IOCL Chairman S.M. Vaidya Denied Further Extension
The Ministry of Petroleum and Natural Gas, today, announced an advertisement for the position of Chairman at Indian Oil Corporation Limited (IOCL). This move is seen as a major setback the present Chairman, Shrikant Madhav Vaidya, who was granted one-year post-retirement last year. Vaidya is set to retire on August 31, 2024. Sources told www.indianpsu.com that though MoP&NG was trying to make eligibility as 61 years, to make S M Vaidya eligible, but it was denied by PMO. The government had given a one-year post-retirement extension to Indian Oil Corporation Limited (IOCL) chairman Shrikant Madhav Vaidya — a rare event for anyone on board of a Maharatna PSU. The order to this effect, issued on August 4, 2023, read as “the Appointments Committee of the Cabinet (ACC) approved the proposal of the Ministry of Petroleum and Natural Gas for re-employment on a contract basis of Shri Shrikant Madhav Vaidya, Chairman, Indian Oil Corporation Limited (IOCL) for a period of one year beyond the date of his superannuation i.e. with effect from September 1, 2023, till August 31, 2024, or till the appointment of a regular incumbent to the post, or until further orders, whichever is the earliest.”
TotalEnergies signs LNG agreements with Indian Oil Corp, Korea South-East Power
French energy major TotalEnergies announced on Tuesday agreements with Indian Oil Corporation and Korea South-East Power for the supply of liquefied natural gas (LNG) over a medium to long term period. It signed a sales and purchase agreement with Indian Oil Corporation to deliver up to 800,000 metric tons per year of LNG to India for ten years from 2026, it said in a statement. The company also signed a heads of agreement with Korea South-East Power to supply up to 500,000 metric tons per year of LNG to South Korea for five years starting from 2027. The agreements are in line with TotalEnergies’ strategy of growing its LNG business and are medium-term outlets for its global LNG supply portfolio, the company said. Indian Oil Corporation, the country’s top refiner, had previously signed a long-term deal to receive 1.2 million metric tons per year of LNG supplies from United Arab Emirates’ s Abu Dhabi Gas Liquefaction Co Ltd (ADNOC LNG), beginning from 2026 for 14 years.
Cairn Oil & Gas Set to Become Net Zero Carbon by 2030
Cairn Oil & Gas, part of Vedanta Group and India’s private oil and gas exploration and production company, is set to become Net Zero Carbon by 2030, by pioneering Environmental, Social, and Corporate Governance (ESG) leadership across the E&P value chain. As part of a multi-pronged strategy, Cairn’s focused ESG roadmap covers carbon emission reduction, leverage renewable energy sources, leveraging nature-based carbon solutions and adopting innovations such as waste to energy, carbon capture utilisation and storage (CCUS) among others. With this, Cairn has fast-tracked its vision of attaining Net Zero Carbon by 2030. This year’s World Environment Day theme centers on land restoration, halting desertification, and building drought resilience. Cairn’s biodiversity conservation initiatives and nature restoration activities are spread across its operational areas in Rajasthan, Andhra Pradesh, and Gujarat. For achieving a low-carbon trajectory to reduce its environmental impact, Cairn is implementing diverse initiatives to decarbonise its operations while expanding its energy portfolio. Company has planned to source up to 70 MW of renewable energy by 2030, with a renewable Power Delivery Agreement for 25 MW set to commence in FY25. Installed solar rooftop across Rajasthan and Gujarat operational sites. Significant progress in flare gas reduction has seen a 60 percent decrease in potential gas flaring intensity over the past four years. Cairn is already a Net Water Positive company with an NPWI of 1.12. The company is recycling more than 96 percent of produced water through reinjection. Undertaken a feasibility study on ‘Waste to Power’ project to utilise lean gas, C02 rich gas, solid waste and other industrial waste, to generate power through pressurized oxy combustor technology. The resulting CO2 gas can then be further utilised for enhanced oil recovery. Other initiatives include bottling and cascading of gas for CNG players, gas transportation from satellite fields to terminal through pipeline, optimising recycled gas compressors, installation of ejector to reduced flaring in terminals and employing digital twin technology for comprehensive asset management. According to Dr. Steve Moore, Deputy CEO, Cairn Oil & Gas, “Cairn, as the largest private oil and gas Producer in India, is proud to lead the charge towards a greener future by making a positive impact on the environment and communities we operate in. Our decarbonisation and environmental initiatives are aligned with the vision to become carbon neutral by 2030 through innovation and technology coupled with our dedicated efforts.”
PNGRB retracts announcements designating 54 city gas networks as common carriers
PNGRB revised its April guideline that had formed the basis for notices to 54 city gas licensees in 2021 with a new one, repealing the prior one that had stated networks to be common carriers. The agency stated that it made the decision to remove all of those notices because the previous guideline was revoked. Regarding the notices, city gas license holders have been suing the PNGRB in court. Companies will immediately withdraw their cases if notices are withdrawn, according to sources with knowledge of the situation. However, the people said that the regulator may once more take action to designate the licensed areas that have long past their exclusivity period as common or contract carriers. This would be required to promote fair competition among suppliers, lower consumer costs, and increase the nation’s gas consumption.
Oil marketing companies reduce price of commercial LPG cylinder and jet fuel
The oil marketing companies (OMCs) announced on Saturday that they would reduce the price of jet fuel and commercial LPG used by hotels and restaurants in the country. As per the price notifications, a 19-kg commercial LPG used by hotels and restaurants was cut by 69 to Rs 1,676 in Delhi, while ATF (Aviation Turbine Fuel) was cut by Rs. 6,673.87 per kilolitre, or 6.5%, to Rs. 94,969.01 per kl in the national capital. The reduction follows a marginal 0.7 percent (Rs 749.25 per kl) increase on May 1. The revised price will be applicable today, June 1, 2024. However, the rate of cooking gas used in domestic households remained unchanged at Rs. 803 per 14.2-kg cylinder. April 1 saw the first reduction in commercial LPG prices since January. The rate had gone up by Rs. 14 per cylinder on February 1 and Rs 25.5 on March 1. Oil companies such as Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd. (BPCL), and Hindustan Petroleum Corporation Ltd. (HPCL) revise the prices of ATF and cooking gas on the 1st of every month based on the average price of benchmark international fuel and the foreign exchange rate. Petrol and diesel prices remain unchanged after a Rs. 2 per liter cut implemented in mid-March. Currently, petrol costs Rs 94.72 per liter in Delhi, and diesel is priced at Rs 87.62 per liter.
Extreme Weather and Red Sea Crisis Trigger Commodities Rally
After three years of extreme volatility, many experts predicted that commodities prices would broadly stabilize in 2024. However, adverse weather conditions, escalating geopolitical tensions and soaring shipping costs are turning those predictions on their heads. According to data gathered by the the United States’ National Oceanic and Atmospheric Association (NOAA), the European Union’s Copernicus Climate Change Service (CCCS), the United Nations World Meteorological Organization (WMO), last year not only broke 2016’s heat record but shattered it by a wide margin. 2023 was 1.48°C warmer than the pre-industrial period, with global average temperatures at least 1°C warmer than pre-industrial averages on every single day. Well, 2024 could be even hotter, with the National Centres for Environment Information (NCEI) predicting a 22 percent chance that the current year will be the warmest year on record and a 99 percent probability that it will rank in the top five warmest years. NCEI data reveals that the first four months of the current year were the warmest in 175 years. Wild weather driven by climate change is elevating the cost of energy, food and fuel; increasing the frequency of natural disasters and raising insurance costs. According to Munich Re, last year, extreme weather and earthquakes inflicted global losses of $250 billion, a new norm for insurers. These wild weather patterns–coupled with geopolitical tensions–have changed the outlook for certain commodities. Gary Cunningham, director of market research at Tradition Energy, has predicted that U.S. natural gas futures could soar to $4 per million British thermal units later this year if the ongoing hot weather persists and increases cooling demand. That would mark a large 60% jump from the current Henry Hub price of $2.50/MMbtu. The same case applies to Europe. European natural gas prices held around €35 per megawatt-hour in the last week of May, close to a 5-month high amid expectations of lower supply and robust cooling demand. New weather forecasts anticipate hotter temperatures in Northern Europe at the beginning of June; aggressive heat waves in Europe later in the summer and excessive heat in France and Spain. “This summer will almost certainly bring a rash of debilitating heat waves, particularly in the US midsection and Europe,” said Jennifer Francis, a senior scientist at the Woodwell Climate Research Center, has predicted. Meanwhile, soaring temperatures in Asia have intensified bidding competition for LNG in major hubs, underscored by the 16.7% annual increase in imports from Japan in April. Europe now competes with Asia for LNG cargoes from exporters like the US, Qatar and Nigeria However, ample reserves in European storages and added capacity in Norwegian gas fields are helping temper shortage risks. Hot weather and dry conditions have triggered shortages of several agricultural commodities resulting in price spikes. Wheat futures have hit the highest since July, reversing bearish bets by hedge funds they held for almost two years. In North America, much of Kansas is still suffering from extreme drought, though harvests are expected to improve from last year when drought was so bad many fields didn’t make it to harvest. Still, with hot conditions prevailing more than a month before the harvest season kicks in, experts are warning that those rosier forecasts might not be realized. “It better start raining pretty quick to get these numbers,” said Dave Green, executive vice president of the Wheat Quality Council and leader of the crop tour. Meanwhile, Citigroup analysts have predicted that extreme weather could see prices of Arabica coffee jump about 30% to hit $2.60 a pound over the next few months if adverse weather and production issues prevail in Brazil and Vietnam. Shipping Bull Market Shipping stocks have so far been the biggest winners in the energy sector. From tankers to dry bulk to containers to LPG, shipping equities are constantly taking out fresh highs. Indeed, with the exception of the pandemic, 2024 is on track to be the best year for shipping equities since the shipping supercycle in 2004-2008. With shipping rates soaring, leading commodity shipping stocks are firmly in the green this year, and show no signs of slowing down. Tsakos Energy Navigation (NYSE: TNP) and Teekay Tankers (NYSE: TNK) recently hit fresh 52-week highs, as did dry bulk carrier owners Genco Shipping & Trading (NYSE: GNK), Golden Ocean (NASDAQ: GOGL. TNP is now up 40.1% in the year-to-date; TNK has climbed 51.0%, GNK has gained 34.9% while GOGL has rallied 46.3%. Tanker stocks have been more of a mixed bag: Scorpio Tankers (NYSE: STNG) is up 34.9% YTD; Frontline Plc (NYSE:FRO)+42.4%, Nordic American Tankers (NYSE: NAT) -1.2%, Euronav (NYSE: EURN)-3.9% while International Seaways (NYSE: INSW) has returned 45.3%. Source: Drewry According to Lloyd List, broad gains by shipping stocks can be chalked up to an improved operating model. In the pre-financial-crisis era of 2008, shipping companies featured highly cyclical revenues with heavy capital expenditures on newbuildings, equity sales to fund growth, full dividend payouts, and very high debt levels. However, they have mostly changed their playbook, especially larger spot-centric bulk commodity shipping owners. Mirroring the similarly retooled strategy of U.S. oil exploration and production (E&P) companies, shipping companies now have much lower debt to reduce break-evens, limited capital expenditures, more sustainable shareholder returns including dividend payouts, and share buybacks when stock prices are below net asset value (NAV). According to Clarksons Securities analyst Frode Morkedal, these changes have led to “a significantly more receptive investor market for shipping. Shipping stocks have made a significant turnaround this earnings season, outperforming the previous two quarters.”
Global LNG supply to increase by 80% by 2030: Goldman Sachs
The global liquefied natural gas supply is set to surge by 80 percent by 2030, driven by new projects in Qatar and North America, a new analysis showed. In its latest report, Goldman Sachs said that this robust rise in supply would bring an end to the current energy crisis following Russia’s invasion of Ukraine. The US-based financial services firm also highlighted that investments in LNG are projected to increase by over 50 percent by 2029. Michele Della Vigna, Goldman Sachs’ head of natural resources research in Europe, the Middle East and Africa, said: “LNG in the US, without any doubt, is dominating future supply and we believe that the capacity growth in LNG is going to bring an end to the energy crises that began a couple of years ago, following European sanctions on Russian gas after the invasion of Ukraine, and work to lower natural gas prices in Europe and Asia.” He added: “We’re projecting an 80 percent increase in global LNG supply by 2030, which will be driven by new projects in North America and Qatar.” In January, QatarEnergy signed an agreement with US-based Execelerate Energy to supply up to 1 million tons per annum of LNG to Bangladesh for 15 years. Similarly, in February, Qatar’s state-owned firm signed another agreement with Petronet to supply 7.5 mtpa of LNG to India for a period of 20 years. In the same month, QatarEnergy chief Saad Al-Kaabi announced a new expansion of its LNG production in the North Field, which will add a further 16 mtpa to existing capacity, bringing total production to 142 mtpa.
Govt cuts windfall tax on petroleum crude to Rs 5,200 per MT from Rs 5,700
The Indian government has cut the windfall tax on petroleum crude to Rs 5,200 ($62.33) per metric ton from Rs 5,700, effective on June 1, according to a notification issued on Friday. The tax, which is revised every fortnight, remains unchanged at zero for diesel and aviation turbine fuel. The Indian government on May 16 had reduced the windfall tax on petroleum to Rs 5,700 per metric ton from Rs 8,400. India started taxing crude oil production and exports of gasoline, diesel and aviation fuel in July 2022 to regulate private refiners which wanted to sell fuel overseas instead of locally in a bid to gain from robust refining margins.
Domestic Natural Gas Prices Reduced, Government Caps Prices
The Ministry of Oil has reduced the price of domestic natural gas to USD 8.44 per million metric British thermal units (mmBtu) for June 2024, down from USD 8.90 in the previous month. Despite this reduction, the price will remain capped at USD 6.5 per mmBtu under the current pricing formula, as part of the government’s efforts to stabilise the market. The new pricing mechanism, introduced by the government, sets a floor price of USD 4 per mmBtu and a ceiling price of USD 6.5 per mmBtu for domestic gas. This applies to natural gas produced from legacy and oil fields managed by Oil and Natural Gas Corporation Ltd (ONGC) and Oil India Limited (OIL). Under this regime, domestic gas prices are linked to imported crude oil prices, pegged at 10 per cent of the Indian crude basket, with monthly updates to reflect current market conditions. This pricing reform follows recommendations from a government-appointed panel led by Kirit Parikh, an energy expert and former member of Niti Aayog. Established in 2022, the panel aimed to overhaul the pricing structure for domestically produced natural gas to stabilise the market for both producers and consumers. The primary goals included boosting domestic gas production to meet the target of deriving 15 per cent of India’s energy from natural gas by 2030 and ensuring fair pricing for consumers. Key recommendations from the Parikh committee included a fixed pricing band for gas from legacy fields, which constitute two-thirds of the country’s total natural gas production. The panel advised linking the price of gas produced by state-owned companies from fields allocated on a nomination basis to imported crude oil prices, with a minimum floor price of USD 4 per mmBtu and a ceiling of USD 6.5 per mmBtu. The ceiling rate for APM gas from legacy fields will see an annual increment of USD 0.5 per mmBtu. The current pricing formula will remain for gas fields with challenging geologies, such as Reliance Industries and British Petroleum’s KG-D6. Additionally, the committee recommended integrating natural gas into the Goods and Services Tax (GST) regime to streamline taxes and prioritise city gas in the allocation of APM gas. This ensures the city gas sector falls under the ‘no-cut’ category, meaning supplies to other consumers will be curtailed first in the event of a production decline.
India explores for crude oil on sweeter terms after end of Iran oil waiver
India is trying to leverage its robust ties with West Asian crude oil producers such as Saudi Arabia, Kuwait and the United Arab Emirates (UAE) to source additional volumes at terms similar to those of its annual contracts in a bid to avert any sharp rise in its domestic oil prices. India, the world’s third-largest oil importer, is in discussions with oil producers in West Asia as well as in other geographies to procure a total of about 15 million tons of extra crude over the year to urgently bridge a supply gap that will be caused by the exit of Iran from its energy basket. US secretary of state Mike Pompeo on Monday announced that the Donald Trump administration would no longer grant exemptions to some countries to import Iran oil with the conditional waiver set to expire on 2 May. India’s attempt to boost crude supplies from the Gulf nations also comes at a time when they plan to increase their investments in India. Crude purchased under the annual contract terms would be more lucrative for India than under spot contracts. Such contracts would also allow for purchasing additional quantities of crude at similar terms. “Talks with West Asian suppliers such as Saudi Arabia, United Arab Emirates and Kuwait are in advanced stages. They have been our long-term suppliers and will be leaned on for extra cargoes at old terms and conditions,” an Indian government official said, requesting anonymity.