MonitorsPublished on Dec 26, 2020
Energy News Monitor | Volume XVII; Issue 25


Monthly Oil News Commentary: October – November 2020



India’s fuel consumption in October registered its first year-on-year increase since February, as slowing coronavirus cases and increased mobility accelerated an economic recovery, data showed. Consumption of refined fuels, a proxy for oil demand, rose 2.5 percent in October from the prior year to 17.78 mt and nearly 15 percent higher from the previous month, data from the PPAC of the MoPNG showed. Diesel consumption, a key parameter linked to economic growth and which accounts for about 40 percent of overall refined fuel sales in India, rose 7.4 percent to 6.99 mt on an annual basis, and climbed about 27 percent month-on-month. Sales of gasoline, or petrol, rose by 4.3 percent from a year earlier to 2.65 mt, and by 8.2 percent from 2.45 mt from September. Cooking gas or LPG sales increased by 3 percent to 2.42 mt from a year earlier and 6.6 percent from the previous month, while naphtha sales rose 15% to 1.30 mt and about 14 percent month-on-month.

India’s gasoil consumption in October rose 6.6 percent from a year earlier, the first such increase since Covid-19 restrictions were imposed in late March signalling a pick-up in industrial activity. Diesel sales by the country’s three state fuel retailers totalled 6.17 mt in October, according to provisional data compiled by IOC the country’s biggest refiner and fuel retailer. Sales of gasoil, which account for about two-fifths of India’s fuel demand, rose 27.5 percent from September. Rising diesel sales in the world’s third-biggest oil consumer and importer should help refiners, who had to cut crude-processing runs during the coronavirus crisis. IOC hopes to operate refineries at full capacity in a couple of months, up from 95 percent, as local fuel demand is rising. Rising gasoline and gasoil demand in India should also aid other markets hit by slow demand recovery. Local gasoline sales in October rose above pre-pandemic levels for a second month in a row. Gasoline sales rose 4 percent from a year earlier to about 2.4 mt, about 8.6 percent higher than September. State companies IOC, HPCL and BPCL own about 90 percent of India’s retail fuel outlets. State retailers sold 3.8 percent more cooking gas or LPG in October than a year ago, at about 2.44 mt, while jet fuel sales halved to 328,000 tonnes.

Tax on Petroleum Products

The economic crisis triggered by the Covid-19 pandemic and subsequent pressure on revenues may again push the Centre to raise excise duty on petrol and diesel. Another ₹3-6/ litre increase in excise duty on petrol and diesel may come soon if the government felt the need to mobilise more resources to finance additional economic recovery packages to fight Covid-19 related disruptions. For consumers, any further increase in duty should not impact much as retail prices may be left unchanged or marginally increased as lower oil prices would allow for absorbing any increase in price. However, a further increase in taxes on fuel would make the product most taxed globally. The current taxes account for close to 70 percent of the price of petrol and diesel. With any further increase in duty, this could reach 75-80 percent level.

OMCs did not revise the retail prices of petrol and diesel, maintaining the trend despite further softening of global oil prices. With this, petrol prices have now remained unchanged for 47 days now while diesel prices have been at the same level since 2 October. During this period, Brent crude prices fell by $2-3/bbl and are currently hovering just over $40/bbl. Price of petrol in the national capital remained at ₹81.06/litre. In Mumbai, Chennai and Kolkata, the fuel was sold for ₹87.74, ₹84.14 and ₹82.59/litre respectively. Diesel prices per litre in Delhi, Mumbai, Chennai, and Kolkata were ₹70.46, ₹76.86, ₹75.95, and ₹73.99 respectively. With global crude prices falling below $40/bbl consumers were hoping the pump prices of auto fuel will also fall. However, OMCs seem to be playing a waiting game before taking further action on petrol and diesel prices.

The government hiked the price of ethanol extracted from sugarcane for doping in petrol by up to ₹3.34/litre as it looked to ramp up the programme that has benefited farmers and also helped cut down oil import bill. The Cabinet Committee on Economic Affairs raised the price of ethanol extracted from sugarcane juice to ₹62.65/litre from current ₹59.48/litre for the supply year beginning December 2020. India, which is 85 percent dependent on imports to meet its oil needs, allows doping of up to 10 percent ethanol in petrol with a view to cutting oil import and vehicular emissions as also offer a remunerative source for sugarcane farmers to sell their produce. OMCs, IOC, BPCL and HPCL will bear GST and transportation cost on the ethanol procured for doping in petrol.


Indian exploration companies were asked by the concerned Ministry to consider farming out their acreages to global players with advanced technology to expedite development and raise oil and gas output. India, the world’s third biggest oil importer and consumer, depends on foreign purchases for over 80 percent of its oil needs. The nation’s oil and gas output has been stagnant for years, forcing it to raise reliance on imports to meet rising fuel demand. Indian exploration companies should work at “exponential speed” to unlock resources. India’s exploration licensing rounds have so far seen a lukewarm response from global oil majors, with most of the blocks awarded to local companies, mainly ONGC and OIL.

ONGC has won seven out of the 11 oil and gas exploration blocks offered for bidding in the latest licensing round according to the upstream regulator DGH. OIL won the remaining four blocks. The government had offered 11 blocks for exploration and production of oil and gas in the fifth bid round under the Open Acreage Licensing Policy (OLAP). A total of 12 bids — seven bids by ONGC and four by OIL — were received for the 11 blocks on offer at the close of bidding on 30 June. Invenire Petrodyne Ltd was the only private bidder for one block. While ONGC was the sole bidder for six blocks, OIL was the lone bidder in all the four blocks it bid for. ONGC won all six blocks where it was the sole bidder and also the one block where Invenire Petrodyne had bid. Prior to OALP-V, the government had awarded 94 blocks in four OALP bid rounds in the last two and a half years.

The country’s most prolific Barmer oilfield operated by Cairn Oil and Gas has been denied full extension of production sharing contract once again with the government allowing the company to operate the oilfield only for three more months. The temporary extension has been given to the company on five occasions since the expiry of the initial licence period in May. The latest extension is now till 31 January 2021. The company had been reduced to operate on temporary permission from the government which has denied full 10-year extension to the company’s production sharing contract, claiming higher share of profit petroleum. After prolonged delays, the government had in October 2018 agreed to extend by 10 years the contract for Barmer fields after the expiry of the initial 25-year contract period on 14 May 2020.

Vedanta Ltd’s oil and gas arm Cairn has got a further three-month extension of license for its prolific Rajasthan oil block pending settlement of a dispute over $520 mn cost recovery. The license to explore and produce oil and gas from Barmer was due to renewal in May this year, but pending settlement of the dispute the government has given five extensions, the latest till 31 January 2021. 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.


To ensure LPG cylinders are sold to genuine customers, oil companies will introduce code system for confirming receipt of cylinders by customers. A four-digit delivery authentication code will be sent by the company to the customer’s mobile number during booking and payment. When the cylinder is delivered, the customer will have to share the code with the delivery person to authenticate the delivery. IOC, BPCL and HPCL will introduce the system. Since LPG is subsidized by Centre, it is important to account for each LPG cylinder which is sold to genuine registered customers of oil companies. The traditional method for confirming receipt of cylinders is to obtain a customer signature in the distributor’s copy of cash memo and delivery boy making an entry in the Domestic Gas Consumer Card or Blue Book issued to customers. This digital method of taking confirmation of receipt is also in keeping with social distancing and there is no need for contact with the delivery person.


India, the world’s third-largest oil importer, pressed for assessing the impact of Covid-induced disruptions to global energy sector supply chains and said oil-cartel OPEC needs to address anomalies in the crude price differential for different regions. OPEC meets 78 percent of India’s crude oil demand, 59 percent of its LPG needs, and nearly 38 percent of LNG consumption. India imported $92.8 bn worth of hydrocarbons from OPEC countries in 2019-20. The pandemic has impacted the global oil and gas industry by a significant impact on both oil demand as well as the supply side, creating an unprecedented global oil price volatility. OPEC has projected India to emerge as the leading energy consumer over the long term. India’s oil demand is forecast to rise from 4.7 mn bpd in 2019 to 10.7 mn bpd by 2045, with its global share rising from 5.2 percent to 10.8 percent by 2045.

India’s crude oil imports fell for the sixth straight month in September as surging Covid-19 cases continued to limit fuel demand, but the decline was the least since virus restrictions began earlier this year. Imports of LPG surged 4.5 percent to 1.64 mt in September, the highest since Refinitiv started collecting data going back to 2004. Crude oil imports fell about 9.8 percent in September from a year earlier to 15.18 mt, or 3.71 mn bpd according to PPAC. On a monthly basis, imports in the world’s third-biggest oil importer and consumer fell about 10 percent from 16.86 mt, or 4.12 mn bpd, in August. The year-on-year decline in crude imports, however, was the least in six months as easing coronavirus restrictions supported economic activity and travel.

India’s oil import bill may fall further in the remaining period of the current fiscal with Saudi Arabia looking at giving discount in crude it sells to Asian Buyers. The benchmark Dubai prices of oil have fallen and so have the gross refining margins. If this holds, a 10-20 cents per barrel discount on Saudi light crude would be available from December onwards. The development is positive for India that imports maximum oil from Saudi Arabia after Iraq. Any discount on oil prices is expected to set the ball rolling for cheaper oil imports from other oil producing countries as well. India imports 85 percent of its domestic oil requirements. So any change in oil prices results in big savings for the country. For India, good news is also coming from global developments in the oil market where prices are expected to remain soft in the absence of any big pickup in demand due to the Covid-19 pandemic while the market remains oversupplied with oil. The benchmark Brent crude prices witnessed a drop in the preceding week, falling from a level of $42/bbl to just about $38/bbl. India imported 227 mt of crude for $101.4 bn in 2019-20. The import bill in the April-September period of FY21 has already fallen by about 58 percent to $22 bn as compared to an import bill of $52.6 bn in the first half of FY20 due to lower oil prices.


Crude oil processed by Indian refiners hit the highest in six months in September, in another sign that demand for fuel is recovering from the blow to economic activity and transportation from coronavirus restrictions. Crude oil throughput in September rose 13.4 percent from the previous month to 4.33 mn bpd (17.71 mt). This was the highest since the onset of the country’s coronavirus restrictions in March, when refiners processed 5.01 mn bpd of crude oil. Fuel demand also rose for the first time since June last month, data showed. October gasoil sales rose for the first time since March signalling a pick-up in industrial activity ahead of key festivals. Indian refiners operated at about 86.22 percent of their overall capacity in September compared to 76.10 percent in August. Top refiner IOC operated its directly owned plants at 81 percent capacity.

BPCL has put on hold its plans to expand its Bina refinery and install a secondary unit at its Mumbai refinery to boost efficiency pending privatisation of the company. The federal government wants to sell its 53.29 percent stake in BPCL, to raise funds to rein in a ballooning fiscal deficit. The company, which has a robust retail presence in key Indian cities, aims to set up 6,000 retail outlets in three years with a focus on rural areas to raise its market share in diesel and gasoline sales to about 32 percent from 29 percent. BPCL has also upgraded its bunkering facility with five jetties that can now pump the oil into ships from the pipelines at the Marine Oil Terminal on the Butcher Island, off the east coast of the city. BPCL is the largest supplier of bunkering oil with around 60 percent of the volume at JNPT, Mumbai Port and the two other harbours nearby the city consuming around 400 thousand metric tonne (tmt) annually. And the sell-off bound national oil marketer expects to double its annual sales to 14 tmt from 7 tmt now after the upgrade and complete mechanisation of the oil filling facilities. On average, as many as 5,000 vessels berth at Mumbai, JNPT and the adjoining Digi and Dharamtar ports annually, creating a bunkering business of close to 400 tmt of VLSFO. The upgrade includes construction of the underwater pipeline and connecting the pipeline to the terminal at BPCL’s Mumbai refinery, was completed on time despite the lockdown challenges and heavy monsoons in Mumbai.

IOC has commissioned its 120th aviation fuel station at Darbhanga in Bihar. IOC, which controls about 40 percent of the fuel market in the country, was selected for developing a fuel farm facility at the airport under the Regional Connectivity Scheme by the Ministry of Civil Aviation in 2018. The company has positioned three refuellers at the airport to cater to the three daily flights scheduled currently. IOC runs aviation refuelling facilities across the country – from the icy heights of Leh (the highest airport in the world at 10,682 feet) to the distant islands of Andaman and Nicobar.

Strategic Reserves

India has invited global firms to invest in its SPRs as the nation’s energy consumption growth would be fastest among large economies in coming decades. India’s share in global energy consumption is set to rise from 7 percent to 12 percent in 2050. The nation, the world’s third-biggest oil consumer and importer, earlier this year filled its three SPRs in southern India with 5.33 mt of oil when prices were low. To attract private investment in its SPRs, India recently allowed ADNOC to re-export some of its oil stored in Mangalore SPR, mirroring a model adopted by South Korea and Japan.

The Union cabinet has allowed UAE’s ADNOC to export oil from its Mangalore SPR, marking a policy shift that could enhance foreign participation as India seeks to expand its storage capacity. Allowing ADNOC to export its oil mirrors a model adopted by countries such as Japan and South Korea which allow oil producers to re-export crude storage. India does not allow oil exports. ADNOC had been seeking permission from the Indian government for the export of its oil from the cavern as it was finding difficult to sell to Indian refiners, some of which have cut crude processing due to falling demand. ADNOC can export oil stored in the Mangalore SPR in foreign flagged ships. So far Indian flagged ships were used for coastal movement of the oil from the cavern. Indian companies will have a first right of refusal in case of any re-exports by ADNOC. India, the world’s third-biggest oil importer and consumer, imports about 80 percent of its oil needs and has built strategic storage at three locations in southern India to store up to 5 mt oil to protect against supply disruption. India plans to build strategic storage at Chandikhol in Odisha and Padur in Karnataka for around 6.5 mt of crude. The Indian Strategic Petroleum Reserve Ltd has leased half of the 1.5 mt capacity in Mangalore storage to ADNOC, while ISPRL has retained the remainder. The previous lease allowed ADNOC to sell only 35 percent of its oil stored in Mangalore to Indian refiners and another 15 percent with permission from the government.

Rest of the World

Global Trends

Global oil demand is unlikely to get a significant boost from the roll-out of vaccines against Covid-19 until well into 2021 according to the IEA. While noting that OECD countries had modestly drawn down their crude oil stocks for two months in a row by September the storage levels were still not far from peaks in May at the height of the pandemic. Plans by the OPEC and allies such as Russia to boost output by 2 mn bpd from January would mean supply would outweigh demand. Draws on oil storage would halt in the first quarter of 2021 if the producer group carried through on its plans to taper their production cut pact. The IEA revised up its prediction for demand growth in 2021, which will still represent a drop of 3 mn bpd below pre-pandemic levels in 2019.

Renewed lockdown measures in Europe aimed at containing a rise in Covid-19 cases appear set to push the outlook for global oil demand toward the downside according to the IEA. However, it likely be less severe than under lockdowns. Demand fears persist, while markets remain on edge over a knife-edge US election result which appears headed for legal challenges. The IEA kept its 2020 and 2021 oil demand forecast steady in its report, before major European countries including Germany, France and the United Kingdom imposed strict new curbs on movement to check the spread of the virus. China remains the world’s major bright spot after suppressing the virus earlier this year and is on track to be the only major country to boost its year-on-year demand for oil.


US crude oil exports are expected to sputter through the end of 2020 due to weak production and unfavorable economics for foreign buyers of US oil. US oil demand is down about 13 percent from last year due to the coronavirus pandemic. Exports have become critical revenue sources for many oil companies, and the US had regularly been exporting more than 3 mn bpd of crude oil. But US output is not expected to recover to its 2019 peak of nearly 13 mn bpd, which could hamstring exports. Generally, when demand falls, prices adjust. But US output has been hampered by declining shale output and several hurricanes that have interrupted offshore production. Overall US weekly output is currently roughly 9.9 mn bpd, down from a peak of 13.1 mn bpd reached. US crude oil production is expected to fall by 800,000 bpd this year to 11.45 mn bpd and to 11.09 mn bpd next year, according to the EIA. The pullback in supply – compared with several years of sharp growth in output – makes it less likely that US prices will fall. US crude arrivals to Europe are expected to sink to 16.2 mn barrels in October, versus a record 32.6 million barrels of US crude that reached Europe in September, according to Refinitiv Eikon data. Asian countries, including China and South Korea, are among the largest buyers of US crude. China was the only major crude consumer with increased oil demand in the April-September period from the year before and ramped up purchases from the US. Arrivals in November to Asia are expected to be about 52 mn barrels, near the record 53.1 mn barrels seen in September, Refinitiv Eikon data showed. Of those, about 28.4 mn barrels were set to arrive in China in November. US oil output from shale formations is expected to decline by about 139,000 bpd in December to about 7.51 mn bpd, the lowest level since June. Output at nearly all seven major formations is expected to fall, except the Haynesville region, where output is forecast to remain largely steady. The biggest decline is expected to come from the Permian basin of Texas and New Mexico, where production is expected to drop by about 37,000 bpd, the biggest decline since May, to 4.3 mn bpd. The second biggest drop is forecast to be in the Bakken, where output is expected to decline for the third straight month, by about 32,500 bpd, to 1.13 mn bpd.

The Trump administration issued a request to energy companies to identify what specific land areas in the Arctic National Wildlife Refuge should be offered for sale. The move is a key step toward pulling off a sale of oil drilling leases in a pristine area of the Arctic before Democrat Joe Biden, who opposes energy development there, becomes president. Drilling had been banned in ANWR for decades before Republican-led tax legislation signed in 2017 removed that ban. Lawmakers in Alaska have long pushed to open up the ecologically sensitive area to oil and gas exploration.

US oil demand fell nearly 2 percent as new lockdowns in Europe to contain the spread of the coronavirus disease raised questions about the outlook for crude demand, while markets remained on edge over the drawn-out vote counting in the US election. The OPEC and allies including Russia, a group known as OPEC+, are expected to delay bringing back 2 mn barrels per day of supply in January, given the decline in demand from new Covid-19 lockdowns. Providing some support for the market, US inventories of crude oil plunged, although much of the fall was attributed to production being shut down as another hurricane swept through the Gulf of Mexico.

Minnesota regulators approved key permits for Enbridge Inc’s Line 3 crude pipeline replacement project, paving the way for the project to receive federal permits from the US Army Corps of Engineers after facing years of delays. Line 3, built in the 1960s, carries less oil than it was designed for because of age and corrosion. Replacing it would allow the company to boost flow from a Canadian oil hub in Edmonton, Alberta, to Midwest refiners.

Middle East & Africa

Qatar’s budget will be drawn up on the assumption of an oil price of $40/bbl to shield the gas-rich Gulf country from oil prices volatility. Crude oil prices provide a benchmark for gas prices, impacting Qatar, which is one of the world’s biggest liquefied natural gas exporters. Early indications for Qatar’s first half deficit put the figure at 1.5 bn riyals ($412 mn), much better than expectations. In December last year Qatar expected to achieve a surplus of 500 mn riyals this year, but that was before the pandemic and the ensuing oil price shock. It had based the 2020 budget on an oil price assumption of $55/bbl.

Iraq’s Oil Marketing Company (SOMO) has notified clients that it plans to launch a third crude oil export grade called Basra Medium in January. The new medium-sour crude will be created by splitting the existing Basra Light production into two grades, according to the sources and a copy of the 2 November notice reviewed. Basra Light, exported from the Basra Oil Terminal offshore southern Iraq, accounts for the bulk of the country’s exports and revenues. Iraq exported about 2.77 mn bpd of Basra crude in October and it is the second-largest producer in the OPEC.

Iran’s budget for next year could be based on an oil price of $40 a barrel. Iran’s oil exports have shrunk from more than 2.5 mn bpd since 2018, when the United States withdrew from Tehran’s 2015 nuclear deal with six world powers and reimposed sanctions that have hammered the country’s economy.

Ghana has imposed terms and conditions for Italian major ENI and Ghanaian operator Springfield E&P to combine their adjacent oil and gas fields, after the parties failed to reach an agreement. The decision was made to ensure optimum exploitation of the Afina and Sankofa fields. Ghana directed Eni and Springfield to begin talks to combine their adjacent oil and gas fields. Sankofa is part of Eni’s Offshore Cape Three Points project off Ghana’s Atlantic Coast, which it says has reserves of about 40 bcm of gas and 500 mn barrels of oil. Springfield, a wholly owned Ghanaian company has discovered 1.5 bn barrels of oil and 0.7 tcf of gas at its Afina field.

NNPC and First E&P have begun oil production at the Anyala oilfield, NNPC announced. The shallow offshore field is in Oil Mining Leases 83 and 85 and will have peak production of 60,000 bpd. Production will feed into the Abigail-Joseph FPSO, which connected to the field on 21 October. Nigeria’s oil production is limited by a supply-cut pact with the OPEC and other producer nations such as Russia. Low oil prices brought on by coronavirus containment measures has also cut oil company budgets, limiting new exploration.

Total is seeking to sell stakes in a number of Angolan oilfields, in what is seen as an early sign of an expected wave of divestments by big energy companies from the West African country. Total could raise around $300 mn from the sale of its 20 percent stake in Angola’s offshore Block 14, which includes the Tombua-Landana, Kuito fields as well as a cluster of fields that make the BBLT project. Chevron operated Block 14 produced around 40,000 boepd in 2019. The sale of Total’s stake in Block 14 is part of the company’s drive to focus on its larger and more profitable oil and gas fields in Angola, where it remains the largest operator. Total and rivals including BP, Chevron and Exxon Mobil aim to sell tens of billions worth of oil and gas assets around the world in the coming years to reduce debt that ballooned following the collapse in oil prices due to the coronavirus crisis. Those disposals are expected to include a number of stakes in Angolan oilfields, where production is generally more complex and expensive than other basins. HSBC analysts, however, estimate that Total will sell around 200,000 bpd of production over the coming decade to meet its target of keeping production unchanged until 2025.


China’s Unipec, the trading arm of Sinopec, has loaded a VLCC with diesel and is set to ship it to the West next month. The VLCC is the Chinese refiner’s second to be shipped to the West this year, as traders in Asia exploit low shipping costs to use bigger vessels to move excess supplies in bulk volumes. Unipec’s two VLCCs would boost the total number of supertanker diesel shipments from Asia to the West to eight since the second quarter of the year. Since 2017 Unipec has shipped eight VLCCs of diesel from Asia to Europe, West Africa, Latin America and New York as part of its global trading strategy to find markets for excess production. Diesel is used in heating and in the industrial and transport sectors. Demand for the fuel typically rises in the fourth quarter.

Brazil jumped to China’s third-biggest crude oil supplier in September as China’s independent refiners scooped up cheap supplies of the South American exporter’s relatively high quality oil. Imports from Brazil hit 4.49 mt up from 2.96 mt a year earlier. Brazil overtook Iraq, which fell to fifth-biggest supplier. China’s January-September imports from Brazil were 33.69 mt, up 15.6 percent from a year earlier. China makes up 70 percent of Brazil’s oil exports. Saudi Arabia regained the top spot   China’s oil purchases after losing that rank to Russia for the previous two months. China snapped up 13 percent more crude in the first nine months than a year earlier, as refiners ramped up production to meet speedy demand recovery from the pandemic and stock up at record rates on cheap oil.

Other Asia

Asian refiners’ profit from producing VLSFO climbed to six-month highs this week as output cuts keep supplies tight while demand for the shipping fuel at most ports are back at pre-pandemic levels, traders and analysts said. The trend is likely to stay for the rest of the year, encouraging Asian refiners to prioritise VLSFO production along with petrochemical feedstock naphtha, where demand has also firmed. The front-month VLSFO crack was at $9.43 per barrel above Dubai crude, its highest since 10 April. The residual fuel also posted the highest average margin among refined products so far this year, according to data on Refinitiv Eikon. The world’s largest bunkering hub Singapore posted a 6 percent rise in total marine fuel sales in the first nine months this year.

Exxon Mobil Corp is urging the Australian government to start releasing aid to the country’s oil refineries by January after a decision last week by BP plc to shut the nation’s biggest refinery. Exxon owns Australia’s oldest refinery at Altona near Melbourne, which can process 90,000 bpd of oil, the smallest of the nation’s four refineries. The site supplies about half of the fuel for the state of Victoria, which has been subject to one of the world’s longest and tightest coronavirus lockdowns. The Australian government is in talks with the refining industry on an offer of $1.6 bn in incentives over 10 years to keep refineries open to bolster of national fuel security. BP plc plans to stop producing fuel in Australia and will convert its loss-making Kwinana oil refinery, the biggest of the country’s four, into a fuel import terminal because of tough competition in Asia. BP is the first of Australia’s four refiners to pull the plug on its plant in the wake of this year’s slump in demand, triggered by the coronavirus pandemic. Two rivals have also flagged that they are considering the future of their plants. BP will wind down operations at the 146,000 bpd plant in Western Australia over the next six months, affecting 650 jobs, but did not say how much the closure and conversion would cost. The company estimates that refinery overcapacity in the region stands at 7 mn to 8 mn bpd. Analysts said the other refiners were likely to follow BP, as oil demand is expected to recover slowly and global refining overcapacity would crunch refining margins for some time.

OPEC and Russia

OPEC+ could extend the group’s current oil production cuts into 2021 or deepen them further if market conditions require. The OPEC and allies led by Russia, a group known as OPEC+, are due to reduce their existing cuts of 7.7 mn bpd by about 2 mn bpd in January. Algeria, which currently holds the OPEC presidency, supported an extension of the current cuts into next year, adding that the next OPEC+ meeting could consider a six-month extension.

Russia may support keeping cuts in global oil output unchanged after 2020, when they are due to be eased, if world markets worsen due to sluggish demand and a surge in new coronavirus cases. However, Moscow, in need of cash for its virus-hit economy, may agree to keep them at current levels if oil markets worsen and if such proposals are put forward. According to Russia OPEC+ will start easing output curbs as planned despite a global spike in coronavirus cases. OPEC+ is cutting output by 7.7 mn bpd to help support prices and reduce inventories but plans to reduce this to 5.7 million bpd from 1 January. Some analysts believe the global oil glut is far from over and question the expected results of higher output as the second wave of coronavirus hits Europe and other regions. According to the IEA the second wave of Covid-19 is slowing demand and will complicate efforts by producers to balance the market. Recovery in the market has been slowed by the second wave, while winter may bring more uncertainty due to a traditional decline in motor fuel demand. Making a possible case for rollover of cuts, OPEC+ noted in a document that the supply and demand balance could not be restored in 2021, under a pessimistic scenario.

A sharp decline in sea-borne transportation costs for Russian flagship Urals crude has made exports via the Druzhba pipeline to Europe less profitable compared to shipments from ports. According to traders this gives suppliers an upper hand in forthcoming negotiations with buyers in Europe as oil volumes have tightened due to a global deal on production cuts.

Four major buyers of Russian oil are contesting the amount of compensation pipeline monopoly Transneft has offered over the supply of tainted barrels more than a year ago. Up to 5 mt of Russian oil were contaminated with organic chlorides on their way to Europe via the Druzhba pipeline and a Baltic port in April 2019, forcing Moscow to suspend exports to countries as far away as Germany. Oil companies and traders from countries including France, Hungary and Kazakhstan, have held talks with Transneft over compensation for the oil, which had to be stored in special facilities, burned or heavily diluted. Several have agreed to Transneft’s payout of up to $15/bbl but Russia’s Rosneft, via its unit Rosneft Deutschland, Italy’s Eni and traders Trafigura and Glencore want more. In total, Rosneft, Eni, Trafigura and Glencore received a total of around 1 mt of oil which, if not tainted, would have been worth nearly $500 mn based on global prices at the time.


Oil firm Neptune Energy made a small oil discovery near the Fenja field in the Norwegian Sea, according to Norway’s Petroleum Directorate. The discovery is estimated to hold between 0.5 and 3.2 mcm of recoverable oil equivalents. The drilling, however, also led to a reduction in size of the nearby Arc discovery, which is now estimated to contain 0.2-1.6 mcm of recoverable oil equivalents, down from 1-4 mcm seen previously.

Wage negotiations between Norwegian oil service companies and the Safe labour union broke down and will become subject to mandatory mediation later this year. Negotiations covered pay and other terms for drillers, well service crews, divers and other workers at firms such as Aker Solutions, Subsea 7 and Schlumberger, which operate as subcontractors to the oil industry. In 2016, a three-week strike among Norwegian oil service workers disrupted the drilling of new wells but did not impact ongoing oil and gas production. Norway is western Europe’s top petroleum exporting nation with daily output of some 4 mn boe half in the form of natural gas and the other half as crude and other liquids. The industry’s core production workers, who are directly employed by oil firms and thus not part of the latest talks, settled their wage demands.

PPAC: Petroleum Planning and Analysis Cell, mt: million tonnes, MoPNG: Ministry of Petroleum and Natural Gas, LPG: liquefied petroleum gas, IOC: Indian Oil Corp, HPCL: Hindustan Petroleum Corp Ltd, BPCL: Bharat Petroleum Corp Ltd, OMCs: Oil Marketing Companies, bbl: barrel, GST: Goods and Services Tax, OALP: Open Acreage Licensing Policy, OPEC: Organization of the Petroleum Exporting Countries, LNG: liquefied natural gas, bpd: barrels per day, FY: Financial Year, tmt: thousand metric tonne, SPRs: strategic petroleum reserves, ADNOC: Abu Dhabi National Oil Company, ISPRL: Indian Strategic Petroleum Reserves Ltd, UAE: United Arab Emirates, IEA: International Energy Agency, OECD: Organization for Economic Cooperation and Development, EIA: Energy Information Administration, bcm: billion cubic meters, tcf: trillion cubic feet, NNPC: Nigerian National Petroleum Corp, VLSFO: very low sulphur fuel oil, boepd: barrels of oil equivalent per day, US: United States


India set to double oil refining capacity in 5 yrs, earlier than expected: PM Modi

21 November. India plans to nearly double its oil refining capacity in the next five years, Prime Minister (PM) Narendra Modi said, offering a much more aggressive timeline than previously despite the coronavirus pandemic blighting the economy. India’s oil refining capacity could jump to 450-500 million tonnes (mt) in 10 years from the current level of about 250 mt.

Source: Reuters

Oil India launches seismic campaign in Mahanadi

21 November. Oil India Ltd launched a ₹2.2 bn seismic campaign to locate oil and gas in the Mahanadi basin in Odisha, as it is boosting the country’s hydrocarbon resource base. Oil Minister Dharmendra Pradhan inaugurated the seismic survey campaign at Kakatpur in Puri District (Odisha), the company said. Oil India had won five blocks for hydrocarbon exploration in Odisha in two bid rounds under Open Acreage Licensing Policy (OALP). The total envisaged expenditure on the entire exploration campaign in the five blocks in Mahanadi Basin (Onshore) is ₹12.48 bn of which ₹2.2 bn is for seismic survey. The blocks are spread in eleven districts of Odisha namely Puri, Khurda, Cuttack, Jagatsingpur, Kendrapara, Dhenkanal, Jajpur, Bhadrak, Baleshore, Maurbhanj and Keonjhar. The company has been actively participating in the OALP rounds in an endeavour to intensify exploration. Oil India has been awarded a total of 25 blocks, making it the second-largest winner of exploration blocks under OALP.

Source: The Economic Times

Petrol price up 17 paise, diesel 22 paise after two-month hiatus

20 November. Petrol price was hiked by 17 paise per litre and diesel by 22 paise, as firming international oil prices broke a nearly two-month-long hiatus in price revision. Petrol price in Delhi was hiked to ₹81.23 per litre from ₹81.06, according to a price notification from Oil Marketing Companies (OMCs). Diesel rates went up from ₹70.46 to ₹70.68 per litre. This is the first revision in petrol prices since September 22. Diesel rates hadn’t changed since 2 October. Public sector OMCs – Indian Oil Corp, Bharat Petroleum Corp Ltd and Hindustan Petroleum Corp Ltd – revise rates of petrol and diesel daily based on benchmark international oil price and foreign exchange rate. They have, however, restored to calibrating the rates since the pandemic broke out with a view to avoiding volatility in retail prices. The 58-day hiatus in petrol price revision and 48-day status quo on diesel rates was preceded by no change in rates between 30 June and 15 August and a 52-day status quo between 17 March and 6 June. In Mumbai, the petrol price was raised to ₹87.92 per litre from ₹87.74, while diesel rates went up from ₹76.86 to ₹77.11. Petrol costs ₹84.31 in Chennai and ₹82.79 in Kolkata. Diesel costs ₹76.17 per litre in Chennai and ₹74.24 in Kolkata.

Source: The Economic Times


Hoegh LNG signs deal with India’s H-Energy to supply FSRU from 2021

19 November. Norway’s Hoegh LNG Holdings, a provider of specialised vessels for importing liquefied natural gas (LNG), said it had entered a binding commitment to supply India’s H-Energy with a floating storage and regasification unit (FSRU). This will be the first FSRU to start operations in India, which has six land-based LNG import terminals. Hoegh will supply the Indian natural gas company with the FSRU in Jaigarh, south of Mumbai in Maharashtra state, from as early as first quarter 2021, the company said. The final agreement will be for 10 years with annual termination options after the fifth year, Hoegh said. Hoegh said it will allocate one of its available FSRUs currently trading in the LNG carrier market for the project. The FSRU terminal, which has been delayed on several occasions, is planned to be capable of handing 4 million tonnes per year.

Source: The Economic Times

India aims to reduce diesel use with $1.35 bn LNG retail push

QuIck Comment

LNG replacing diesel in transportation will reduce pollution!


19 November. Indian companies will spend ₹100 bn ($1.35 bn) over three years on 1,000 liquefied natural gas (LNG) stations along main roads and industrial corridors and in mining areas, Oil Minister Dharmendra Pradhan said, to cut diesel consumption. Use of LNG in heavy vehicles will cut fuel costs by 40 percent compared with diesel and help contain inflation, he said, and urged automobile makers to look at producing LNG-compatible vehicles. LNG is suitable for long-haul trucks and buses as its higher energy density can help vehicles travel 700-900 km with one fill compared with about 300 km for a diesel vehicle, Petronet LNG said. Companies will set up LNG fuelling stations along a 6,000 km network of highways linking the four main metropolitan areas, he said. Indian companies are spending billions of dollars to build gas infrastructure including pipelines and import terminals to raise share of gas in energy mix to 15 percent by 2030 from the current 6.2 percent. Use of LNG will also help India in meeting its commitment made under the Paris accord to cut greenhouse gas emission intensity of its gross domestic product by 33 percent to 35 percent below 2005 levels by 2030, he said.

Source: Reuters


India sees consecutive year-on-year decline in coal funding

QuIck Comment

Decline in coal funding must be adjusted for fall in coal demand!


24 November. The third annual Coal Vs Renewable Financial Analysis 2019 marks a second consecutive year-on-year decline in coal funding in India following a 90 percent decrease in 2018. The report, prepared by the Centre for Financial Accountability (CFA) and Climate Trends, made public, finds a 126 percent drop in funding from the commercial banks to coal compared to 2018. The report looked at 50 project finance loans across 43 coal-fired and renewable energy projects in India.

Source: The Economic Times

HEC bags 5.2 bn coal handling plant order for Central Coalfields

22 November. Heavy Engineering Corp (HEC) bagged a ₹5.27 bn project for constructing a coal handling plant (CHP) on a turnkey basis at Magadh open cast project of Central Coalfields Ltd (CCL) in Chatra. The project involves planning, designing, construction, fabrication, erection, installation, testing and commissioning of a coal handling plant of 20 million tonnes per annum capacity. The period of completion of the project is two years and HEC will be responsible for undertaking operation and maintenance of the plant for a period of five years.

Source: The Economic Times

Coal protesters demand that SBI stop financing Adani’s Australia project

21 November. Protesters rallying under the banner of ‘Goyant Kollso Naka’ gathered outside the Margao branch of State Bank of India (SBI) demanding that the bank drop the proposal to finance the coal mine project of Adani group in Australia. They also submitted a memorandum to the branch manager requesting him to forward their request to the bank’s management.

Source: The Economic Times


Maharashtra: BJP demands free power up to 100 units

24 November. The Bharatiya Janata Party (BJP) hit the streets against the rise in electricity charges and demanded that the state government fulfil its assurance of free electricity for 100 units per month. Led by the BJP general secretary Devyani Pharande, city unit president Girish Palve and other office-bearers, the party workers burnt a copies of bills issued by the Maharashtra State Electricity Distribution Company Ltd (MSEDCL). The BJP leaders slammed the company for the alleged high-handedness of officials, who allegedly asked the consumers to first pay their dues before their complaints can be taken up. The BJP also warned against disconnecting the power connections to any consumers over non-payment of bills. They also demanded that the bills of the economically weaker sections of society from March to June be completely waived off.

Source: The Economic Times

Karnataka government refutes opposition charges on power purchase agreement

24 November. The state government refuted allegations by Congress and AAP (Aam Aadmi Party) about aberrations in the power purchase agreement with central agencies. Karnataka Pradesh Congress Committee (KPCC) working president Eshwar Khandre and AAP state convener Pruthvi Reddy have alleged that Karnataka incurred losses of around ₹190 bn by purchasing power even after the 12-year agreement with central agencies had concluded. It said power from central generating stations (CGS) is cheap, and is a long term contract. Cancelling the contract will involve significant penalties. Also, such cheap power would not be available if it was found that the state would need more power in the coming years. The government said a final decision on the long-term contracts with CGS and PGCIL (Power Grid Corp of India Ltd) would be made after a better forecast of power requirements. Congress and AAP have demanded a judicial probe into the government’s decision to buy power from central agencies.

Source: The Economic Times

Don’t harass consumers, check faulty billing & jumping meters: UP Energy Minister to UPPCL chairman

22 November. As non-payment of power bills, coupled with transmission and distribution losses, keep mounting, UP (Uttar Pradesh) Energy Minister Shrikant Sharma has taken up the issue of faulty billing and jumping meters, which are often the reasons for rising dues. Sharma has written to UPPCL (UP Power Corp Ltd) chairman Arvind Kumar to fix accountability and take action against billing companies on these issues. The Minister has also asked the chairman not to shift the blame for non-payment of bills upon power consumers because in most of the cases proper bills have not reached the consumers. In his letter to the chairman, the Minister has mentioned that the UPPCL went into an agreement with 18 billing companies for providing downloadable bills through handheld machines within two years, profiling ‘know your consumer’ (KYC) details and identification of chronic defaulters. The Minister warned UPPCL authorities that without proper billing, consumers should not be made to bear the brunt and in case of overbilling and meter jumping, the authorities should first install a check meter of a new company and detect the fault. Action against the consumer should be considered only if they do not pay up even after that. The Minister said that it was an easy excuse to claim that 10 mn consumers have not paid their bills, but somebody should check how many of them received proper bills and how many of them have not even received the bills.

Source: The Economic Times

AAP vows zero power bills to 73 percent of Goa if elected

QuIck Comment

Zero power bills is not the right path to political power!


18 November. Aam Aadmi Party (AAP) promised zero power bills to 73 percent of Goa’s consumers if it forms the government in the state. Delhi MLA Raghav Chadha, who arrived in Goa for a public debate with State Power Minister Nilesh Cabral, said the decision to provide free power to those who consume under 200 units will be taken “within 48 hours of AAP forming the government”. Displaying the stark contrast between electricity bills issued to consumers in Delhi and Goa, he said Delhi residents who consumed 177, 174, 204 and 211 units of power received bills of nil, nil, ₹13.4 and ₹5 respectively.

Source: The Economic Times 


India to float competitive bids for 22.5 GW of solar power capacity soon

24 November. Indian authorities will invite competitive bids for close to 22.5 GW of new tenders for solar power projects by December end while about 43 GW of capacity is at different stages of commissioning by successful bidders. Bids to enhance solar and wind power installations will continue to grow as India has committed to the world to enhance its dependence on renewable power. Modi government is confident of achieving these targets of probably the world’s largest renewable energy programme in history. Currently, India’s solar power capacity stands at about 35 GW and the government is planning to increase it to 100 GW in the next couple of years to meet its ambitious targets under National Solar Mission. Also, India has 9.5 GW of wind power capacity under execution and new bids are expected in near future. Of the country’s 370 GW of total electricity generation capacity, renewable power accounts for close to 24 percent that is expected to grow year-on-year. The Solar Energy Corp India (SECI) is the is the nodal agency to facilitate the implementation of the Mission and managing 16.2 GW of tenders. SECI has invited 7.5 GW of the tender to commission solar projects in Jammu & Kashmir, 2.5 GW in Karnataka and 6.2 GW anywhere the developers want in India.

Source: The Economic Times

JBM Renewables inks pact with MoPNG to set up 500 biogas projects in India

24 November. JBM Renewables, a firm of JBM Group, said it has inked a Memorandum of Understanding (MoU) with the Ministry of Petroleum and Natural Gas (MoPNG) for setting up 500 compressed biogas (CBG) projects across India. The MoU was signed in the presence of Oil Minister Dharmendra Pradhan, the company said. JBM Renewables has been shortlisted and is among the four companies that have been identified by the government for the biogas programme. It will work jointly with MoPNG on the SATAT (Sustainable Alternative Towards Affordable Transportation) programme. The ministry will offer its guidance, support, and facilitation in conceptualizing, establishing and functioning of the plants, Pradhan said after signing the MoUs for setting up 900 CBG plants as part of SATAT initiative. The scheme envisages setting up 5,000 CBG plants by FY24 and the benefits from it will go to farmers, rural areas and tribals.

Source: The Economic Times

Solar power tariff dips to all-time low of 2 per unit

24 November. Solar power tariff dropped to an all-time low of ₹2 per unit in an auction conducted by the Solar Energy Corp of India (SECI). Under the SECI auction concluded, Saudi Arabian firm Aljoemaih Energy and Water Co and Sembcorp Energy India arm Green Infra Wind Energy Ltd emerged as the lowest bidders by quoting a tariff of ₹2 per unit for 200MW and 400 MW capacities. NTPC Ltd quoted a price of ₹2.01 per unit for 600 MW capacity. In July this year, solar power tariffs had dropped to a low of ₹2.36 per unit in an auction of 2 GW capacities by SECI.

Source: The Economic Times

Coal India to set up 3 GW solar power projects at 56.5 bn by FY24

23 November. Coal India Ltd (CIL) said it would set up 14 rooftop and ground-mounted solar power projects of 3,000 MW capacity by financial year 2023-24 (FY24) at an investment of about ₹56.5 bn. CIL has been mandated by the coal ministry to become a net-zero company and solar power initiative is a part of CIL’s diversification plans. The company has a JV (joint venture) with NLC India named Coal Lignite Urja Vikas Private Ltd which was floated on 10 November this year to develop 1,000 MW solar power projects. It also has a JV with NTPC Ltd and an MoU (Memorandum of Understanding) with the Solar Energy Corp of India for solar projects of 1,000 MW each, the progress of which is being worked out individually. It said that CIL would gradually peak up to 1,340 MW in 2023-24, while for FY23 solar power capacity addition is targeted at 1,293 MW, with 220 MW capacity to come up in 2021-22. CIL’s subsidiaries have already identified 1,156 acres of land between them where they would set up 220 MW solar projects by end of FY22. Solar power generation by CIL and its subsidiaries stood at 4.6 mn units in FY20 and 4.25 mn units in FY19, which amounted to a reduction of over 3,000 tonnes of carbon dioxide emissions in each year, according to the firm.

Source: The Economic Times

MP government to set up plant for clean fuel from stubble burning

23 November. The Madhya Pradesh (MP) government has proposed a plan to set up an industrial unit producing fuel from stubble burnt by the farmers in the state, Agriculture Minister Kamal Patel said. This would help save the environment, putting an end to the air pollution caused by stubble burning. The Minister recently met Oil Minister Dharmendra Pradhan in New Delhi and discussed several issues, including the initiative of producing clean fuel from stubble burnt by the farmers.

Source: The Economic Times

With renewables push, India to cut carbon footprint by 35 percent: PM Modi

22 November. Prime Minister (PM) Narendra Modi said that the country was moving briskly forward in its efforts to “reduce its carbon footprint by 30-35 percent” and exuded confidence that the target of renewable energy production would be achieved “before time”. Modi said efforts were on to improve the share of natural gas fourfold this decade and to double the oil refining capacity in the next five years.

Source: The Economic Times

Covid scars India’s solar plan, capacity addition down 68 percent in 9 months

21 November. The Coronavirus pandemic has left a big dent in India’s solar plan, although the industry is showing signs of recovery as new capacity jumped 114 percent to 438 MW in the third quarter from 205 MW installed in the second quarter as supply chains get restored. Green energy market tracker Mercom’s latest report outlined the impact by pointing out the third-quarter installations were 80 percent less than 2,177 MW added in the corresponding period of 2019. Similarly, total installations for the nine-month period were down 68 percent to 1.7 GW from 5.48 GW added in the same period of 2019. Large-scale installations showed improvement at 283 MW in the third quarter against 120 MW in the previous quarter, but the number was still down 85 percent compared to 1,932 MW installed in the year-ago period. Work on projects came to a standstill as the countrywide lockdown from 25 March disrupted supply chains, including imports, and movement of manpower. But since the unlock process began in June, economic activity has resumed steadily. The solar industry is also showing signs of recovery with increased activity compared to the previous quarter. India has set an ambitious target of setting up175 GW renewable energy capacity by 2022 and 450 GW by 2030. The cumulative solar capacity currently stands at more than 37 GW. In the near term, the report expects some supply disruptions and a shortage of solar components. Because of solar glass shortage and the anticipated demand rush in China in the fourth quarter to meet the year-end goals, developers are experiencing module shortages along with their prices firming up. The module scarcity and upward pressure on pricing could linger till the second quarter of 2021.

Source: The Economic Times

SunSource Energy bags 6 MW floating solar plus storage project in Andaman and Nicobar Islands

20 November. SunSource Energy, a Noida-based distributed solar energy firm, said it would be developing a 4 MW grid-connected floating solar photovoltaic power project, along with 2 MW battery storage system (BESS) in Andaman and Nicobar Islands. It said that once commissioned, it would be one of India’s largest floating plus storage projects in Andaman and would offset about 8,112 tonnes of carbon dioxide annually by reducing the region’s reliance on diesel for electricity. The project will be situated at the reservoir of Kalpong river, Kalpong Hydroelectric Project Dam, Diglipur in North Andaman. The company would sign a power purchase agreement for a 25-years period with the Electricity Department of the Andaman and Nicobar administration.

Source: The Economic Times

Solar power equipment production for 35 GW capacity on cards

20 November. The government has received expressions of interest to set up manufacturing capacity of nearly 35,000 MW of solar equipment, Power and Renewable Energy Minister R K Singh said. If the bids materialise, they would result in the first large-scale plan to set up the manufacturing of ingots and wafers in the country. As per industry estimates, India currently has a manufacturing capacity of 3,000 MW for cells and 10,000 MW for modules. He also said talks were ongoing with the finance ministry to implement the basic customs duty on foreign solar imports.

Source: The Economic Times

MNRE proposes scheme for development of wind-solar hybrid parks

18 November. The Ministry of New and Renewable Energy (MNRE) has sought comments and feedback on its concept note for development of wind and wind-solar hybrid parks in the country. The concept note aims to address a key issue faced by renewable energy projects, in particular wind energy projects, in recent months. The solar power project is commissioned on contiguous land, while the wind power project requires scattered land on footprint basis which not only increases the transmission cost but also increases the possibility of land-related issues. If the site is found to be suitable, the park developer may consider developing a wind-solar hybrid park. The identified sites would be circulated to concerned state governments for their approval. The State government would designate park developer who would undertake the development of park including DPR preparation, land, transmission infrastructure, etc. Sites have been identified across seven states — Tamil Nadu, Andhra Pradesh, Karnataka, Telangana, Gujarat, Rajasthan and Madhya Pradesh — and the Concept Note has identified potential to install projects for a capacity of 53,495 MW (5 MW per square km). The capacity of each park should be 500 MW and more. However, parks of lower capacity may also be developed depending upon the availability of land and resource. In any case, the capacity of each park shall not be less than 50 MW. Park developers may also be allowed to pool small investor into the single park. MNRE will provide financial assistance of ₹25 lakh per park to the developer for DPR preparation and ₹30 lakh per MW or 30 percent of the park development cost to park developer, whichever is lower.

Source: The Hindu Business L ine

Rays Experts commissions 700 MW solar power projects in India

18 November. Solar solution provider and park developer Rays Experts announced that it has commissioned solar projects of around 700 MW capacity across the country. These projects include a 440 MW solar plant inside the park, 210 MW solar plant outside the park, 49 MW rooftop installations for commercial/industrial sites, and 4 MW units across 8,400 homes. These projects include ground-mounted solar panels for 230 clients – including Delhi Metro, NDMC, airports, IITs and NITs, defense establishments, industries, and major hotel chains alongside others, the statement said. Rays Experts aims at venturing deeper into the commercial space and achieve a YoY (year on year) growth of 20 percent by completing three more solar parks over the next financial year. Since India is estimated to have over 10 GW additional solar plants within the next two years, Rays Experts has its sights set on institutional projects and becoming a leader in residential rooftop installations by powering 330 mn homes across the country.

Source: The Economic Times


US regulator issues report on negative oil prices

24 November. A US (United States) regulator issued a report detailing events that led up to US crude futures’ historic collapse into negative territory in April, but did not delve into the actions by individuals or firms that may have profited on the day. Benchmark US crude futures plunged below zero for the first time in history in April as technical factors such as unusually high open interest coincided with fundamental factors including a shortage of storage options and an unprecedented collapse in demand due to the Covid-19 pandemic, the US Commodity Futures Trading Commission (CFTC) said in the report. Trading in the benchmark US contract has ripple effects across the global market and is used a key reference rate for pricing physical and financial oil transactions.

Source: Reuters

Domestic fuel supplies unaffected by attack on Jeddah plant: Saudi Aramco

24 November. Saudi Aramco said its domestic fuel supplies were not affected by an attack from Yemen’s Houthi group on a petroleum products distribution plant in the north of Jeddah city, with operations resuming three hours after the incident. Aramco’s oil production and export facilities are mostly in Saudi Arabia’s Eastern Province, more than 1,000 km (620) from Jeddah. One of the 13 tanks used for diesel oil, gasoline and jet fuel at Aramco’s North Jeddah Bulk Plant is currently out of action, the facility’s manager Abdullah al-Ghamdi said. He described the site as a “critical facility” with total storage capacity of 5.2 mn barrels. It can distribute more than 120,000 barrels of products per day domestically to Jeddah, Mecca and the al-Baha region.

Source: Reuters

Elliott Management invests in small Guyana oil explorer

24 November. Activist hedge fund Elliott Management Corp has invested at least $30 mn in Cataleya Energy, a small firm focused on oil exploration in Guyana, the world’s newest oil and gas hot spot. The deal reflects rising interest in Guyana, a small South American country of 750,000 whose oil discoveries are set to transform an economy dependent on agriculture and mining. Five years ago, a consortium led by Exxon Mobil Corp struck oil off the Guyanese coast in the 6.6 mn-acre (26,800 square kilometre) Stabroek block that has been shown to hold more than 8 bn barrels of recoverable oil and gas.

Source: Reuters

Iraq seeks first ever oil prepayment deal as finances strained

23 November. Iraq is seeking its first ever crude oil prepayment deal to boost its finances as the country struggles to cope with lower oil prices and demand due to the coronavirus pandemic, its oil ministry said. The country is seeking a five-year prepayment starting January 2021 until December 2025 to be repaid with cargoes of its Basra crude, according to a letter sent by state oil marketer SOMO to its customers. OPEC (Organization of the Petroleum Exporting Countries) and allies including Russia, known as OPEC+, announced record oil production cuts in the first half of the year as oil demand crashed when the world ground to a near-halt due to Covid-19 lockdowns.

Source: Reuters

China issues final batch of refined fuel export quotas for 2020

23 November. China has issued a new and final batch of refined fuel export quotas for 2020 totalling 3 million tonnes (mt), including its first sizeable quota to a giant private refiner. The new issue brings the total fuel export quota this year to nearly 59 mt, up from last year’s 56 mt. Valid until the end of the year, the new quota includes 1.95 mt allotted to CNPC, 1 mt to privately controlled Zhejiang Petrochemical Corp (ZPC) and 50,000 tonnes to North Industries Group Corp. ZPC, which operates China’s single-largest crude oil refinery based in eastern port city Zhoushan, in July became the first private refiner allowed to export refined fuel, but the size of its quota had not been determined. Beijing is seeking to let more private companies access the global fuel market as it looks to ease oversupply pressure on China’s domestic market.

Source: Reuters

UAE oil discoveries bolster ADNOC bid to reach 5 mn bpd capacity: Energy Minister

23 November. UAE (United Arab Emirates) Energy Minister Suhail al-Mazrouei said the latest oil discoveries are part of Abu Dhabi National Oil Co’s efforts to increase production capacity to 5 mn barrels per day (bpd) by 2030. The UAE announced the discovery of two bn barrels of conventional oil reserves and 22 bn barrels of unconventional oil reserves.

Source: Reuters

China’s oil buying binge to run on in 2021 as tank operators, refiners stock up

18 November. China’s commercial oil stockpiling sector, which emerged as a key swing buyer of crude as prices plunged earlier this year, is setting plans to grow again in 2021, supporting a further boost in imports. Private tank farm operators, refiners and traders pumped an extra 310-600 mn barrels of oil into storage in China this year, according to a survey of five analysts, more than a month’s usage in the world’s second-largest oil consumer. The buying helped prop up global oil markets as the coronavirus slashed demand, and delivered big profits for operators, traders and refiners who were able to stock up cheaply. While oil prices have partly recovered, they remain below historical levels. Private refiners and storage operators will put about another 100 mn barrels of new tanks to use in 2021. China’s oil storage has traditionally been driven by state-owned companies and the country’s Strategic Petroleum Reserve, but private firms have taken an increasing role over the past four years after small, independent refiners were allowed to import oil. Private refiners, storage firms and port authorities accounted for nearly half of this year’s inventory build, analysts said.

Source: Reuters


Australia’s Santos plans maintenance at Gladstone LNG plant in January 2021

24 November. Australia’s Santos Ltd plans to shut down one of its production trains at its Queensland-based Gladstone Liquefied Natural Gas (GLNG) project in January, according to the Australia Energy Market Operator (AEMO) notice. One train will be offline during 2-7 January for scheduled maintenance, according to the notice. The plant’s two production trains have combined nameplate capacity of 7.8 million tonnes per annum (mtpa) on Curtis Island. Santos is the operator of GLNG with a 30 percent stake. Its co-owners are Malaysia’s Petronas, France’s Total SA and Korea Gas Corp. LNG producers in Queensland, Australia voluntarily submit information on production maintenance to the AEMO.

Source: Reuters

China’s CNOOC to add 6 LNG storage tanks at Binhai terminal

18 November. China’s biggest offshore oil and gas producer CNOOC Group will add 1.62 mn cubic metres of storage capacity for liquefied natural gas (LNG) at its Binhai terminal in the eastern province of Jiangsu. The expansion will consist of six tanks with storage capacity of 270,000 cubic metres each and construction is expected to be completed in 2023, according to a statement from Assets Supervision and Administration Commission of the State Council (SASAC). The government of Henan, a province in central China, will invest in two of the tanks but CNOOC will operate them, in order to meet gas demand from both Henan and Jiangsu. The cooperation between CNOOC and Henan government is the first time in China that a local government has invested in LNG infrastructure outside its administrative region, according to the SASAC. The first phase of CNOOC’s Binhai LNG terminal is designed to receive 3 million tonnes (mt) of LNG a year and to have four storage tanks of 220,000 cubic metres each. It is expected to commence operation in 2021.

Source: Reuters


China approves four coal mines in Xinjiang region

24 November. China’s National Energy Administration had approved four coal mine projects in western Xinjiang region to ensure stable energy supply, it said. The four coal mines involved total investments at 4.06 bn yuan ($616.97 mn) and annual capacity at 6 million tonnes (mt), according to the administration.

Source: Reuters

Indonesia January to October coal output at 459 mtEnergy Minister

23 November. Indonesia coal output in the January to October period was 459 million tonnes (mt), the country’s Energy Minister Arifin Tasrif said. Domestic coal consumption in the same time period stood at 109 million tonnes (mt), the Minister said. Indonesia’s full-year domestic coal consumption target stands at 155 mt, higher than last year’s 138 mt.

Source: Reuters


Covid-19 will not lead to power cuts: French Environment Minister

19 November. France will not face electricity outages this winter even if the new coronavirus crisis disrupts nuclear plant maintenance, Environment Minister Barbara Pompili said. Power grid operator RTE is expected to update its forecasts for electricity needs this winter later. RTE said in September that the ability of France to meet electricity needs required vigilance as the pandemic made forecasts difficult. Pompili said that industrial companies would have to halt output in the case of any electricity shortages to reduce demand.

Source: Reuter 


UK to double renewables capacity eligible for next subsidy auctions

24 November. The British government said it will double the capacity of renewable energy projects eligible for support in its next round of subsidy auctions. Under the so-called Contracts-for-Difference (CfD) scheme, qualifying projects are guaranteed a minimum price at which they can sell electricity, and renewable power generators bid for CfD contracts in a round of auctions. The next allocation round for renewable energy technologies such as offshore wind will open late next year. It will increase the capacity of renewable energy from the 5.8 GW achieved in the last allocation round to up to 12 GW, which could be enough to power 20 mn electric cars on Britain’s roads in a year, the government said.

Source: Reuters

ADB approves $600 mn loan for Indonesia’s PLN for renewable power

24 November. The Asian Development Bank (ADB) approved a $600 mn loan for Indonesian state utility Perusahaan Listrikk Negara (PLN) to expand electricity access and promote renewable energy. The loan is part of the second phase of an electricity grid development programme covering the outer regions of Kalimantan, Maluku, and Papua in the east of the country, which began in 2017. Indonesia’s government aims to have 23 percent of energy coming from renewable sources by 2025, up from around 9 percent in July, but progress on renewable projects has been slow. The country has over 400 GW potential capacity for sources like hydropower, solar and geothermal, but only around 2.5 percent had been utilised, according to government data. It hopes to simplify pricing for electricity from renewables to encourage more investment in the sector.

Source: Reuters

Spain offers $89 mn green energy aid to Balearic, Canary Islands

24 November. Spain will offer €75.1 mn ($89 mn) in state aid for renewable energy projects in the Balearic and Canary Islands, the energy ministry said, hoping to smooth a carbon phase-out process. Mirroring green ambitions across Europe, Spain plans to install 60 GW of renewable capacity by 2030, and hopes to create more than 100,000 jobs annually and reduce energy costs for consumers and businesses in the process. A further €54.4 mn will be offered to wind energy projects in the volcanic Canary Islands which include Tenerife. The new aid is partially financed by European Union funds and is expected to lead to the installation of at least 160 MW of capacity in the Canaries and 120 MW in the Balearics, the ministry said. The tiny Canary island of El Hierro has occasionally managed to meet all its power needs from renewable sources, the ministry said.

Source: Reuters

China lifts renewable power subsidy for 2021 by nearly 5 percent

21 November. China’s finance ministry said it had set the country’s renewable power subsidy for 2021 at 5.95 bn yuan ($905.7 mn), up 4.9 percent from this year, thanks to a big increase in the allocation to solar projects. The subsidy will go to wind farms, biomass power generators and distributed solar power operators, as well as solar power projects for poverty alleviation purposes, in 14 Chinese regions, according to the ministry’s Central Budget and Final Accounts Public Platform. China, the world’s biggest energy consumer, aims to peak carbon dioxide emissions by 2030 and achieve carbon-neutrality before 2060. It had slashed the subsidy in 2020 from the previous year by around 30 percent as it aimed to stop funding large producers of electricity from renewable sources to make them compete with coal-fired utilities and achieve grid-price parity.

Source: The Economic Times


Source: World Energy Outlook 2020, International Energy Agency
Source: World Energy Outlook 2020, International Energy Agency

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.

Disclaimer: Information in this newsletter is for educational purposes only and has been compiled, adapted and edited from reliable sources. ORF does not accept any liability for errors therein. News material belongs to respective owners and is provided here for wider dissemination only. Opinions are those of the authors (ORF Energy Team).

Publisher: Baljit Kapoor

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