MonitorsPublished on Oct 15, 2020
Energy News Monitor | Volume XVII; Issue 15


Monthly Oil News Commentary: August- September 2020 



Indian state refiners have stopped buying crude oil from China-linked companies, after New Delhi’s recent regulation aimed at restricting imports from countries that it shares a border with. Since the new order was issued, state refiners have been inserting a clause in their import tenders on new rules restricting dealings with companies from countries sharing a border with India, the tender documents show. Indian state refiners decided to stop sending crude import tenders to Chinese trading firm like CNOOC Ltd, Unipec and PetroChina, among others. State refiners, which control 60 percent of India’s 5 mn bpd refining capacity, regularly tap spot markets for crude. India is the world’s third biggest oil consumer and importer and imports nearly 84 percent of its oil needs. China does not export crude to India but Chinese firms are major traders of the commodity globally. India has surplus refining capacity. Most refiners are operating their plants at below capacity as Covid-19-related restrictions have dented fuel demand.


Diesel sales dropped by a fifth in the first half of August compared with a month ago, signalling. extended regional lockdowns, sluggish economic recovery and high prices are blocking full revival of fuel demand. Demand for diesel slipped 19 percent while that for petrol gained 2 percent during August first half compared to the same period in July, according to the provisional sales data of state-run oil companies that control 90 percent of the market. The sales of jet fuel fell 2 percent and of LPG slid 6.5 percent. The sharp drop in diesel demand comes on top of the 12.5 percent drop witnessed in July over June. In the same period, petrol sales had dropped 1 percent. Compared to August 2019, sales in the first fortnight of August are down 22.5 percent for diesel, 5.5 percent for petrol, 66 percent for jet fuel and 8.5 percent for LPG. Fuel sales swiftly rose in May and June after a dramatic collapse in April due to the nationwide lockdown but the recovery started faltering in July. Diesel, which makes up 40 percent of the country’s total oil demand, is widely used for transporting goods and irrigating farms. Falling diesel sales mean lower industrial and construction activity in the country. Petrol sales appear to have stabilised and until more employees return to physical offices, the demand is unlikely to rise much. Demand for diesel and petrol may recover to the pre-Covid levels by January-February subject to the revival of the economy. Falling domestic fuel demand and an oversupplied export market have prompted refiners to cut runs. The run rate at IOC the nation’s largest refiner, has dropped to 75 percent from 93 percent in early July. IOC expects run rates to stay around 70-75 percent for the rest of the year. Rosneft-backed Nayara is unsure when its 20 mt refinery in Gujarat would again operate at full capacity as margins on most fuels are very weak

The price of diesel in the Mumbai metropolitan region has fallen and it has dropped below the ₹80-mark. The price of diesel in Mumbai was ₹79.81/l while that in Thane and Navi Mumbai had dipped to ₹79.91/l. The price of diesel in Mumbai was at a 20-month high lately at ₹80.11/l. While the price was ₹66.21/l in Mumbai on 31 May, it increased by around ₹14/l to touch at ₹80.11/l at the city pumps. The gradual dip and more likely in coming days hat this will benefit the transport sector which depends on this fuel for transportation of commodities and essential goods.

OMCs announced a 16 paise cut in the prices of diesel, first drop in the retail prices of the fuel in two months. Petrol prices were, however, left unchanged. Post the revision, diesel is priced at ₹73.40/l in the national capital while petrol continues to be priced at ₹82.08/l. In Mumbai, Petrol and diesel prices stand at ₹88.73 and ₹79.94, respectively. Diesel prices were put on hold after June 30 when the Delhi government announced the rollback on value added tax causing the prices to fall by ₹8.38/l. Since then diesel continued to be priced at ₹73.56/l. The OMCs had raised petrol prices irregularly between 16 August and 1 September by an overall ₹1.96/l.

Petrol price has maintained its rise with the fuel price increasing again after a brief one day pause while diesel holding on to its price line that it has maintained since 30 July. In the international market, crude price has also remained firm with benchmark Brent crude hovering close to $ 46/b. OMCs increased the price of petrol by 10 paisa per litre in Delhi while increasing it by nine paisa per litre in Mumbai, Kolkata and Chennai. According to IOC, petrol prices in Delhi, Kolkata, Mumbai and Chennai increased to ₹81.83, ₹83.33, ₹88.48, ₹84.82/l respectively. However, diesel prices are holding steady in these metros at ₹73.56, ₹77.06, ₹80.11 and ₹78.86/l. Petrol prices have now risen in 10 of the last 12 days and in the national capital it is now expensive by ₹1.40/l during the period.

MSRTC, which incurred huge losses during Covid-19, said it will set up 30 petrol and diesel pumps, five LNG pumps to earn more revenue. An MoU was signed between MSRTC and IOC. Two petrol and diesel pumps will be in Palghar division, three in Nashik, one in Aurangabad, four in Beed, two in Jalgaon, one in Dhule, two in Buldana, one in Jalna, two each in Ratnagiri, Akola and Wardha, one each in Yavatmal, Gadchiroli, Amravati, Ahmednagar, Satara and Pune and two at Solapur.

According to ICRA, subdued crude oil prices, on account of the Covid-19 outbreak, are expected to keep the cost of ATF low. Following the pandemic outbreak, crude oil prices declined materially, reaching a low of $19/bbl in April, thereby leading to a decline in ATF prices. However, crude oil prices have increased gradually since then, and currently range around $44/b.  Consequently, ATF prices increased sequentially by 24.1 percent in July and by 4.2 percent in August.

It’s just not electricity rates in Rajasthan that are highest in the country. Comparative VAT rates across states in the country show that people in the state cough up the highest VAT on petrol and diesel. People in Rajasthan pay 38 percent VAT on petrol and 28 percent on diesel which is highest in the country, while the fuels attract road development cess of ₹1,500 and ₹17/kl respectively. It’s not only the common man who is facing hardship. Businesses are also suffering because of the high diesel prices. Goods carriers plying through Rajasthan are not buying diesel from the state as the rates are much higher compared to neighbouring states.

Exploration & Production

Domestic crude oil production declined 5 percent in July from a year earlier mainly on 16 percent output contraction from fields operated by private players. Natural gas output fell by a tenth. The total crude output in July was 2,634 tmt with the biggest contribution of 1,739 tmt by ONGC whose output barely changed in a year, as per official data. Oil India Ltd’s production declined 8 percent in July from a year earlier. Output from fields operated by the private sector fell to 644 tmt from 764 tmt a year earlier. These fields have produced 17 percent less crude during April-July from a year earlier mainly due to sharply shrinking output from Rajasthan’s Barmer block operated by the Vedanta group. The oil ministry’s monthly review note has cited delay in enhanced recovery projects as a key reason for output decline from the Barmer block, the country’s largest onshore oilfield. The pandemic has also delayed the planned output from some of the fields operated by both the private and the state players.

ONGC has managed to save its golf courses in Ahmedabad and Vadodara after the department of disinvestment dropped a proposal to divest the company of the ‘non-core’ assets. The DIPAM, erstwhile called the department of disinvestment, had in May 2019 decreed golf courses and sports clubs owned by central public sector enterprises as non-core assets and wanted them to monetise them. It listed ONGC’s two golf courses in Ahmedabad and Vadodara as non-core assets that needed to be sold to private developers to raise money for the government. But the Ahmedabad golf course was in the middle of an oilfield and had oil wells. DIPAM dropped the two golf courses from its list a few weeks back after ONGC made a case of how selling them would mean also handing over producing oil wells to a private developer. The 9-hole Ahmedabad golf course sits in the middle of ONGC-operated 15.69 square kilometre Motera oilfield. Two of the five wells on Motera oilfield are housed in the golf course. Motera produces 245 barrels of oil per day and 16,000 cubic metres per day of gas.


As petrol and diesel prices remain around record levels, the Indian Auto LPG Coalition has said that consumers are now looking for economical alternative fuels that can save fuel costs without compromising on vehicle performance. As petrol and diesel hover around the ₹80/l auto LPG is currently priced at almost half of both the mainstream automotive fuels. Indian Auto LPG which is the third most widely used automotive fuel globally, holds a lot of promise in this scenario. In fact, conversion kit providers are reporting a rise in queries from consumers looking to cover their personal vehicles to auto LPG or CNG.

An association of LPG transporters in the north east went on an indefinite strike against the latest tender floated by PSU giant IOC. The NEPLTA, which transports cylinders from the bottling plants to the dealers, is protesting against among other things the floating of the tender from Kolkata instead of Guwahati, lowering of the existing rates and increasing the carrying capacity. Because of the strike loading and supplying of finished cylinders from the company’s 10 bottling plants have been affected and is likely to impact the stock at retail selling points of the distributors in coming days. IOC currently rolls out around 150,000 cylinders every day for its customers across the North East. It has around 850 distributors in the region. NEPLTA operates around 1,400 trucks to transport LPG cylinders from IOC’s bottling plants to various distributors across Assam.

The government has completely eliminated the need to provide subsidy on domestic cooking gas as the global fall in oil prices and frequent rise in LPG or cooking gas cylinder price has brought the price of the common man’s fuel closer to market rates. As of 1 September, the price of non-subsidised and subsidised 14.2 kg cooking gas is identical at ₹594/cylinder. What this means is that government would no longer need to pay subsidy under the DBT into the account of beneficiaries. In fact, with the price gap between the subsidised and non-subsidised cooking gas narrowing since early this fiscal, the government has not made a any cash transfers into the accounts of beneficiaries for the last four months. With the development, the government could easily make a saving of over ₹200 bn in FY21 towards LPG subsidy. This would be huge given the pressure on the government to step up expenditure for Covid-19 relief schemes. The government has allocated ₹409.15 bn as petroleum subsidy for FY21, a 6 percent increase from ₹385.69 bn allocated for the last fiscal. Out of this, the allocation for LPG subsidy has been increased to ₹372.56 bn for the current year. But so far in the first quarter period, the government had to draw just about ₹19 bn from the subsidy provisions. India has about 277.6 mn LPG consumers. Of these, around 15 mn are not eligible to get LPG subsidy since December 2016 because they have an annual taxable income above ₹1 mn. The good news is that with the developments in the past few months, the government had completely eliminated oil subsidy and is spending the savings on other welfare activities. But this could mean that if there is any spike in LPG prices hereon, the government may pass on a portion of the burden to consumers by raising LPG prices. Mangala oilfield in Thar desert of Rajasthan – the largest onland oil find in the last three decades – has completed 11 years of continuous production, its operator Cairn Oil & Gas said. The company’s gross proved, and probable reserves and resources base is 1.2 bn barrels of oil equivalent as on 31 March 2020. Cairn holds 70 percent in the Barmer block while ONGC has a 30 percent stake. Vedanta Ltd said the economic and social impact of oil production from Rajasthan has indeed made the Mangala oil field the crown jewel for the state and for India.

LPG customers may continue receiving subsidy into their bank accounts post privatisation of PSU oil refiner and retailer BPCL, with the government clarifying to potential investors that the present system would not be changed. Several potential bidders for BPCL in their query have raised the issue of subsidy on cooking gas, whether such subsidy would be borne by the new owners post the sale of government stake in the company. The government clarified that the present system where the oil companies pay the subsidy amount and the government reimbursed such payments would continue. Private oil companies such as RIL, Nayara Energy do not get any subsidy support from the government for cooking gas. So if these companies were to sell domestic LPG cylinders, it would be priced at market rates.

Construction work on the LPG bottling plant of BPCL at Kappalur on the outskirts of Madurai, has been completed and is to be commissioned soon. The work began in February 2019 on 22 acres at an outlay of ₹800 mn – excluding the land cost. It is the 5th bottling plant of BPCL in Tamil Nadu. The plant refilling 12,000 cylinders a day will be despatching 40 loads of cylinders to Madurai, Theni, Dindigul, Sivaganga and Ramanathapuram districts that have monthly demand for 4.5 lakh cylinders. Of the 55 lakh Bharat Gas customers in Tamil Nadu – 24.6 percent of the LPG market in the state – the Madurai plant will cater to the requirements of 890,000 customers. The plant has been planned to meet the futuristic requirements of the region that is seeing a steady increase in LPG connections. During the lockdown, online payment for LPG refills has also increased manifold. While only 1.5 percent consumers opted for the online modes of paying for their refills prior to the lockdown it has now increased to 8 percent.


The Covid-19 disruptions have changed the structure of the country’s oil and gas sector with the share of OPEC crude in Indian oil imports falling to a decade-low level in July. As per data with industry sources, the oil cartel’s share in India’s oil imports fell to about 67 percent in July as against highs of 75-80 percent maintained earlier. While the share of OPEC crude has been reducing for some time in wake of India expanding its oil import basket to include newer territories in Africa, South and North America, the fall in July has come in wake of Covid-19 which has squeezed demand in the domestic market. The lower domestic demand has also pushed Indian refiners to operate their refineries at 70-80 percent capacity. This means they are using less crude to produce products. This has also impacted imports of crude. Iraq and Saudi Arabia are the two of country’s largest oil sourcing markets. Iraq currently enjoys the top position among markets that supply crude to India.

India’s crude oil imports fell in July to their lowest since March 2010 as fuel demand slowed amid renewed coronavirus-induced lockdowns and closures of refinery units for maintenance, government data showed. Crude oil imports last month slumped about 36.4 percent from a year earlier to 12.34 mt, or 2.92 mn bpd, data from the PPAC of the MoPNG showed. India is also Asia’s third-biggest economy, which imports and exports refined fuels. Refined product imports surged 46.4 percent to 4.07 mt year-on-year, mainly due to a sharp jump in India’s fuel oil imports. Fuel oil imports rose to record 1.22 mt in July from 127,000 tonnes a year ago. Reliance Industries Ltd, operator of the world’s biggest refining complex, has been buying some straight-run fuel oil from countries including Iraq to process at its revamped coker, to maximise refining margins. However, exports of refined products fell 22.7 percent in July to 3.92 mt, their lowest since April 2018. Diesel shipments continued to hold a major share of the total exports at 2.06 mt, down 21.1 percent year on year, the data showed.

Cross Border Trade

India and Nepal had a JWG meeting, during which the two sides discussed future areas of cooperation in the petroleum energy sector, including possibilities of new pipelines for supply of petroleum products to the Himalayan nation, the Indian embassy said. The second meeting of India-Nepal JWG on oil and gas cooperation was held through video conferencing, the embassy said. Representatives from the Embassy of India in Kathmandu, Indian Public Sector Oil and Gas companies such as IOC, GAIL (India) Ltd and HPCL, Ministries of Finance and Foreign Affairs of Nepal and NOC participated in the JWG meeting. The JWG mechanism was set up in 2017 to further strengthen the long-standing cooperation between IOC and NOC and diversify areas of cooperation between the two countries in the oil and gas sectors.

Rest of the World

Crude Prices

According to the IEA the global economy is likely not headed for any major slowdown due to Covid-19 but piled-up storage and uncertainty over China’s oil demand cloud oil markets’ recovery. Keisuke Sadamori, IEA director for energy markets and security, said the outlook for oil was in the midst of either a second wave or a steady first wave of the coronavirus. The IEA cut its 2020 oil demand forecast in its monthly report on 13 August, warning that reduced air travel would lower global oil demand by 8.1 mn bpd. China, the world’s largest crude importer, emerged from an economic lockdown sooner than other major economies and used its financial muscle to make record oil imports in recent months, a rare bright spot amid global demand destruction.

Middle East & Africa

Saudi Arabia’s state oil company has suspended a deal to build a $10 bn refining and petrochemicals complex in China, according to people familiar with the matter, as the company slashes spending to cope with low oil prices. Saudi Arabian Oil, or Aramco, decided to stop investing in the facility in China’s Northeastern province of Liaoning after negotiations with its Chinese partners. The oil-price crash and the virus’s impact on energy demand have changed the calculations for energy companies’ projects around the world. Aramco plans deep cuts to its capital spending as it tries to maintain a $75 bn dividend amid low crude prices and rising debt.

Saudi Arabia cut pricing for oil sales to Asia and the US for October shipments, a sign that the world’s biggest exporter may see fuel demand wavering amid flare-ups in the coronavirus. State oil producer Saudi Aramco is cutting its benchmark Arab Light crude more than expected and lowering the grade to a discount for the first time since June for buyers in Asia. It’s the second-consecutive month of cuts for barrels to Asia. Aramco will also trim pricing for lighter barrels to northwest Europe and the Mediterranean region. Aramco is reducing pricing to Asia for October shipments of the Light grade by $1.40/b to 50 cents below the regional benchmark. The company was expected to pare pricing by $1/b to a 10-cent discount, according to a survey of eight traders and refiners. Oil demand has plunged this year as the pandemic forced governments to lock down economies, airlines to cancel fights and workers to stay at home. New tax regulations on shipments overseas may cost Russian exporters of fuel oil as much as $1 bn a year, customs data show.

Iraq’s crude oil exports have fallen so far in August, according to shipping data and industry sources, suggesting OPEC’s second-largest producer is delivering more of its pledge to cut supply under an OPEC-led deal. Southern Iraqi exports up to 25 August have dropped to 2.63 mn bpd, according to the average of figures from Petro-Logistics, which tracks tanker shipments, and Refinitiv Eikon data. The OPEC and allies, known as OPEC+, unwound part of a record supply cut from 1 August as demand starts to recover from the coronavirus crisis. Iraq said it would cut production by another 400,000 bpd in both August and September to compensate for its overproduction in the earlier three months.

Tehran sent several gasoline cargoes to Venezuela to help it overcome fuel shortages, as well as equipment to help state oil company PDVSA repair its dilapidated refineries. The US seized four cargoes of Iranian gasoline en route to Venezuela.

Nigerian energy company Lekoil Ltd needs to raise around $100 mn before it can start drilling in its Ogo oilfield.  The company was able to finance much of the Ogo preparation work with cash from its producing field, Otakikpo, and will drill once it raises the money. Lekoil expects to spend $1 bn developing Ogo through its life cycle. Lekoil is also targeting a 40 percent reduction in annual general and administrative expenses due to this year’s oil price crash.

Libya’s National Oil Corp said Germany stressed the need for an immediate end to the blockade of oil facilities in Libya at a meeting in Tripoli. Factions loyal to eastern commander Khalifa Haftar began the blockade of oil terminals and fields on 18 January, gradually reducing national output to less than 100,000 bpd from around 1.2 mbpd.

Europe & UK

Oil and gas investment in Norway, Western Europe’s top producer, will rise more this year and decline less in 2021 than predicted a few months ago, an industry survey by the statistics office showed. Petroleum companies, including Equinor, have revived several projects after the Norwegian parliament in June granted tax incentives to spur investment and safeguard jobs after a crash in oil prices sparked by the onset of the Covid-19 pandemic. Analysts said the expected drop next year will dampen Norway’s overall economic recovery, while DNB Markets said it reflected a lack of large oilfield projects to develop in the years ahead.

Britain’s OGA awarded 259 offshore blocks to 65 companies for oil and gas exploration in areas close to producing fields with existing infrastructure, it said. The 32nd offshore licensing round was launched last July, and the OGA has said it would suspend new licensing rounds in 2020/21. Premier Oil, which is currently restructuring its debt and plans to raise new equity, was awarded blocs near its Tolmount and Catcher fields. US crude oil and fuel stockpiles fell sharply as Hurricane Laura shut offshore production and refining facilities, the EIA said. Crude inventories fell by 9.4 mn barrels in week to 28 August to 498.4 mn barrels, according to data, compared with analysts’ expectations in a poll for a 1.9 mn barrel drop. That was driven by a record fall in production, which dropped by 1.1 mn bpd to 9.7 mn bpd, its lowest since January 2018, as most US offshore facilities were shut as a precaution ahead of Laura.

France’s Total has restarted oil drilling in Angola and new exploration ships will also soon resume work. All drilling activity ground to a halt in Africa’s second biggest oil exporter as global oil prices cratered amid the coronavirus pandemic. Total had four drilling rigs operating at the start of 2020 and, with crude production likely at around 600,000 bpd for the year, is the top foreign operator in Angola, accounting for nearly half of national production. The halt to exploration came amid a long-term slump in Angola’s production volumes due to ageing fields and lack of investment. It dealt a setback to a drive by Angolan authorities to sell off key state oil assets, including parts of the state oil company Sonangol, and to drum up foreign investment.


Australia’s Woodside Petroleum has exercised its right to match a $400 mn offer by Russia’s Lukoil to buy Cairn Energy’s entire stake in the Sangomar oil project in Senegal. The acquisition takes Woodside’s interest in the Rufisque, Sangomar and Sangomar Deep offshore joint venture to about 68 percent, making it the largest shareholder. It will remain as operator of the $4.2 bn project. Lukoil, which in July offered $400 mn for Cairn’s stake, is on a US list of sanctioned Russian firms, including for transactions related to deepwater oil projects.


Moscow has been looking for ways to shore up state coffers, which have been hit by the coronavirus crisis and the oil and gas industry is seen as a central source of income, generating around a third of the budget revenues. The state has introduced new customs rules for the export of fuel oil, which took effect on 14 September, to eliminate a loophole that has previously allowed sellers to avoid hefty export duty. Some exporters have used the loophole to pass off the fuel oil and another heavy refining products, including vacuum gasoil, for duty-free products, such as heavy oil residue. Data shows that producers of heavy oil products could have earned an extra $1 bn last year by exporting more than 12 mt of products using the scheme. Many refineries have enjoyed high refining margins thanks to the loophole. Reuters calculations show that at a domestic oil price of $47.5/t export duty is likely to rise to $31/t from $7/t for exports of light oil products.


Imports at the US Gulf fell by 501,000 bpd to a record low of 781,000 bpd. Net US crude imports fell 655,000 bpd, EIA said. Gasoline stocks fell 4.3 mn barrels in the week, the EIA said, compared with expectations for a 3 mn barrel drop. Refinery crude runs fell by 844,000 bpd and refinery utilization rates fell by 5.3 percentage points to 76.7 percent of total capacity, the EIA said. US crude oil shipments to China will rise sharply in coming weeks, US traders and shipbrokers and Chinese importers said, as the world’s top economies gear up to review a January deal after a prolonged trade war. Chinese state-owned oil firms have tentatively booked tankers to carry at least 20 mn barrels of US crude for August and September, the people said, moves that may ease US concerns that China’s purchases are trending well short of purchase commitments under the Phase 1 of the trade deal. China had emerged as a top US crude buyer, taking $5.42 bn worth in 2018 before trade tensions brought flows to a near halt. In January, China pledged to buy $18.5 bn of energy products including crude oil and natural gas over its 2017 level, implying total value of about $25 bn this year. Its US crude purchases through June 30 amounted to $2.06 bn, according to data from the US Census Bureau, reflecting the Covid-19 pandemic downturn and the limited impact of the Phase 1 deal.

Energy firms shut 57.6 percent, or 1.07 mn bpd of offshore crude oil production in the US Gulf of Mexico because of the twin threat from Hurricane Marco and Tropical Storm Laura, the US government said. Workers have been evacuated from 114 production platforms out of the 643 manned platforms in the Gulf of Mexico, according to the federal Bureau of Safety and Environmental Enforcement.


China’s crude oil imports in August climbed 13 percent from a year earlier, buoyed by hefty orders placed earlier this year when global oil prices collapsed and as cargoes previously delayed by congestion at arrival ports finally cleared customs. Imports were 47.48 mt the General Administration of Customs data showed, equivalent to 11.18 mn bpd. That was well below the monthly record of 12.94 mn bpd set in June this year, but easily beat last year’s overall monthly average of 10.11 mn bpd. China, the world’s top crude oil importer, has been shipping in historically high volumes since May as bargain hunters snapped up cheap supply. Amid the jump in cargoes, oil storage tanks have filled up and major Chinese ports are still clogged, even though congestion has eased of late. Analysts expect the number of shipments to ease as Chinese fuel demand has reached a peak, while oil prices are steadily recovering. For refined oil products, customs data showed exports in August jumped to 4.27 mt from 3.21 mt in July, as well as being 4.8 percent higher than in the same month last year. Meanwhile total natural gas imports, including liquefied natural gas and piped gas, reached 9.36 mt, up from both 7.35 mt in July and 8.34 mt in August 2019.

China’s diesel demand is likely to hit a record this year powered by trucking activity, as Beijing’s aggressive stimulus fuels a construction and delivery boom and a speedy recovery in heavy machinery sales, analysts said. The stimulus measures have helped to reverse the damage from the coronavirus crisis and a revival in diesel consumption is a signal that China’s economic recovery is gaining traction. Diesel, which accounts for some 30 percent of total Chinese oil demand, will likely expand around 2 percent in 2020 and is outperforming gasoline and aviation fuel, both of which have been harder hit by travel curbs and look set to contract, according to analysts at SIA Energy and FGE.

S America

Brazil’s Petrobras has initiated the sale process for a group of 26 onshore and shallow water oilfields and a small nearby refinery in the northeastern part of the country, as the state-run company forges ahead with its ambitious divestment program. Petrobras said it had begun the teaser phase for the sale of the oilfields and the nearby Clara Camarao refinery in the state of Rio Grande do Norte. The oilfields, known collectively as Polo Potiguar, produced roughly 23,000 bpd of oil in 2020 and 124,000 cubic meters per day of gas, while the refinery has an installed capacity of 39,600 bpd. Petrobras is years into a drive to sell of tens of billions of dollars of non-core assets in a bid to reduce its hefty debt load and sharpen its focus on deepwater oil production. Iraq said it would cut its oil production by another 400,000 bpd in both August and September to compensate for its overproduction in the past three months. Iraq’s output cut was in addition to the 850,000 bpd it had committed to cut in August and September under an OPEC+ supply pact. The total reduction to Iraq’s production in August and September will amount to 1.25 mn bpd for each month.

An idled oil storage facility off Venezuela’s eastern coast is in “satisfactory” condition, an official with state company PDVSA said, after a series of incidents in recent months raised concerns about environmental hazards. About 1.3 mn barrels of Corocoro crude have been stuck for over a year aboard the Nabarima floating storage and offloading facility, part of the Petrosucre joint venture between PDVSA, as the company is known, and Italy’s Eni SpA, as US sanctions have complicated the nation’s exports. Eni had said that the vessel was “stable” and that it was evaluating options to offload the crude, some of which would need authorization under the US sanctions regime.

Crude exports from Venezuela are facing growing delays due to excess water and other impurities in cargoes loaded at PDVSA’s main terminal, according to internal company documents, as US sanctions worsen disruptions to the oil industry. In recent years, PDVSA has been forced to give price discounts to customers due to high levels of water and metals in its oil shipments as a dire recession, mismanagement and US sanctions imposed since 2019 contributed to lack of chemicals and maintenance for storage tanks and pipelines. Improper handling of the heavy crude produced and blended mainly in Venezuela’s eastern Orinoco Belt, which already has a high sulfur content, has also exacerbated the issue, according to the sources. Venezuela’s oil exports sank to about 400,000 barrels per day (bpd) in June and July – the lowest level in almost 80 years – as the US ramped up sanctions on PDVSA’s trade partners, customers and vessel owners in an effort to oust President Nicolas Maduro. The loading delays are another blow for PDVSA’s dwindling exports and revenues, with shipments slipping still further to around 300,000 bpd of crude and refined products so far this month. In July, two vessels scheduled to carry a total of 1.5 mn barrels of heavy Merey 16 crude from Venezuela’s Jose port – the Balita and Sounion bound for Asia – stopped loading due to excessive water, leading to delays, according to the documents.

Mexico’s oil output hit a record low in July at 1.605 mn bpd, down slightly for both state-run Pemex and upstart private producers and putting the country’s oil patch on track for its lowest production since the 1970s. Pemex, produced just 1.548 mn bpd in July while private oil companies pumped about 57,000 bpd during the month, both figures down slightly from June, data from oil regulator CNH showed. Pemex’s July output marks the lowest amount of crude extracted since November 1979, when the then-monopoly producer pumped 1.615 mn bpd, according to energy ministry data. Its production has steadily declined each year since reaching a peak of 3.4 mn bpd in 2004, and was most recently hit by an oil price rout earlier this year, budget cuts, as well as a two-month negotiated output cut with other major oil producing countries. The ailing Mexican oil giant saw its monopoly end with a landmark 2013. 2014 energy reform that for the first time allowed private producers to operate oil fields on their own. Since the beginning of this year, Mexico’s crude oil production has dipped nearly 7 percent, according to the CNH data. In July, Pemex produced about 96 percent of national output, according to the CNH, while the private operators, such as Italy’s Eni and Canada’s Renaissance Oil Corp, contribute around 4 percent.

IOC: Indian Oil Corp, bpd: barrels per day, LPG: liquefied petroleum gas, MSRTC: Maharashtra State Road Transport Corp, OMCs: Oil Marketing Companies, ONGC: Oil and Natural Gas Corp, LNG: liquefied natural gas, VAT: Value Added Tax, MoU: Memorandum of Understanding, bbl: barrel, ATF: aviation turbine fuel, kl: kilolitre, DIPAM : Department of Investment and Public Asset Management, NEPLTA: NE Packed LPG Transporter Association, FY: Financial Year, mn: million, bn: billion, mt: million tonnes, CNG: compressed natural gas, tmt: thousand metric tonne, PSU: Public Sector Undertaking, RIL: Reliance Industries Ltd, BPCL: Bharat Petroleum Corp Ltd, OPEC: Organization of the Petroleum Exporting Countries, PPAC: Petroleum Planning and Analysis Cell, MoPNG: Ministry of Petroleum and Natural Gas, JWG: Joint Working Group, NOC: Nepal Oil Corp, HPCL: Hindustan Petroleum Corp Ltd, kg: kilogram, IEA: International Energy Agency, EIA: Energy Information Administration, PDVSA: Petróleos de Venezuela, OGA: Oil and Gas Authority, Petrobras: Petroleo Brasileiro SA, Pemex: Petroleos Mexicanos, US: United States


India’s Nayara Energy sees diesel recovery to pre-Covid-19 level by end-2021

15 September. India’s diesel demand growth is likely to return to pre-Covid-19 levels by the end of 2021 or early 2022, Indian oil refiner Nayara Energy vice president Ashutosh Deshpande said. Deshpande said a recovery in economic activity, good monsoon rains and the festival season in Indian would augur well for the diesel demand. India’s diesel demand has already recovered from April’s lows, when the nation was under complete lockdown to prevent spread of Covid-19. But refinery runs will remain subdued and there could even be further cuts in the short term, Deshpande said. Deshpande said an emerging trend in the coming years would be for complex refiners to look to get into the petrochemical or retail spheres. Indian Oil Corp (IOC) said it will expand its petrochemicals capacity and integrate it with its textile business to help offset the impact of low refining margins.

Source: The Economic Times

Cairn’s Rajasthan oil block licence stuck in cost dispute

14 September. Cairn India’s Rajasthan oil block licence extension is stuck in a dispute over cost and the firm is literally surviving on monthly extensions by the government. The government had in October 2018 agreed to extend by 10 years the contract for Barmer fields in Rajasthan after the expiry of the initial 25-year contract period on 14 May 2020. This extension was subject to Vedanta Group firm agreeing to raise the share of the government’s profit from oil and gas produced from the block by 10 percent. Pending resolution, the government first gave the company a three-month extension of the production sharing contract (PSC) for the Rajasthan block, which houses the prolific Mangla, Bhagyam and Aishwariya oilfields, till 15 August 2020. It subsequently extended the PSC by 15 days and then by a month till 30 September. The block, it said, produces more than 20 percent of India’s crude oil production and has the potential to double this over the next 3 years.

Source: The Economic Times

Cancel nod for ONGC’s oil drilling: Ramadoss

14 September. PMK founder S Ramadoss has urged the Centre to cancel the permission granted to ONGC limited to explore eight more new oil wells in delta districts. An expert committee had granted ONGC (Oil and Natural Gas Corp) permission to explore 24 oil wells in delta districts in 2013. Of them, ONGC has already established 16 wells. Though ONGC had kept the proposal for drilling eight wells idle for months, they had recently applied for license renewal. The permission should be cancelled and the Tamil Nadu government should take the issue with the union government and pressurize to withdraw the license and do the needful to make ONGC wind up from the delta from its entire activities.

Source: The Economic Times

400 new petrol pumps, 1.2k LPG distributors opened in Bihar in last 6 years: Pradhan

14 September. LPG connections in Bihar have increased recently. In the last 6 years, 400 petrol pumps became operational in Bihar while 1,200 LPG (liquefied petroleum gas) distributors opened. This generated employment for 20,000 youths, Oil Minister Dharmendra Pradhan said. Earlier in the day, Prime Minister Narendra Modi dedicated three projects including the Durgapur-Banka section of the Paradip-Haldia-Durgapur Pipeline Augmentation Project and two LPG Bottling Plants to the nation.

Source: The Economic Times

India’s fuel demand dips most since April

11 September. India’s fuel demand in August posted its biggest decline since April as local lockdowns put brakes on economic activity and transportation, data from the oil ministry’s Petroleum Planning and Analysis Cell (PPAC) showed. Petroleum product sales fell to 14.39 million tonnes (mt) in August, down 7.5 percent over the previous month and about 16 percent from a year earlier, data showed. Fuel demand had slumped by a record 48.6 percent in April to 9.4 mt as the government imposed a nationwide lockdown in an attempt to curb the spread of coronavirus. Sale of diesel, the most consumed fuel in the country, fell 12 percent to 4.84 mt in August from 5.51 mt in the previous month. On an annual basis, the demand for diesel declined by 20.7 percent. Petrol sales fell 7.4 percent year-on-year to 2.38 mt although it rose 5.3 percent from 2.26 mt in July as commuters preferred driving to using public transportation. LPG (liquefied petroleum gas) sales were down five percent year-on-year to 2.2 mt, while kerosene demand fell 43 percent to 1,32,000 tonnes. Oil Minister Dharmendra Pradhan had previously stated that sales would return to normal by festival season but the local lockdowns being imposed in several states has prolonged the return to normalcy.

Source: The Economic Times


Oil India diverts gas from blown out well in Assam’s Baghjan

14 September. In order to reduce the surface level well head pressure of the blowout well number 5 at Assam’s Baghjan, the process of restoration of diversion of the flow of gas from the well head to Baghjan EPS and two flare pits successfully implemented, Oil India Ltd said. On 27 May this year, a blowout occurred after the well suddenly became active while Oil India was carrying out work over operations in the gas-producing well Baghjan-5 under Baghjan Oilfield.

Source: The Economic Times

CNG sales rise to 85 percent of pre-Covid level in Delhi-NCR

10 September. CNG (compressed natural gas) sales in Delhi have risen to 85 percent of the pre-lockdown level as the Arvind Kejriwal government progressively opened up markets, allowed businesses and other economic activities to resume after the Centre began lifting curbs since June. Data from Indraprastha Gas Ltd (IGL), the sole supplier in the capital and most of the towns in neighbouring UP (Uttar Pradesh), show CNG sales averaging 27.5 lakh kg (kilogram) per day in August against 34.5 lakh kg per day in the same month a year ago. Data shows current daily average sales at 32 lakh kg per day, or 92 percent of the pre-Covid average sales of 34.5 lakh kg per day. Sales had slumped by 90 percent to 3.7 lakh kg per day in April as the countrywide lockdown to check coronavirus infections from spreading shuttered nearly all economic activities and all vehicular movements, except emergency services, were halted. This forced IGL to close most of its stations in the NCR, though the company maintained round-the-clock service throughout the lockdown period.

Source: The Economic Times             

India to launch 11th city gas licensing round soon: Pradhan

10 September. India will soon launch a bid round to give out licences for retailing gas in cities to help extend the coverage of environment-friendly fuel to about 500 cities, Oil Minister Dharmendra Pradhan said. During 2018 and 2019, sector regulator PNGRB (Petroleum and Natural Gas Regulatory Board) gave out licences to retail CNG (compressed natural gas) to automobiles and piped cooking gas to household kitchens in 136 geographical areas. This extended coverage of the city gas network to 406 districts and around 70 percent of the country’s population. The push for city gas expansion is part of the government plan for raising the share of natural gas in the country’s energy basket to 15 percent by 2030 from the current 6.3 percent. The 11th bid round is being planned around a new pipeline being constructed from Angul in Odisha to Mumbai in Maharashtra to ferry natural gas between the east and west coast. GAIL (India) Ltd has started work on the Angul-Mumbai pipeline, he said. 17,000 km (kilometre) of gas pipelines particularly in the eastern part of the country are being built to connect gas sources with consumption centres. Also, the capacity of liquefied natural gas (LNG) import terminals is being raised to meet rising domestic demand, he said. He said retail outlets dispensing CNG have risen from 938 in 2014 to 2,307.

Source: The Economic Times 


India’s coal import drops 35 percent in August on lower demand from power, cement players

13 September. India’s coal import declined by 34.9 percent to 12.46 million tonnes (mt) in August on account of subdued demand for the dry fuel from consuming sectors like power and cement. The country imported 19.14 mt of coal in August last year, according to provisional compilation by mjunction, based on monitoring of vessels’ positions and data received from shipping companies. Also, the first five months of the current fiscal saw 32.51 percent decline in coal import at 73.08 mt, over 108.29 mt during the year-ago period, it said. Of the total imports in August, non-coking coal’s shipment was at 8.87 mt and coking coal at 2.18 mt. Coal India Ltd (CIL), which accounts for over 80 percent of domestic coal output, has been mandated by the government to replace at least 100 mt of imports with domestically-produced coal in the ongoing fiscal. The Centre had also announced several relief measures for CIL consumers, including the power sector.

Source: The Economic Times

Global NGOs against auctioning of coal blocks by India

11 September. Global and Indian NGOs have asked India to stop the use of coal for reviving the country’s economy as coal mines are mostly concentrated in the lands of indigenous people who have been “bearing the brunt” of the Covid-19 pandemic. The Denmark-based International Work Group for Indigenous Affairs and the New Delhi-based Indigenous Lawyers’ Association of India, besides National Campaign Against Torture, made the appeal ahead of the auctioning of 41 coal blocks slated for 29 September.

QuIck Comment

24 hour guarantee of power supply must precede electric cooking!


Source: The Hindu

WCL aims to double coal despatch capacity through rail mode

10 September. Western Coalfields Ltd (WCL) an arm of Coal India Ltd (CIL), has prepared an ambitious road map to almost double its coal despatch capacity through the rail mode. WCL has set ‘Mission 100 Days’ agenda to streamline activities to reach peak despatch of 50 rakes per day from January next year with support from railways. The coal ministry said that WCL has drawn up an ambitious road map to meet additional demand of consumers of power sector. On discussion with state gencos (generation companies) of Maharashtra, Gujarat, Karnataka, Madhya Pradesh as well as NTPC Ltd and independent power producers, WCL expects additional coal demand of around 25 million tonnes per annum from these consumers after getting swapped from other subsidiaries of CIL and Singareni Collieries Company Ltd (SCCL). With expected substantial increase in demand, WCL has taken pro-active steps to gear up for additional coal crushing, transporting and loading facility for increasing coal despatch through rail to a level of 50 rakes per day from next January. Current year average is 19 rakes per day due to less coal demand till now. WCL despatches about 90 percent coal through the central railway. WCL produced 57.6 mt of coal and despatched 52.5 mt of coal during 2019-20. With a coal stock of over 14 mt in the beginning of 2020-21 and a production target of 62 mt this year, the company will have more than 75 mt of coal available for its consumers. WCL has planned to reach a production of 75 mt by 2023-24 and 100 mt by 2026-27.

Source: The Economic Times


Power ministry plans to make households shift to electric cooking

14 September. The government will not be content with India moving around in electric cars and buses by 2030. After providing power connections to all willing households in the country, the Centre is turning its focus on making them switch to electric cooking “in a big way”. Electricity is the future of India and most of its infrastructure will be powered by electricity including cooking completely on electricity, giving poor strata of society a cheaper medium of cooking, Power Minister R K Singh said inaugurating a slew of community-focused NTPC Ltd projects in Bihar. A ‘Power Foundation’ is

QuIck Comment

Shift in power to consumer will transform electricity sector!


being set up under the ministry for the purpose he said, adding large-scale use of electric cooking will make the economy self-reliant and “give us independence” from imports. India is the world’s second-largest importer of LPG, which is main cooking fuel for nearly 280 mn households with a connection, followed by piped natural gas in several cities. Niti’s objective was to free up LPG connections for poor households by getting urban families switch to electric cooking. Niti’s plan did not get many takers at that point as the power supply was still patchy in rural parts and many rural households still did not have a connection. The situation is different with 100% household electrification and surplus generation capacity.

Source: The Economic Times

Peak power demand back to normal, surpasses last year level

11 September. Peak power demand is back to normal as it has touched 174.33 GW, surpassing the highest level of 173.15 GW in September last year, showing spurt in commercial and industrial activities in the country. Incidentally, the peak power demand met had reached its previous highest level of 173.15 GW on 9 September last year, as per the power ministry data. Peak power demand met is the highest energy supply during the day across the country. The government had imposed the lockdown from 25 March to fight the deadly coronavirus in the country. It also resulted in lower commercial and industrial demand in April onwards. The government started easing lockdown restrictions from 20 April 2020. The relaxation in lockdown resulted in perking up electricity demand in the country due to the increase in economic activities. The experts had earlier exuded confidence that the power demand will not only be back to normal levels but will also achieve marginal growth from September onwards. However, bucking the trend, the slump in peak power demand met rose marginally to 5.65 percent in August from 2.61 percent in July.

Source: The Economic Times

Electricity consumer rights rules to be notified soon

10 September. The government has proposed to notify rules to ensure minimum service standards to electricity consumers. The draft Electricity (Rights of Consumers) Rules, 2020 seek to specify time limits for distribution companies for giving new electricity connections, and addressing grievances including the common ones like delayed and accumulated bills, faulty meters etc. They entitle consumers to get rebates on power bills which are not served in time and other compensation from discoms (distribution companies) which fail to timely address grievances. The draft rules, which specify standards of performance, aim to introduce corporate culture in the distribution utilities, according to the government. Presently, the Consumer Charter under the Electricity Act 2003 provides a synopsis of rights of consumers of electricity but most states have not implemented them.

Source: The Economic Times

PGCIL commissions first leg of Raigarh-Pugalur HVDC transmission project

9 September. Power Grid Corp of India Ltd (PGCIL) announced the commissioning of the first leg of the 6,000 MW Raigarh-Pugalur high voltage direct current transmission project. PGCIL has commissioned Pole-1 of the Raigarh (Chhattisgarh) to Pugalur (Tamil Nadu) 1,765 kilometre (km) high voltage direct current (HVDC) transmission system comprising 1,500 MW capacity, the company said. The total capacity of Raigarh-Pugalur HVDC transmission system is 6,000 MW.

Source: The Economic Times 


Fossil fuel usage set to drop for 1st time

15 September. India’s thirst for fossil fuels will outpace China’s by a big margin, even though globally, consumption will shrink for the first time in modern history through 2050 as climate initiatives propel renewable energy while the coronavirus pandemic leaves a lasting scar on demand, the benchmark BP Energy Outlook 2020 said. But globally, fossil fuel demand may never recover to pre-coronavirus levels as the pandemic hastens “fundamental restructuring” of the energy business. The share of fossil fuels is set to decline from 85 percent of total primary energy demand in 2018 to between 20 percent and 65 percent by 2050 in the three scenarios, it said.

Source: The Economic Times

Adani Green says on track to have 25 GW capacity by 2025

QuIck Comment

Subsidy driven capacity creation in solar sector may lead to overcapacity!


12 September. Adani Green Energy has said that it is on track to achieve its target to have 25 GW of renewable energy capacity by 2025 through organic and inorganic growth. The company bagged an 8 GW solar bid in Q1 FY21 for a project that involves $6 bn investment. The investment will create 400,000 direct and indirect jobs, and the renewable energy generated will displace 900 mt of carbon dioxide.

Source: The Economic Times

MYSUN commissions 1.75 MWp rooftop solar plant in Bhilwara

11 September. MYSUN said that it has commissioned a rooftop solar plant in Rajasthan for a reputed textiles company. Located in Bhilwara, this 1.75 MWp (megawatt peak) solar power project is an amalgamation of clean aesthetics with advanced solar technology, the company said. The solar plant will help the company save approximately ₹19 mn every year on their power bills. With this plant, MYSUN has consolidated its leading position in Rajasthan for rooftop solar solutions.

Source: The Economic Times

Thyssenkrupp teams up with Amplus to set up solar plant at Pune facility

10 September. Thyssenkrupp Elevator India said it has collaborated with Amplus Solar to set up an onsite solar power unit at their Pune facility. It said that the Gurugram-based solar firm had recently commissioned the 820 kilowatt (kW) solar power plant at the facility, which included 755 kW of rooftop solar and a 65 kW carport. A power purchase agreement to procure 820 kW of solar power for 20 years from Amplus Solar has also been signed, it said.

Source: The Economic Times

Rays Experts commission 10 MW solar capacity in Haryana

10 September. Rays Experts said it has commissioned 10 MW solar capacity in a solar park in Bhiwani district of Haryana. The breakthrough has put Haryana on the map of India’s solar power generation with a 10 MW solar park, which is currently lighting up around 15,000 homes across the region, the company said.

Source: The Economic Times

Karnataka CM distributes solar power operated carts to beneficiaries

10 September. As part of ‘Atmanirbhar Bharat’, a mission envisioned by Prime Minister Narendra Modi, Karnataka Chief Minister (CM) B S Yediyurappa distributed solar power operated tricycle carts for vending fresh fruits and vegetables to select beneficiaries. The carts have been designed and developed by the Indian Council for Agricultural Research and the Indian Institute for Horticulture Research.

Source: The Economic Times


China’s August crude oil runs rise to second-highest on record

15 September. China’s crude oil throughput in August rose from a year ago, reaching the second-highest on record, as refineries worked to digest record imports brought in earlier this year. The country processed 59.47 million tonnes (mt) of crude oil in August, or 14 mn barrels per day (bpd), up 9.2 percent from a year earlier, according to the National Bureau of Statistics (NBS) data. That is second only to the record of 59.56 mt in July and up from 54 mt in August 2019. Total throughput during the first eight months of 2020 reached 438.03 mt, or 13.1 mn bpd, up 3.2 percent from the same period in 2019. Chinese oil refineries have been cranking up production since May to digest record-high crude oil imports and to meet fuel demand that rebounded after coronavirus restrictions eased. But domestic fuel consumption is peaking and overseas markets remain tepid, weighing refineries down with excess supplies that could force them to ship more despite poor export margins. The data showed China’s oil output in August at 16.65 mt, up 2.3 percent from the same month a year earlier. Over the January to August period, China produced 130.15 mt of crude oil, up 1.5 percent on the year.

Source: The Economic Times

Australia proposes paying oil refiners billions to stay open

14 September. Australia proposed offering incentives worth A$2.3 bn ($1.67 bn) over 10 years to keep the country’s four remaining oil refineries open and said it would invest in building fuel storage as part of a long-term fuel security plan. The country’s refiners have been battered by the coronavirus-driven collapse in fuel demand, racking up losses which they say threaten the future of their plants as they compete against much bigger refineries around Asia. The government said it would work with the industry to design a “refinery production payment” as an incentive to keep the four plants open. Together with an exemption from new fuel storage requirements, the incentives would be worth about A$2.3 bn over 10 years. The four refiners – BP Plc, Exxon Mobil Corp, Viva Energy Group and Ampol Ltd – all welcomed the proposals but made no commitment to keep their plants open.

Source: Reuters

Uganda, Tanzania sign agreement for construction of crude oil pipeline

13 September. Tanzania and Uganda signed an agreement paving the way for the construction of a crude oil pipeline running from Ugandan oilfields to the Tanzanian port of Tanga. Uganda discovered oil reserves in 2006 and needs the planned 1,445 kilometre (km) East African Crude Oil Pipeline to be in place to start commercial production. The pipeline is estimated to cost $3.5 bn, according to the two governments.

Source: Reuters                               

BP books oil tanker for storage at lowest rate this year

10 September. Oil major BP has provisionally chartered a supertanker to store crude oil off Malaysia at this year’s lowest rate yet, according to Refinitiv Eikon data. The charter is the latest in a flurry of ship bookings made by oil majors and trading houses after tanker rates plunged. A resurgence in coronavirus cases, poor weather and the end of the northern hemisphere’s summer driving season have slowed global oil trade and shipping demand. BP chartered very large crude carrier (VLCC) Gene at $20,500 per day for three months and has the option to extend another three months at $22,000 per day. The daily rate for chartering VLCCs for six months hit a high of $120,000-$130,000 in April as traders rushed to store oil for later sales after a collapse in oil prices and demand in the second quarter. More than 1 bn barrels of oil entered storage over the second and third quarter.

Source: Reuters

Fitch Ratings cuts long-term oil price assumptions

10 September. Fitch Ratings has reduced its long-term price assumptions for Brent and West Texas Intermediate oil despite a better-than-expected year-to-date performance due to decisive production cuts by Organization of the Petroleum Exporting Countries (OPEC), loosened lockdown measures and an economic recovery. According to Fitch, the reduced price assumption reflects large underutilised production capacities, the extended period of high oil inventory caused by the coronavirus pandemic, falling upstream unit costs and the long-term energy transition. It, however, expects an oil demand recovery that continues in 2021, assuming most countries do not impose a second round of strict lockdowns. The production cuts helped in bringing stability to the oil prices, meaning that any lower-than-expected cuts or conflicts within OPEC can put renewed pressure on the oil prices.

Source: The Economic Times

Communities ‘left out’ as oil pipeline project set to get underway in East Africa

10 September. A multibillion-dollar oil pipeline planned for East Africa could spell disaster for local communities, charities said, warning of lost land and livelihoods unless oil firms listen up and change tack. French energy giant Total and its partner China National Offshore Oil Corp plan to exploit oil reserves in Lake Albert in Uganda and construct a 1,443 kilometre (km) pipeline to neighbouring Tanzania for export. Human rights groups said the oil firms involved in the $3.5 bn East Africa Crude Oil Pipeline have failed to fully address concerns raised by many of the 12,000 families who are expected to lose land due to the project.

Source: Reuters

US 2020 crude output to fall less than previously expected: EIA

9 September. US (United States) crude oil production is expected to fall 870,000 barrels per day (bpd) to 11.38 mn bpd this year, a less steep decline than the 990,000 bpd previously forecast, the US government said. Nations worldwide, including the US, have throttled back oil output in response to the coronavirus pandemic, and as fuel demand has dropped sharply. US production dropped from 12 mn bpd to roughly 10.5 mn bpd. That helped US prices, which briefly fell to minus-$40 a barrel, recover to nearly $45 in recent weeks. A swifter rebound in output could create another supply glut. Lately, oil futures have slipped to near three-month lows due to oversupply fears. Saudi Arabia’s state oil company Aramco cut the October official selling prices for its Arab light oil, a sign of softening demand. Gasoline demand is expected to fall 1.04 mn bpd this year to an average of 8.27 mn bpd, compared with a decline of 91,000 bpd previously expected. Demand for distillate fuels, including diesel and jet fuel, is expected to fall 340,000 bpd to 3.76 mn bpd this year, slightly less than the 360,000 bpd decline forecast previously. Output is expected to drop 300,000 bpd to 11.08 mn bpd in 2021.

Source: Reuters


Israeli regulator approves Chevron takeover of Noble’s gas fields

14 September. Israel’s Petroleum Council gave its approval for Chevron Corp to take over Noble Energy’s stakes in Israeli natural gas fields, which are a key component in Chevron’s $5 bn acquisition. Chevron agreed in July to buy the Texas-based oil and gas producer, which operates two large offshore gas fields in the eastern Mediterranean. Upon completion, Chevron will be the first major energy group to enter the Israeli market. The Petroleum Council, which advises on exploration and production licenses, gave its blessing, paving the way for Chevron to become a dominant player in Israel, according to the energy ministry.

Source: Reuters

Glenfarne seeks 5 more years to build Louisiana Magnolia LNG export plant

14 September. Units of Glenfarne Group LLC and Kinder Morgan Inc asked federal regulators for five more years to complete the Magnolia LNG (liquefied natural gas) export plant and associated gas pipeline expansions. The US (United States) Federal Energy Regulatory Commission (FERC) approved construction of Magnolia LNG and related pipeline expansions in April 2016. That approval required the companies to complete the project within five years, by April 2021. Glenfarne has said it expects to decide late next year whether to build the Magnolia plant and the Texas LNG facility it is developing in Texas. If the company decides to build the projects, they could enter service around 2025. Several developers have put off decisions to build LNG projects in North America over the past year due to uncertainty about demand as the pandemic and other factors have cut energy consumption. Magnolia is designed to produce 8.8 million tonnes per annum (mtpa) of LNG or 1.2 billion cubic feet per day of natural gas. One billion cubic feet is enough gas to supply about 5 mn US homes for a day.

Source: Reuters

US LNG exports rise from coronavirus lows as global gas prices soar

11 September. US (United States) liquefied natural gas (LNG) exports were on track to increase for a second month in a row in September for the first time since hitting a record high in January as rising global gas prices prompted buyers to reverse some cargo cancellations. Gas prices surged over 60 percent in Europe and Asia last month, causing US LNG exports to jump from a 21-month low of 3.1 billion cubic feet per day (bcfd) in July to 3.7 bcfd in August and an expected 3.8 bcfd in September, according to federal data. Several US LNG export plants stepped up to supply more of the super-cooled fuel even though Cameron LNG’s facility in Louisiana remains shut due to lingering power problems after Hurricane Laura slammed into the Gulf Coast in late August. Energy traders said Cameron has already deferred cargo loadings from September to October.

Source: Reuters

US okays $1.5 bn insurance for Mozambique gas project

11 September. The US (United States) has set aside $1.5 bn for political risk insurance in the gas-rich northern Mozambique region ravaged by an Islamist insurgency for the past three years, its Maputo embassy said. The insurance is poised to cover the construction and operation of an onshore natural gas liquefaction plant and support facilities being developed by energy giants including American firm ExxonMobil, French’s Total and Italian’s Eni. The gas project, one of Africa’s largest investment in recent decades, is situated in the Cabo Delgado which has been the scene of the jihadist attacks since 2017. Although the gas project has not been directly targeted, the extremist attacks pose a serious threat to the success of offshore investment valued at more than $60 bn.

Source: The Economic Times


Greece to spend $5.9 bn to phase out coal by 2028

9 September. Greece will spend €5 bn ($5.9 bn) to offset the impact of ditching coal in power generation by 2028 and cutting carbon emissions in line with European Union climate targets by 2050. Energy Minister Kostis Hatzidakis said the total will include state money, funds from the European Union and loans from the European Investment Bank. Greece’s conservative government, which took over last year, has pledged to switch off 80 percent of state utility Public Power Corp’s coal capacity by 2023 to reduce its carbon footprint. Another plant it is building in Ptolemaida, northern Greece, will operate using coal until 2028, after which it will switch to a different fuel.

Source: Reuters


Integration of four European power trading markets faces delay

12 September. A plan to further extend Europe’s integrated power trading market to four eastern European Union states has been delayed by bottlenecks in other projects, the exchanges and transmission grid operators said. The Interim Coupling project seeks to connect day-ahead markets in the Czech Republic, Slovakia, Hungary and Romania to those in most other parts of Europe to form the European Single Day-Ahead Market and increase liquidity. With the design and implementation phases complete, coupling of the markets was previously scheduled to start this month, Norway’s Nord Pool exchange and 15 other partners involved in the plan said.

Source: The Economic Times

US power use to drop over 2 percent in 2020 due coronavirus: EIA

9 September. US (United States) electricity consumption will decline 2.4 percent in 2020 as coronavirus lockdowns cause businesses to close, the US Energy Information Administration (EIA) said. EIA projected power demand will drop to 3,802 bn kilowatt hour (kWh) in 2020 from 3,896 bn kWh in 2019 before easing to 3,801 bn kWh in 2021. EIA projected power sales to commercial and industrial consumers will drop by 6.4 percent and 6.0 percent, respectively, in 2020 from 2019 as offices close and factories run at reduced capacity for the coronavirus. Electricity sales to residential homes, however, will rise 3.5 percent in 2020 from 2019 as lockdowns cause people to stay home. While both the residential and commercial sectors consumed record amounts of electricity in 2018 at 1,469 bn kWh and 1,382 bn kWh, respectively, the industrial sector set its all-time high of 1,064 bn kWh in 2000.

Source: Reuters


China’s CNOOC launches first offshore wind power plant

15 September. China’s offshore oil and gas major CNOOC Ltd announced that its first offshore wind power project has connected to the grid and begun to generate power. The wind power project, located in the sea area nearby China’s eastern province of Jiangsu, and with a total installed capacity of 300 MW, is scheduled to fully come into on-grid production by end of 2020, CNOOC said. The project, planned to be equipped with 67 wind turbines, is expected to have annual on-grid power generation reaching approximately 860 mn kilowatt hour (kW), CNOOC said. China’s state energy giants including PetroChina, Sinopec and CNOOC have all laid out plans to develop renewable projects, in an effort to stay relevant in a low-carbon future.

Source: Reuters

Fossil fuel demand to take historic knock amid Covid-19 scars: BP

14 September. Fossil fuel consumption is set to shrink for the first time in modern history as climate policies boost renewable energy while the coronavirus epidemic leaves a lasting effect on global energy demand, BP said in. BP this year extended its outlook into 2050 to align it with the company’s strategy to slash the carbon emissions from its operations to net zero by the middle of the century. Under its central scenario, BP forecasts Covid-19 will knock around 3 mn barrels per day (bpd) off by 2025 and 2 mn bpd by 2050. The share of fossil fuels is set to decline from 85 percent of total primary energy demand in 2018 to between 20 percent and 65 percent by 2050 in the three scenarios. At the same time, the share of renewables is set to grow from 5 percent in 2018 to up to 60 percent by 2050.

Source: Reuters

US seeks to lower Russian uranium imports to boost US nuclear industry

14 September. The US (United States) Commerce Department inked a draft agreement with Russia’s state nuclear energy company to reduce imports of uranium from Russia over the next 20 years in a bid to boost domestic mining and nuclear energy. The draft amendment was one of the recommendations made by the interagency Nuclear Fuel Working Group to address concern in Washington that the US has ceded its global leadership in nuclear technology, and to boost domestic nuclear power producers and uranium miners suffering from a lack of investment.

Source: Reuters          

European Commission to propose more ambitious 2030 climate goal

11 September. The European Commission will propose that the European Union (EU) sets a 2030 target of cutting its net greenhouse gas emissions by at least 55 percent against 1990 levels. Already well on the way to meeting its current climate target of a 40 percent cut by 2030, the EU wants to set a more ambitious near-term target in order to achieve its goal of net zero emissions by 2050 and cement its status as a global leader in efforts to curb catastrophic climate change. The EU’s 2050 ‘net zero’ goal means that, by that date, most sectors would have slashed their greenhouse gas output to near zero, and emissions removals would be used to balance out any remaining emissions production. Researchers and climate campaigners have said that in the near term, using emissions removals to meet targets should be a last resort, and the priority should be to stop producing planet-warming gases in the first place.

Source: Reuters

Canadian Solar expands solar module plant in China’s Yancheng

11 September. Canadian Solar, a Canada-headquartered solar equipment producer, started to expand its solar module manufacturing project in Yancheng, a port city in China’s eastern province of Jiangsu. The company will add 4 GW of annual solar module production capacity on top of its current 3 GW plant, according to the company. According to the company, Canadian Solar had total annual solar module production capacity of 13 GW by end-2019, of which approximately 9.6 GW was located in China

Source: The Economic Times

Spain to offer $215 mn in renewable energy subsidies

10 September. Spain will inject €181 mn ($215 mn) of state funds into renewable energy projects in seven regions, aiming to boost employment and cut carbon emissions, its energy and environment ministry said. The subsidies are part of a chest of €316 mn Madrid will pour into innovative projects – an amount that could be topped up with European Union (EU) recovery funds. Rich in high-energy sunlight, Spain is a vocal supporter of EU plans to use low-carbon investments to battle the economic devastation wrought by the coronavirus, particularly on its traditionally strong tourism and automotive industries. Projects that could benefit from the subsidies include those generating power from sunlight, wind, biomass, and renewable gases including hydrogen in sectors including agriculture, industry and services, the ministry said. Prime Minister Pedro Sanchez’s government expects its carbon-reduction plans to require €200 bn ($227 bin) of total investment in the next decade, 47 bn of which Sanchez has said would come from the public sector. The funds unveiled should encourage a further investment of €551 mn from the private sector and cut greenhouse gas emissions by 712,000 tonnes of carbon dioxide equivalent each year, the ministry calculates. Decisions on which projects receive the funds will take into account demographic challenges and the welfare of workers in regions affected by the shift to renewable energy.

Source: Reuters

Lightsource BP sells five solar energy projects to Statkraft Ireland

10 September. Solar energy developer Lightsource BP, a joint venture of BP, said it had sold five solar energy projects to Statkraft Ireland. The projects have a combined capacity of 275 MW and are in the late stages of development. They are located in the counties of Meath, Laois, Tipperary and Cork in Ireland.

Source: Reuters

Indonesia provides investors with facilities to develop geothermal energy

10 September. The Indonesian Ministry of Energy and Mineral Resources will make it easier for investors to develop geothermal energy in the archipelagic country through various innovational breakthroughs. The facilities include the issuance of law on geothermal energy, which facilitates development of geothermal power plants in production forest areas, protected forest areas and conservation forest areas. The government encouraged the regional-based geothermal development through the Flores Geothermal Island (FGI) program to meet the need of geothermal electricity in East Nusa Tenggara province’s island of Flores, the Ministry said.

Source: The Economic Times


Source: WIPO News Magazine March 2020 James Nurton

This is a weekly publication of the Observer Research Foundation (ORF). It covers current national and international information on energy categorised systematically to add value. The year 2020 is the seventeenth continuous year of publication of the newsletter. The newsletter is registered with the Registrar of News Paper for India under No. DELENG / 2004 / 13485.

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