal transparency, are crucial for Russia’s strategy to sustain LNG exports amid tightening sanctions. Russia has been expanding its dark fleet of LNG carriers, much like it did with oil tankers following its invasion of Ukraine. The ownership of several ice-class LNG tankers has been transferred to little-known entities, primarily in Dubai’s free trade zones, allowing them to operate under the radar. This strategy enables Russia to continue exporting LNG despite U.S. sanctions and recent EU measures that ban new investments and transshipment operations of Russian LNG. The sanctions, particularly those delaying the Arctic LNG 2 project and restricting the use of EU territory for transshipments, have driven Russia to employ its shadow fleet more aggressively. With demand for LNG still strong globally, Moscow is betting on these clandestine operations to keep its energy sector afloat. An analysis earlier this summer conducted by Bloomberg found that little-known shipping firms operating from Dubai’s free trade zone have assumed ownership of at least eight vessels in the earlier part of the year, including four ice-class LNG carriers that had already received Russia’s approval to transverse the Arctic route. Some of the tankers with new ownership do not have listed insurers, according to the analysis—a strong indication of being part of the dark fleet.
Jamnagar Refinery is among the top 10 largest oil refineries in the world
The Al-Zour Refinery in Kuwait, which commenced operations in 2022, has been ranked eighth globally among the largest oil refineries. With a refining capacity of 615,000 barrels per day, it accounts for 8.54% of the total refining operations carried out by the ten largest refineries worldwide, which collectively process 7.2 million barrels of crude oil daily. According to a report by Offshore Technology, as highlighted by Global Data, the Al-Zour Refinery is the only Gulf and Arab refinery to make the list of the top ten largest refineries globally. The refinery, owned by the Kuwait Integrated Petroleum Industries Company (KIPIC), received a score of 7.1 on the net refining index. It was specifically designed to handle heavy crude oil and produce high-value derivatives. Currently, there are 825 active refineries globally, with the sector expected to see substantial growth. The capacity of crude distillation units (CDUs), a key measure of refining capability, is projected to increase by 15% between 2023 and 2027. The top ten oil refineries by CDU capacity worldwide in 2022 are as follows: Paraguana Refinery, Venezuela – 955,000 barrels per day (established in 1949) Ulsan Refinery, South Korea – 840,000 barrels per day (established in 1964) Ruwais Refinery, South Korea – 800,000 barrels per day (established in 1969) Daewooshan Island Refinery, China – 800,000 barrels per day (established in 2019) Jamnagar Refinery II, India – 707,000 barrels per day (built in 2008) Jamnagar Refinery I, India – 660,000 barrels per day (started operating in 1999) Port Arthur Refinery II, United States – 635,000 barrels per day (built in 1903) Al-Zour Refinery, Kuwait – 615,000 barrels per day (fully operational in 2022) Texas City Refinery III, United States – 593,000 barrels per day (built in 1934) Gurun Island Refinery I, Singapore – 592,000 barrels per day (built in 1966)
Petronet LNG receives GST Bill of over Rs 40 million, calls tax demand unjustified
Petronet LNG has received a tax demand of over Rs 40 million from the Department of Goods and Service Tax, New Delhi, the company said in a filing dated August 14. The alleged violations include under-declaration of outward supplies and claiming input tax credit on supplies from GST identification cancelled dealer and from those who don’t pay taxes. The company has said that the demand and penalties are unjustified and that it will seek legal recourse. The filing stated: “The Company has received an order u/s Section 73 of the Goods & Services Tax Act, 2017 raising a tax demand amounting to INR 4,08,93,486/- (including penalty of INR 21,21,032 and interest as applicable) for FY 2019-20.”
India ramps up crude oil supply from Russia in the last two months; Iraq, Saudi lag behind
In CY24, India has sourced the maximum crude oil from Russia in the last two months, while supplies from its traditional suppliers Iraq and Saudi Arabia have depleted to the lowest level in the same period, according to energy cargo tracker Vortexa. In June, at 1.93 million barrels per day (bpd), Indian imports of crude oil from Russia were the highest, while in July it was 1.81 million bpd. The rise in Russian oil supply to India comes despite narrowing discounts from the country. Russia has become the biggest supplier of crude to India since war broke out between Ukraine and Moscow in 2022. The country has been providing crude at discounted rates to India after the West imposed sanctions on it. However, in recent months, the discounts have reduced as more countries are accepting Russian oil. Meanwhile, imports from Saudi Arabia and Iraq slumped to their lowest this year in June and July 2024. In June, Saudi Arabia supplied 4,54,000 bpd of crude to India, while in July it supplied 6,06,000 bpd. From Iraq, India imported 8,01,000 bpd in June and 6,03,000 bpd in July. “Even if we get only a few dollars worth of discount on Russian crude, it is still attractive to Indian refiners. Right now, GRMs (gross refining margins) have come down globally, so it makes economic sense for refiners to keep buying Russian crude even when discounts have gone down,” said Prashant Vasisht, VP and Co-Head, Corporate Ratings, ICRA.
As Vaidya’s exit looms, Indian Oil getting ready for a new leadership
In the coming weeks, Shrikant Madhav Vaidya’s extended tenure as chairman of Indian Oil Corp Ltd (IOCL) will wrap up, and the search for his successor is already in full swing. Last week, a three-member search-cum-selection committee, led by Mallika Srinivasan, chairman of the Public Enterprises Selection Board (PESB), including petroleum secretary Pankaj Jain and former HPCL chairman M.K. Surana, interviewed about a dozen candidates to find the right fit. The selection process, held at Shastri Bhawan — the heart of the ministry of petroleum and natural gas — saw a mix of internal candidates from IOCL and at least one strong external contender. While early signals suggest a frontrunner has emerged, it might be a while before we know for sure who will take the helm of this Fortune 500 giant. Notably, when a search-cum-selection committee (SCSC) steps in, it has the authority and discretion to choose the best candidate for the job. Mr Vaidya, originally set to retire on August 31 last year, was granted a one-year extension, pushing his retirement to this month-end, on a re-employment and contract basis. Rumour has it that he might stay on for a few more weeks to ensure a smooth transition, pending the final nod from the Appointments Committee of the Cabinet (ACC).
Indian govt plans 5% ethanol blending in diesel
The government is evaluating a plan to blend 5% ethanol in diesel (ED-5) as it nears its goal of achieving 20% ethanol blending in petrol within the next two years, according to ToI. A meeting on this new proposal took place last week at the Prime Minister’s Office with all relevant ministries in attendance, souces told ToI. The ethanol blending initiative aims to enhance environmental benefits and reduce crude oil import costs. In May, the average ethanol blending in petrol exceeded 15% for the first time. This was made possible through increased purchases from biofuel producers who have expanded their production capacity significantly in recent years.
Why state-run oil companies are spending billions on petchem capacity
In the boardrooms of Indian state refiners and in the halls of the oil ministry, there is a buzz surrounding an esoteric term: The Petrochemical Intensity Index (PII). Indian oil companies plan to produce more of value-added chemicals from processing crude oil while reducing the volume of fuels, whose demand is expected to eventually extinguish as the world shifts to cleaner energy. Until now, many of these chemicals, the building blocks of plastics and paint used in homes, hospitals, and industries came from China. India depends on imports to meet 19 per cent and 30 per cent of polypropylene and polyethylene, respectively, the basic commoditised chemicals, and 67 per cent and 81 per cent on PVC and Toluene, which are value-added substances, shows CareEdge data.
Government Allows ONGC, Oil India To Price Gas From New Wells At 20% Premium
The Union government allowed Oil & Natural Gas Corp. and Oil India Ltd. on Monday to price domestically produced natural gas at 20% premium over the administrative price mechanism in a bid to make new gas development projects viable. In the context of India’s oil and gas sector, the APM refers to a government-controlled pricing system that is used to determine the price of petroleum products. The Ministry of Petroleum and Natural Gas notified the allocation of gas produced from new wells or well interventions from nominated fields of ONGC and Oil India at 20% premium over the APM price. The enhanced price for new gas will make the new gas development projects viable and help ONGC to augment the production of natural gas from nominated fields in challenging areas that require higher amount of capital and technology, the company said in a statement. Under the domestic gas pricing guidelines, the APM price is set at 10% of the Indian crude basket price, as announced monthly by the Petroleum Planning and Analysis Cell. The guidelines specify that gas produced from new wells or well interventions in ONGC and Oil India’s nomination fields will be priced at a 20% premium over the APM prices, making it a total of 12% of the Indian crude basket price for new gas. The APM gas price as of June is $8.44 per million British thermal unit. The ONGC board recently approved the Daman Upside Development project in its nominated field of Mumbai High at a cost of around Rs 78 billion for increasing the domestic gas production. The peak production envisaged from this project is around 5 million metric standard cubic metres per day. It has also approved another project integrated development of four contract areas under DSF-II at a project cost of Rs 60 billion with a peak production of around 4 mmscmd of gas where the government has already allowed pricing and marketing freedom.
GAIL head Sandeep Gupta in the race for Indian Oil Corp’s new chairman
Nearly a dozen candidates on Sunday appeared for interview before a search-cum-selection panel that is looking to appoint the new chairman of Indian Oil Corporation (IOC), the nation’s largest oil firm, sources said. While 10 out of the nearly 60 candidates who applied were called for interviews, GAIL chairman and managing director Sandeep Gupta is being considered a wild card Gupta had not applied but was called for the interview, three sources aware of the matter said. “They had invited 10 of the candidates who had applied. Gupta was the 11th person to be interviewed,” one of them said. Gupta, 58, was director (finance) in IOC before he was appointed the CMD of gas utility GAIL in October 2022. Those interviewed on Sunday included two directors on IOC board – Satish Kumar Vaduguri (Director-Marketing) and Arvind Kumar (Director-Refineries).
Oil India reports 6% increase in Q1 crude oil production
State-run Oil India Ltd’s crude oil production for the April-June quarter stood at 871,000 tonnes, 6.2% higher on a year-on-year (y-o-y) basis Its crude oil production in the corresponding period of the last fiscal was 820,000 tonnes Further, the public sector energy company’s natural gas production rose nearly 10% to 818 million cubic meters. “Oil India Ltd (OIL), registers phenomenal growth in its crude oil and natural gas production with an increase of 6.22% in crude oil while the natural gas production is up by 9.80% in Q1 FY25 vis-a-vis Q1 FY24,” said a company statement. The increase in production comes at a time when the Centre is looking at increasing India’s oil and gas production in a bid to reduce import dependence. India imports about 85% of its energy requirement. For the first quarter of FY25, Oil India had reported a consolidated turnover of ₹93.5089 billion, nearly 45.9% higher than ₹64.0876 billion in the same quarter of the last fiscal. Its consolidated net profit rose 44% to ₹20.1630 billion in the quarter ended June from ₹13.9949 billion in the corresponding quarter of FY24.