Hydrogen-enriched CNG may come to India soon
Fossil-fuel powered vehicles are seen as a major culprit for air pollution despite its small contribution. The whole world is already undergoing a complete overall due to COVID and some new changes may be seen in the transport sector in India soon. The current BS6 emission norms were tough to comply by and now the government is thinking of one step ahead. EVs are still in their budding stage in terms of charging infrastructure so they want to modify the already successful alternative, the CNG. Find everything below about Hydrogen enriched CNG India also known as HCNG. What has the department told? The Ministry of Road Transport and Highways of India has issued a new draft. The new draft requires suggestion on the inclusion of HCNG. HCNG is also known as hydrogen-enriched CNG. If the draft receives positive feedback it could lead to an amendment to the Central Motor Vehicle Rules 1979. CNG is already better than any other fossil fuel-powered car. The fuel is available cheaply as well is more environmentally friendly. Thanks to the Indian Government CNG infrastructure is quite good in the Indian market. No official price details are available for HCNG as of now. HCNG, however, has undergone testing and initial results show lower emissions compared to CNG. Scientifically speaking HCNG produces lower CO (Carbon Monoxide), methane and THC (Total hydrocarbon emissions). The test results also showcase that HCNG is better than any other fossil fuel in terms of fuel consumption. Cost is a major deciding factor and reports suggest that it will be meagre. HCNG can be easily installed into CNG pipelines and bus depots. Test phase of this new fuel may take place in Delhi due to its better CNG infrastructure. First 50 busses fitted with HCNG kit will be tested for practicality.
IOCL exports premium fuel to Sri Lanka
Indian Oil Corporation Ltd. (IOCL) on Saturday exported its first-ever consignment of 100 octane premium fuel, XP100 to Sri Lanka. The product is tailored for premium high-end vehicles. Flagging off the shipment at the Jawaharlal Nehru Port Trust in Mumbai, V. Satish Kumar, Director (Marketing), Indian Oil said this was the third time the Company was taking a product offshore, showcasing its potential to send quality products from India to the world. “This marks a momentous occasion as another one of our products moves out to conquer new markets in Sri Lanka,” he said. Sujoy Choudhary, Director (Planning & Business Development) and Chairman Lanka IOC, said, “This is a historic day as we flag off our premium product XP100 to Sri Lanka. We have drawn up comprehensive promotional schemes to ensure this product gets wider visibility and acceptability.” The XP100 is domestically developed, leveraging IndianOil’s indigenous Octamax Technology. Designed with anti-knock properties, it is engineered to enhance engine performance, faster acceleration, smoother drivability and improved fuel economy. The formulation is said to reduce engine deposits and emissions in high compression ratio engines, optimising vehicle performance and longevity while minimizing maintenance. It is also eco-friendly fuel with significantly reduced tailpipe emissions, said a press release here.
As Russian discounts fall, Indian state and private refiners join hands to negotiate better terms
With discounts on Russian crude oil dwindling, India, in a first such effort, has brought together state-owned and private oil refiners to jointly negotiate for higher discounts and better terms with Russian suppliers, including Russia’s largest oil company Rosneft PJSC. The government-led joint sourcing strategy involves leveraging India’s position as the world’s third-largest crude oil buyer to get better discounts on Russian oil, which have dropped to about $3 per barrel from a high of $10 earlier, said two people aware of the development.
Russia Discovers Massive Oil and Gas Reserves in British Antarctic Territory
Russia has found huge oil and gas reserves in British Antarctic territory, potentially leading to drilling in the protected region. The reserves uncovered contain around 511bn barrels worth of oil, equating to around 10 times the North Sea’s output over the last 50 years. The discovery, per Russian research ships, was revealed in evidence submitted to the Commons Environment Audit Committee last week. The committee was assessing questions regarding oil and gas research on ships owned by the Kremlin’s Rosgeo, the largest geological exploration company in Russia. Antarctica is currently protected by the 1959 Antarctic Treaty, which prohibits all oil developments in the area. It was set up to ensure the region was used “exclusively for peaceful purposes” and would “not become the scene or object of international discord.” The committee heard from minister David Rutley, who assured MPs Russia was conducting scientific research in the region. “Russia has recently reaffirmed its commitment to the key elements of the treaty,” he said. But Klaus Dodds, a professor of geopolitics at Royal Holloway University, argued the Antarctic policy environment was “arguably at its most challenging since the late 1980s and early 1990s.” Russia’s invasion of Ukraine has created “widespread concern that a worsening relationship with the country will spark strategic competition and make it even more explicit in Antarctica.” He believes Russian activity in the region equated to hunting for oil and gas as opposed to scientific research. “Russia’s activities need to be understood as a decision to undermine the norms associated with seismic survey research, and ultimately a precursor for forthcoming resource extraction,” Dodds said in comments reported by the Telegraph. The Antarctic Treaty is the largest of Britain’s 14 overseas territories but it has faced competition claims from Argentina and Chile in the past. The Foreign, Commonwealth and Development Office said: “Russia has repeatedly assured the Antarctic Treaty Consultative Meeting that these activities are for scientific purposes.”
Saudis Fear Overheating Economy Could Slow Diversification from Oil
The world’s largest crude oil exporter, Saudi Arabia, is looking to prevent its economy from overheating and driving inflation higher as it aims to boost growth in its non-oil sector. Allowing more time to implement the massive investment projects under the Vision 2030 plan to diversify the oil-dependent economy could be a wise move, Saudi Finance Minister Mohammed Al-Jadaan said this week. “If you don’t allow your economy to catch up with your projects, basically what will happen is you’ll import a lot more,” the minister said at the Qatar Economic Forum in Doha on Tuesday, as carried by Bloomberg. The Kingdom has to be careful not to reach the point where the economy will hit the limits of its capacity to meet demand from the government and individuals, Al-Jadaan said. This point, commonly referred to as an overheated economy, leads to high inflation and leakage. In economics, one example of leakage is higher volumes of imported goods because they transfer income earned in one country to another country. If Saudi Arabia doesn’t allow its economy to catch up with its billions-dollar-priced huge investment projects, it may end up lacking the manufacturing and other capacity to support its plans, Al-Jadaan noted. “So giving it more time is actually wise,” he said at the Qatar Economic Forum, Powered by Bloomberg. “It’s not actually the funding that is the constraint,” the minister added. “It’s actually the economic leakage.” Some Vision 2030 Projects Could Be Delayed Saudi Arabia has started to admit in recent months that it would prioritize some projects that are part of Crown Prince Mohammed bin Salman’s Vision 2030 plan while possibly delaying others. At the end of last year, Saudi Arabia acknowledged for the first time that some of the projects of its Vision 2030 plan to diversify its economy away from oil are being delayed to avoid pressures on the economy. The Kingdom needs more time to “build factories, build even sufficient human resources,” minister Al-Jadaan said in December. “The delay or rather the extension of some projects will serve the economy,” he told Bloomberg at the time. “There are strategies that have been postponed and there are strategies that will be financed after 2030,” Al-Jadaan told Bloomberg without specifying which projects are being delayed. The Crown Prince “might be finally ready to have some tough conversations” about which projects could be accelerated and which can wait to be developed, a source familiar with the thinking of Saudi Arabia’s sovereign wealth fund, the Public Investment Fund, told the Financial Times this month. Conservative Oil Income Forecasts Despite possible discussions about recalibrating the timing of the expensive projects, Saudi Arabia remains optimistic that it could pull off the Vision 2030 plan to have its non-oil economy grow with tourism and technology. The Kingdom has seen its non-oil sector grow steadily in recent years, with more income from non-oil activities, Al-Jadaan said at the forum in Qatar this week. This increased income for the state, coupled with a conservative forecast about revenues from oil, would help Saudi Arabia with the plans for funding the many futuristic projects of Vision 2030, he added. “We are very conservative in our projections and therefore our plans on how the oil revenue will cover that expenditure,” the minister noted. The non-oil sector and government activities grew in the first quarter of 2024, but a 10.6% decline in oil activities – as the Saudis are limiting oil production at 9 million barrels per day (bpd) – dragged down the Kingdom’s GDP by 1.8% compared to the same period of 2023, Saudi Arabia’s General Authority for Statistics said earlier this month. This decrease was primarily driven by a 10.6% decline in oil activities. At the same time, non-oil activities increased by 2.8%, and government activities grew by 2.0% on an annual basis in Q1 2024. The seasonally adjusted real GDP rose by 1.3% in the first quarter this year compared to the fourth quarter of 2023, driven by a 2.4% increase in oil activities, along with 0.5% growth in non-oil activities. Revenues for the state from the oil sector went up by 2% year-on-year in the first quarter, while non-oil revenues increased at a faster pace, 9%, to drive an overall 4% rise in total budget revenues, official data showed in early May. Saudi Arabia, however, booked a budget deficit in Q1 2024, due to rising expenditures which outpaced government revenues. Separately, inflation in the Kingdom is holding steady and below global levels, potentially giving assurances to Saudi Arabia’s officials and financiers that the economy is not nearing the point of tipping into overdrive. The annual inflation rate in Saudi Arabia was 1.6% in April 2024, the same as the annual inflation rate in March. The Consumer Price Index (CPI) inched up by 0.3% in April compared to March 2024. Saudi officials have finally started to acknowledge that some expensive futuristic projects may have to wait longer for development, to avoid roiling the economy of the world’s top crude oil exporter, which could have an impact on the global oil market and economy.
India shows interest in fifth oil and gas licencing round
TOP officials from the High Commission of India in Tanzania have met and held talks with Petroleum Upstream Regulatory Authority (PURA) leadership about auction of petroleum exploration blocks in Tanzania Mainland scheduled for later this year. According to a statement availed to the media yesterday, the talks took place on Tuesday at PURA offices in Dar es Salaam and attended by the Second Secretary to the High Commissioner (Commerce) Narender Kumar and Danstan Asanga, PURA acting director general alongside other officials from both sides. Speaking during the meeting, Kumar said that upon learning of the government’s plan to auction oil and gas blocks through the Ministry of Energy budget estimates speech for the year 2024/25, the Indian High Commission deemed it necessary to meet with the relevant authority to thoroughly understand the matter to enable it provide comprehensive information to companies and stakeholders in India. “We hope that companies from India will be interested in this information which is why we have decided to seek further details that can enable them make decisions to participate in the forthcoming bidding round and ultimately invest in oil and gas exploration and production activities in Tanzania,” he said. Providing details about the fifth licencing round, Asanga said that PURA, on behalf of the government, has continued with preparations for the event and that several activities have been completed, including preparation of model production sharing agreement which has been submitted to the Ministry of Energy for further action. Other activities include demarcation of the blocks to be auctioned after obtaining approval from the Ministry of Energy and preparation of petroleum data packages. Additionally, Asanga noted that a review of the Petroleum Act of 2015 was underway to identify sections requiring amendments and that PURA was participating in the review. Regarding the timing of the bidding process, Asanga said that the auctioning of blocks will take place shortly after the completion of preliminary preparations including the review of the Petroleum Act of 2015 and that the government plans to launch the fifth licencing round later this year. In addition to discussing the fifth licencing around, the High Commission of India in Tanzania and PURA also explored the possibility of establishing cooperation between oil and gas exploration and production regulatory authorities in the two countries. They also discussed the possibility of collaborating in capacity building programmes for personnel in the field of oil and natural gas through funding from the government of India.
Reliance faces many hurdles in getting crucial crude delivered as global market struggles
A dearth of heavy crude is forcing one of the world’s biggest buyers to go the extra mile to get the barrels it needs, offering another example of how sanctions and OPEC+ curbs are recasting the supply chain. Reliance Industries Ltd., India’s largest private refiner, purchased about 2 million barrels of Canada’s Access Western Blend crude from the recently expanded Trans Mountain pipeline, its first such cargo. And although that grade suits processors with sophisticated refineries such as Reliance, there were plenty of unusual logistical complexities that came with the deal. To get the shipment delivered, Reliance is first having to load it onto four smaller tankers from Burnaby port because of local depth restrictions, according to people with knowledge of the matter. The quartet of cargoes will then be transferred onto a single very large crude carrier, before that vessel makes the more-than-19,000-kilometer voyage to India via the Pacific, they said. An alternative, possible route via the Atlantic would be longer still. The complex journey reflects underlying changes in the global market that have combined to make supplies of dense and sulfurous crude harder to find. First, US sanctions against Venezuela have been reimposed, cutting that nation’s supplies of heavy crude. At the same time, OPEC+ cutbacks have crimped flows of similar grades, while Mexico, another supplier, is also exporting less. Rounding it off, more heavier barrels from the Middle East are getting used locally for power generation during the hot summer months.
ONGC, Oil India to get relief as Centre cuts windfall tax on crude oil
The Central government has cut the windfall tax on petroleum crude to Rs 5,700 ($68.34) per metric ton from Rs 8,400 with effect from Thursday, as part of its fortnightly revision that is calibrated with global prices This is the second fortnightly cut in windfall tax in a row after a Rs 8,400 per metric ton reduction from Rs 9,600 on May 1. Upstream oil exploration and production companies ONGC and Oil India Ltd will gain as they will have to pay a lower tax on their crude oil output. The tax has been scaled down as crude oil prices have declined in the international market and the earnings of oil producers have also come down. Prices of the benchmark Brent crude are currently hovering at a little over $82 per barrel. The government had on April 16 raised the windfall tax on petroleum crude to Rs 9,600 a metric ton from Rs 6,800 due to the sharp increase in oil prices at the time.
UAE and Oman Partner for Renewable Energy and Green Tech Projects
The Middle East is expanding its renewable energy and clean tech sectors at an accelerated pace, as several countries plan for economic diversification beyond oil and gas. While fossil fuels may continue to provide massive revenues for countries such as Saudi Arabia, the UAE, and Qatar, these Middle Eastern states are ensuring they hold a competitive position in the future of international energy through the development of major wind, solar, green hydrogen, and other renewable energy projects. Several countries in the Middle East have long depended on oil and gas for both energy security and to bring in revenues, which have allowed these states to become some of the richest in the world. As the world transitions towards green and many traditional oil and gas reserves are being depleted, several countries in the region are now pumping funds into renewable energy projects and clean technologies to ensure they do not fall behind. At the COP28 climate summit, held in the UAE, many regional leaders made ambitious climate pledges, with the Middle East and North Africa (MENA) expected to add 62 GW of renewable energy capacityover the next five years, according to the International Energy Agency (IEA). Solar energy will contribute more than 85 percent of this capacity growth, as countries across the region exploit their abundant sun. Saudi Arabia is expected to contribute a third of the MENA region’s renewable energy increase, alongside growth in the United Arab Emirates (UAE), Morocco, Oman, Egypt, Israel, and Jordan. Together, these countries will contribute around 90 percent of the region’s renewable energy capacity growth. Saudi Arabia’s green energy capacity increase relies heavily on the development of a massive new urban area at the northern tip of the Red Sea – Neom. The megaproject – which many international experts and scientists are skeptical about – is expected to span 26,500 km2 and be completed in 2039. The development of Neom is supported by $500 billion from Saudi Arabia’s Public Investment Fund. The Kingdom says it will be powered wholly by renewable energy, with no roads or cars. It is expected to accommodate nine million people and will be connected by high-speed rail and pedestrian links. The government plans to build a clean industrial hub called Oxagon within the development, where it will construct the “world’s largest green hydrogen facility”, at a cost of $8.4 billion. Saudi Arabia is aiming to achieve a power mix of 50 percent renewable energy by 2030. The UAE hopes to reach a renewable energy mix of 44 percent by 2030, supported by the rapid development of the country’s solar power, as home to three of the world’s largest solar plants. The UAE’s Noor Abu Dhabi solar park is expected to reduce the country’s carbon emissions by around one million metric tonnes annually, while the Rashid Al Maktoum Solar Park in Dubai is expected to produce enough solar energy to power 800,000 homes by the end of the decade. The UAE is also beginning to develop its wind energy industry, developing a 103.5-MW project to power 23,000 homes and reduce carbon emissions by 120,000 tonnes a year. It is the first country in the Middle East to operate a nuclear power facility, which is expected to contribute 25 percent of the country’s energy needs once fully operational. Meanwhile, the government is investing heavily in the development of its blue and green hydrogen industry in line with its National Hydrogen Strategy 2050. The UAE hopes to become one of the biggest producers of green hydrogen worldwide in the coming decades. In April, the UAE and Oman signed a $35-billion investment partnership for the development of renewable energy, green metals, railways, and digital infrastructure and technology. The two countries plan to boost economic cooperation through strategic investments. The largest investment agreement was for an industrial and energy megaproject valued at $31 billion, which will include renewable energy initiatives, including solar and wind projects, alongside green metals production facilities. Mohamed Hassan Alsuwaidi, the Minister of Investment of the UAE, explained, “The agreements represent a major milestone in our bilateral ties, as they pave the way for us to leverage our collective strength to realize our shared vision of advancement and prosperity.” Oman also aims to become a major green hydrogen producer, developing on its existing oil and gas expertise and using its abundant open land to develop solar and wind farms to provide the renewable energy required for the electrolysis process needed to produce green hydrogen. Andrea Zanon, the CEO of WeEmpower Capital, stated, “Oman boasts some of the world’s most suitable locations for solar and wind power generation, key ingredients for producing low-cost green hydrogen through electrolysis.” Zanon added, “This green hydrogen can then be transported through Oman’s existing 4,000km gas pipeline network, significantly reducing infrastructure costs compared to starting from scratch… Furthermore, Oman’s extensive experience in processing and exporting liquefied natural gas (LNG) and ammonia translates directly to efficiently managing green hydrogen and its derivatives.” Oman hopes to produce at least a million tonnes of green hydrogen annually by 2030, 3.75 million tonnes a year by 2040 and 8 million tonnes by 2050.
Citi Sees Oil Prices Falling to $70 Range in Q3 2024
Oil prices have pulled back sharply to a three-month low as a combination of demand concerns and easing geopolitical premium take a toll. Last week, the Energy Information Administration’s (EIA) reported that U.S. crude inventories declined by 1.362 million barrels, smaller than the Wall Street consensus at 1.430 million barrels. The smaller-than-expected fall came hot on the heels of a large 7.3M-barrel build in U.S. crude stocks in the previous week, the largest weekly increase since February. Meanwhile, the United Arab Emirates has raised production capacity, with Abu Dhabi National Oil Co. saying in its website it’s able to pump 4.85 million barrels a day, up from 4.65 million a day at the end of last year. Not surprisingly, part of Wall Street is turning more bearish on the oil price outlook, with Citi analysts cautioning against speculative buying and advising investors to capitalize on any rallies by selling. According to the analysts, the market’s perception of geopolitical risks in the Middle East has softened, with investor attention turning to looser fundamentals. “With crude oil prices now trading over $10/bbl off their highs, we could not rule out some speculative buying, but still believe the right strategy in this balance between geopolitical risks and loosening fundamentals is to sell any rally,” they explained. Citi has forecast that oil prices will average $86 per barrel in the second quarter, slightly higher than current Brent price at $83 per barrel, but fall to $74 per barrel in the third quarter. The energy sector is, however, still in good shape, with only Communication Services and Utilities outpacing its gains. Energy stocks have lost some momentum over the past month, with the Energy Select Sector SPDR Fund (NYSEARCA:XLE) down -3.6% over the past 30 days compared to a 1.2% gain by the S&P 500. Still, the sector is up 11.9% in the year-to-date compared to a 9.5% return by the broad-market benchmark. Traders are also not betting heavily against oil and gas stocks with just 2.65% of outstanding shares sold short. Short interest is, however, higher in the oilfield services sector with Schlumberger Limited (NYSE:SLB) the most-shorted energy stock with 7.26% of its shares sold short; Halliburton (NYSE:HAL) at 6.50% of shares float while Baker Hughes (NYSE:BKR)) has short interest at 5.74%. Demand Fears Overblown Commodity analysts at Standard Chartered have argued that the demand fears acting as headwinds on oil prices are overblown. StanChart has pointed out that oil prices are currently trading well below OPEC’s preferred level of at least $90 per barrel, meaning we are likely to see production cuts extended for at least another month when OPEC ministers meet in June. StanChart has conducted a highly unscientific straw poll of traders and that weak U.S. transportation fuel demand has become a primary concern. The EIA estimates that U.S. gasoline demand declined 4.4% Y/Y in April, a number that has triggered a rapid pivot by speculative funds towards the short side of the market. StanChart has, however, pointed out that there has been a systemic downwards bias in estimates of U.S. fuel demand, with actual gasoline demand exceeding estimates in 22 of the past 24 months, while distillate demand (mainly diesel) has been revised higher in all of the past 24 months. StanChart believes the latest EIA estimate for April gasoline demand is too low with actual demand likely to surprise to the upside. Meanwhile, the commodity analysts have pointed out that OPEC+ has room to increase output by over 1 mb/d in the third quarter without upsetting global oil balances, meaning global markets can comfortably absorb the UAE’s production increase of 200,000 barrels per day. Another bullish catalyst: India’s oil demand remains healthy. India’s oil demand in April averaged 5.295 mb/d, good for 6.3% Y/Y growth, data by the Government of India’s Petroleum Planning and Analysis Cell (PPAC) has revealed. Fuel demand growth was mixed, with gasoline demand jumping 14.1% Y/Y while diesel demand grew at a more sluggish 1.4% clip. StanChart has forecast that India’s oil demand will increase by 265 kb/d Y/Y in 2024, slower than April’s 313,000 Y/Y increase but significantly faster than the International Energy Agency’s (IEA’s) forecast of 180 kb/d growth.