23 October 2020, Volume XVII, Issue 20

Energy News Monitor

DIESEL DEMAND FALTERS Monthly Oil News Commentary: September - October 2020

India refineries that predominantly produce diesel will need to rethink their current output of products, Nayara Energy Demand Ltd, India’s second-biggest private refiner. or decades, diesel has underpinned India’s economic Petrol sales have fully recovered to pre-Covid level and growth and the fortunes of its refiners, but the F diesel is down just about 6 percent in the first half of pandemic has caused the nation’s most consumed fuel to September from a year earlier, signalling people and lose some of its lustre. Since Covid-19-lockdowns have industry were eager to get on with their lives despite a eased across India, diesel consumption has trailed the record jump in infection rates. In the first fortnight of rebound in gasoline with trucks remaining idle amid a September, petrol sales rose 2 percent from a year earlier softer economy. Motor fuel use, however, has benefited and 7 percent compared to August. Diesel sales were from people choosing their own cars and scooters over down 5.5 percent year on year but rose 20 percent month public transport to avoid the risk of infection. While on month, as per sales data from state-run fuel retailers diesel is still king in India -- fuel sales are double that` of who control nearly 90 percent of the domestic market. gasoline -- the uneven demand recovery has created a India’s petrol sales rose 2 percent in September - the first unique challenge for India’s refiners, just as more increase since the country’s lockdown in late March - headwinds emerge from the use of hydrogen and natural signalling demand returning to pre-Covid-19 levels. gas in major guzzlers such as trucks and buses. Refiners Diesel sales continue to be below normal but have shown are expected to focus on making less diesel and more a month-on-month increase, according to provisional gasoline and petrochemicals to respond to changing data from state-owned fuel retailers who control 90 demand. RIL has flagged a shift away from transport percent of the market. Petrol sales in September rose 2 fuels, while IOC has signalled greater diversification to percent year-on-year and were up 10.5 percent over the reduce its dependence on its fuels business. The price previous month. Diesel sales continue to be in the advantage of once cheap diesel has also faded. The fuel negative territory, with demand falling 7 percent year-on- costs almost as much as gasoline in some Indian states year. But the demand was 22 percent higher over August after being saddled with new taxes over the past six years, 2020. This is the first time that petrol sales in the world’s prompting some farmers to come up with novel third-largest oil importer have risen since the 25 March alternatives such as liquefied petroleum gas to run water nationwide lockdown crippled economic activity and sent pumps. Farms account for more than eighth of total demand plummeting. Petrol sales rose to 2.2 mt in diesel consumption in India. The demand shift related to September as compared to 2.16 mt in the same month the pandemic and broader energy transitioning means last year and 1.9 mt during August 2020. Demand for diesel, the most consumed fuel in the country, fell to 4.84 proposal given by the industry and the oil ministry is mt from 5.2 mt in September 2019. Sales were 3.97 mt accepted by the finance ministry. The oil ministry said during August this year. BPCL had stated that petrol sales that they are looking at extending tax concessions, along were almost at pre-Covid-19 levels but diesel is lagging. with reduction in oil cess and the finance ministry has been apprised of the matter for action. Though the larger India’s fuel demand in September rose for the first time view is in favour of halving the cess, the exact quantum since June as easing coronavirus restrictions supported would be worked out later. The reduction in the levy has economic activity and travel, but consumption remained huge revenue implications as ONGC alone pays cess in weaker than a year earlier. Consumption of refined fuels, ₹ a proxy for oil demand, rose 7.2 percent in September excess of 100 bn annually. The finance ministry had from the prior month to 15.47 mt the first monthly revised oil cess in the FY17 Union Budget, shifting it increase since June when demand rose to 16.09 mt. from specific charge of ₹4,500/tonne of crude to an ad However, demand fell 4.4 percent from the same period valorem rate of 20 percent. The government is looking to a year earlier, posting its seventh consecutive year-on-year reduce tax burden on oil companies to push up domestic slide, data from the PPAC of the MoPNG showed. production that has stagnated for past several years at Diesel consumption, a key parameter linked to economic around 30-34 mt. The reduction in oil cess would benefit growth and which accounts for about 40 percent of upstream companies such as ONGC and overall refined fuel sales in India, rose 13.2 percent to whose production is subjected to the oil industry 5.49 mt last month from 4.85 mt in August. development cess levied on an ad valorem basis. But under OALP, which provides pricing and marketing Tax on Petroleum Products freedom to operators along with the power to select the The Nagaland government has decided to withdraw the block for exploration, does not attract oil cess. Currently, steep Covid-19 cess on petrol and diesel. Considering the ONGC and Ltd pay a cess on crude oil they need to give a boost to economic activities and the woes produce from their allotted fields on a nomination basis. of the people, the decision to roll back the cess was taken. Cairn India has to pay the same cess for oil from the The Nagaland government imposed the Covid-19 cess of Rajasthan block. ₹5/litre on diesel and ₹6/litre on petrol and other motor LPG spirits on 28 April, amid a crunch in the state's finances in the wake of the lockdown following the Covid-19 India is expected to overtake China as the world’s largest outbreak. Opposition parties, tribal bodies, civil society cooking gas or LPG residential sector market by 2030 groups and student bodies have been demanding a according to Wood Mackenzie. Driven by environmental rollback of the cess. Besides, the Dimapur Naga Students' and health concerns, the government has also been Union on 19 September had threatened to close down all implementing schemes to help lower-income families the petrol pumps in the state if the cess was not cope with the cost of switching from dirtier biomass to withdrawn. LPG. Even with subsidy and the initial cost of set-up covered by the government, LPG is more expensive than Production biomass. Smaller-size LPG cylinders which reduce The government may give a 'Make in India' push to oil upfront cash payment required for each refill, more LPG and gas explorers, as it is considering a proposal to halve distributors as well as the 'Give it Up' campaign where cess on domestic crude oil to encourage exploration households can voluntarily give up their LPG subsidies activity and allow Covid-hit oil producers to protect their from the DBTL scheme to benefit lower-income families. margins at a time when a glut in the market and By the end of 2030, India’s LPG demand in the suppressed demand is pushing down prices. Cess on residential sector will account for 82 percent of the domestic crude is currently levied at the rate of 20 percent country’s total LPG demand while natural gas demand in of the value of oil. This may come to 10 percent if a the same sector will only account for 3 percent of total natural gas demand in India according to Wood month, as a substitute for dwindling Venezuelan supply. Mackenzie. The deal, large for Canada, shows how global buyers are scrambling for new sources of heavy oil. Venezuela’s Hassan district will soon get another LPG pipeline after production has collapsed over the last several years, and Mangaluru-Bengaluru pipeline. The 72nd Land Audit US sanctions have squeezed its ability to sell oil to Committee meeting held recently has given a green signal international buyers, including RIL. The Indian refiner, to the ambitious HPCL LPG pipeline between Hassan which operates the largest refining facility in the world, is and Cherlapally at Secunderabad in Telangana. This is a among several companies winding down purchases from 680 km pipeline. According to the proposal, the company Venezuela as a result of US sanctions. will invest ₹6.8 bn in this project which is expected to ease the burden of LPG transport between Hassan and Indian refiner BPCL will continue to import gasoline for neighbouring Telengana. According to the proposal, the next few months as its crude processing is hit due to HPCL pipeline will go through Arsikere in Hassan, lower demand for diesel that accounts for 40 percent-45 Tiputur and Chikkanayakanahalli in Tumakur, and Hiriur percent of its product slate. BPCL is operating refineries and Sira in Chitradurga. The project is expected to create at an average of 80 percent capacity. By design BPCL hundreds of indirect jobs as it is a labour-intensive project. refineries make 2.5 mt of diesel for every 1 tonne of gasoline produced. India’s recent spot demand provided The issue of continuation of cooking gas or LPG subsidy support to the Asian gasoline market. India’s gasoline will be considered before inviting financial bids for BPCL demand in September recovered to last year’s level as privatisation, Parliament was informed. However, the passenger cars sales surged last month and motorists are interest of LPG customers of BPCL would be taken into relying on personal vehicles for commuting amid rising consideration while deciding on the subsidy issue. The cases of coronavirus. Slowing industrial activity has government is selling its entire 52.98 percent stake in delayed a recovery in diesel consumption, largely used by India’s second largest fuel retailer and third biggest oil commercial vehicles. Diesel demand this month is 8 refiner. percent-9 percent lower than year-ago levels. India’s Imports diesel sales could recover next month during the festival India’s oil imports from Africa jumped to their highest in season. BPCL will completely stop importing gasoline 10 months in August as refiners switched out more from April next year when it would start new units at its expensive crude from the Middle East according to Kochi refinery to upgrade naphtha into gasoline. BPCL shipping data. The world’s third biggest oil importer will go back to its pre-Covid product slate in next two- shipped in about 3.95 mn bpd of oil in August, the three months, notwithstanding lower demand of jet fuel highest volume since April, with African nations which is just 4 percent-5 percent of its overall output. accounting for about 17.5 percent, or an eleven month Refining high of 688,000 bpd. Fitch Solutions has made a further downward revision to Oil imports by India’s RIL the operator of the world’s India refined fuels demand forecast for 2020 from minus biggest refining complex, surged in August after over a 9.4 percent to minus 11.5 percent in line with further decade low in July, as the company has resumed normal deterioration in the country’s economic outlook. In operation at its export-focused plant after weeks of response to the pandemic, the government has maintenance shutdown, shipping data showed. RIL’s oil introduced a number of stimulus measures and, imports in August rose about 58 percent from July to 1.22 according to Fitch country risk analysts, will likely mn bpd. The refiner received Venezuelan oil in August continue to boost spending in the face of a persistent after a gap of two months as it took authorisation from revenue shortfall. Demand weakness is spread across the Washington to exchange the oil for fuels. RIL has agreed board, with both consumer and industrial fuels set for to purchase 2 mn barrels of Canadian heavy crude per steep declines. With a nationwide lockdown in place over March to May, domestic demand plummeted, reaching its Abu Dhabi National Oil Co to build a 1.2 mn bpd nadir in April at minus 48.7 percent year-on-year growth refinery on India’s west coast has also been held up for total fuels consumption. Industrial demand as a whole because land has yet to be acquired for the project. Fuel has declined sharply due to restrictions in place on demand in India has recovered in the first two weeks of business activities, labour and supply shortages and credit this month, with IOC selling 1 percent more gasoline constraints. The one bright spot was LPG demand for than a year earlier while diesel remained down by about 9 which rose by 4.3 percent. Social distancing measures percent. have increased residential demand as a whole while the Activities for development of Crude Oil Import facility government’s policy to offer free cylinder refills to low- of Assam based NRL have started in Paradip Port, income households offered an additional boost. Odisha. Land filling activity will soon be started by DCI Crude oil processed by Indian refiners slipped 26.4 by way of dredging and reclaim. A tripartite MoU was percent from a year ago in August, the most in four entered into by NRL with Paradip Port Trust and DCI months, as fuel demand remained subdued on for reclamation of the 200 acres of land allotted to NRL skyrocketing coronavirus cases that hindered industrial for setting up its crude oil import terminal at Paradip Port. and transport activity. Indian refiners processed 3.82 mn NRL stated that DCI shall start the dredging activity from bpd or 16.15 mt of crude last month, 8.7 percent lower mid-November 2020 and is expected to complete the than in July. Crude oil throughput in August recorded its reclamation work within a period of 7 months. largest year-on-year contraction since April, when it posted its steepest decline since 2003. Weaker refining Strategic Reserves margins and a slide in fuel consumption have prompted India saved over ₹50 bn when the country in April-May refiners to cut crude processing and lower output. Indian used two-decade low international oil prices to fill up its refiners operated at about 76.1 percent of their overall three strategic underground crude oil storages. India, the capacity in August compared to 83.3 percent in July. Top world’s third-biggest oil importer, has built strategic refiner IOC operated its directly owned plants at 66.7 storages in underground rock caverns at three places to percent capacity. The refiner expects local gasoline and meet any contingency. The average cost of procurement gasoil demand to reach pre-pandemic levels in the first of crude oil was $19/bbl as compared to $60/bbl half of fiscal 2021 and sought to expand its petrochemical capacity to off-set weaker fuel refining margins. RIL prevailing during January 2020. While the 5.33 mt of owner of the world’s biggest refining complex, operated emergency storage -- enough to meet India’s oil needs for its plants at about 75.8 percent capacity. 9.5 days -- was built in underground rock caverns in Mangalore and Padur in Karnataka and Visakhapatnam IOC, the country’s largest refiner, is reviewing its refinery in Andhra Pradesh by the government, state-owned oil expansion plans because of a gradual rise in use of cleaner firms were in April asked to buy crude oil when global fuels and changing demand patterns in Asia’s third-largest rates fell to a two-decade low. The storages at Mangalore economy. In 2018 India set a target for a 77 percent jump and Padur were half-empty and there was some space in refining capacity to about 9 mbpd by 2030, with IOC raising capacity to 2.6 mn bpd. However, PPAC is available in Vizag storage as well. The ISPRL built the revising the supply and demand scenario for the country. underground storages at Mangalore and Padur in Andhra IOC’s focus is on adding higher capacity through Pradesh and Visakhapatnam in Andhra Pradesh as expansion of existing units and raising petrochemical insurance against supply and price disruptions. India capacity to protect margins. IOC will also review meets 85 percent of its oil needs through imports. Its expansion of its Paradip refinery when the revised supply refiners maintain 65 days of crude storage, and when and demand figures are available. IOC’s joint venture added to the storage planned and achieved by ISPRL, the with other state refiners along with Saudi Aramco and Indian crude storage tally goes up to about 87 days. Taking advantage of low prices in major oil-producing has steadily lowered its 2021 oil demand growth forecast centres in Saudi Arabia and UAE India has filled up its from an initial 7 mn bpd expected in July. To tackle the strategic crude oil reserves to meet its energy needs in drop in demand, OPEC and its allies including Russia, a times of emergency and saved a neat $685.11 mn in the group known as OPEC+, agreed to a record supply cut process. It bought crude oil at an average price of $19/bbl of 9.7 mn bpd starting on 1 May. OPEC output fell by to fill its reserves in April and May when prices reached 50,000 bpd to 24.11 mn bpd in September. OPEC an all-time low while the US oil touched negative price forecast demand for its crude will be 200,000 bpd lower levels in futures market. The state-funded reserves are than expected next year at 27.93 mn bpd. Assuming meant to tide over short-term supply disruptions and will global demand rebounds as expected, this in theory leaves take care of India’s oil needs for 9.5 days. The country room for OPEC members to increase output in 2021 by was already holding half of its total 5.33 mt of oil reserves over 3.8 mn bpd from September’s rate without causing capacity when the government decided to take advantage a glut. of the low crude prices. India’s three petroleum reserve USA caverns at Visakhapatnam (1.33 mt), Mangaluru (1.5 mt) and Padur (2.5 mt), managed by ISPRL, are now full. US oil output from seven major shale formations is Another 6.5 mt facility is coming up at Padur in expected to decline by about 68,000 bpd in October to Karnataka, and Chandikhole in Jajpur. The oil ministry 7.64 mn bpd according to the US EIA. Output at every has also told the ISPRL to identify new sites so that the formation is expected to fall in October, except the storage facility is increased to ensure oil stock of 90-100 Permian basin of Texas and New Mexico, where production is expected to rise by about 23,000 bpd to days for use in an emergency at all times. 4.17 mn bpd. That would be the smallest increase since Overseas Ventures production declined in May. The biggest decline is BPCL has been forced to pay for its defaulting partner expected to come from the Eagle Ford basin in South Videocon Industries Ltd after it had relied on a rarely Texas, where output is expected to fall by nearly 28,000 used model to acquire stake in five oil blocks in Brazil. In bpd to 1.13 mn bpd. US oil prices are still down about 40 September 2008, BPCL and Videocon Industries had percent from the peak at the start of the year, due to formed a 50:50 joint venture to acquire a Brazilian oil coronavirus demand destruction. However, US crude exploration firm for $283 mn. futures have gained almost 100 percent over the past five months to around $37/bbl mostly on hopes global Rest of the World economies and energy demand will snap back as Global Trends governments lift lockdowns. Those higher oil prices have encouraged some energy firms to start adding rigs, an World oil demand will rebound more slowly in 2021 than early indicator of future output in recent weeks. previously thought as coronavirus cases rise according to OPEC. Demand will rise by 6.54 mn bpd next year to BHP Group signed an agreement to acquire Hess Corp’s 96.84 mn bpd. The growth forecast is 80,000 bpd less entire stake in Shenzi oil and gas field in the Gulf of than expected a month ago. A further weakening of Mexico for $505 mn. The deal would take its ownership demand could threaten plans by OPEC and allies to taper in the oil platform to 72 percent, with Spain’s Repsol SA in 2021 the record oil output cuts they made this year. owning the rest. With the acquisition, BHP said it would OPEC is keeping an eye on the situation but currently has be able to add about 11,000 boepd of production to its no plan to cancel the supply boost. Oil prices have portfolio and also grow high-margin barrels. The Anglo- collapsed as the coronavirus crisis curtailed travel and Australian company in August put up 50 percent of its economic activity. While in the third quarter an easing of stake in the Bass Strait oil and gas venture owned with lockdowns allowed demand to recover, OPEC sees the Exxon Mobil Corp for sale as revenue contribution from pace of economic improvement slowing again. OPEC the operation dwindled in fiscal 2020 compared to a year ago. Despite a plunge in crude prices this year, BHP laws governing Nigeria’s oil and gas exploration have not remains bullish on oil as it has profitable prospects for at been fully updated since the 1960s because of the least the next decade. contentious nature of any change to oil taxes, terms and revenue-sharing within Nigeria. But reforms and Middle East & Africa regulatory certainty became more pressing this year as Saudi Arabia’s crude oil exports rebounded in July to 5.73 low oil prices and a shift towards renewable energy made mn bpd from a record low in June, according to the Joint competition for investment from oil majors tougher. Organizations Data Initiative data showed. At 4.98 mn Libyan oil production has risen by about 20,000 bpd to bpd, crude exports in June were the weakest on record, reach 290,000 bpd as exports ramp up. The easing of a according to data. Output from the OPEC rose by more blockade by eastern forces, which began in January, has than 1 mn bpd in July as Saudi Arabia and other Gulf allowed the OPEC member to ramp up exports with the members ended voluntary supply cuts, on top of an reopening of the Marsa El Hariga, Brega and Zueitina OPEC-led deal to curb production. An easing of terminals, though damage sustained during the shutdown lockdowns and lower supply helped benchmark Brent may slow a full resumption of exports. The blockade crude hold above $40/bbl throughout July after plunging reduced Libya’s output from more than 1.2 mn bpd to to a 21-year low of $15.98/bbl in April, though gains were around 100,000 bpd. Exports have yet to resume from kept in check by fears of a second wave of Covid-19. the Ras Lanuf and Es Sider oil terminals. The NOC will Saudi Arabia shipped 6.1 mn bpd of crude oil in only resume operations at oilfields and terminals where September, slightly above August levels, and kept output militants had vacated their positions. The Episkopi oil steady at 8.974 mn bpd. The world’s top oil exporter tanker loaded a 600,000 barrel crude cargo for Austria’s pumped 8.988 mn bpd and exported 6 mn bpd in August. OMV at Zueitina over the weekend and departed for Italy. Saudi oil exports usually rise after the hot summer The port is expected to export 3.8 mn barrels. NOC months, when increased use of crude for power subsidiary AGOCO said it had resumed operations at the generation restricts oil shipments. The kingdom’s Hamada oilfield, with crude from the field expected to be production is in line with market expectations and its pumped to the 120,000 bpd Zawia oil refinery, west of OPEC Countries output quota. According to a OPEC Tripoli. Libya’s national oil company announced it is survey, Saudi Arabia’s September oil output was steady at resuming production at the country’s largest oil field as 9 mn bpd. rival officials from eastern and western Libya began peace Iraq has proposed forming a company to manage oil talks, part of preliminary negotiations ahead of a UN production and export operations in the semi- brokered dialogue set to take place next month. The autonomous Kurdish region. The Kurdistan Regional NOC said it has lifted the force majeure that was imposed Government and central government in Baghdad have at the southwestern Sharara oil field after it reached "an been locked in a long-running dispute over oil and land honor agreement" with forces loyal to military rights in the northern Iraqi Kurdish region. Talks on oil commander Khalifa Hifter to end "all obstructions" at issues between the government and authorities in the the field. Iraqi Kurdish region had reached a “positive Lebanon’s struggling economy will significantly benefit understanding”. The proposed state company’s from the revenues from the extraction of oil and gas from management would be technically and administratively the disputed area once the country reaches a border linked to the Kurdish regional authorities and federal oil demarcation agreement with Israel. The government has ministry. "high hopes" for the upcoming border-demarcation Nigeria has passed a long-awaited oil-reform bill and it agreements with Israel, which if successful will allow the will be formally presented in the Senate. The legislation consortium of companies licensed by the Lebanese has been in the works for the past 20 years, and the main government to begin taking the necessary steps towards the extraction of the oil and gas reserves in the disputed with the help from the Indian Navy and coast guards Block-9 off the Lebanese coast. doused the fire after three days. Two Sri Lankan naval ships, one Indian naval ship and 3 Indian coast guard China vessels were deployed in the operations. Chinese customs said it will amend the way it supervises S America crude oil imports as part of a broader effort to boost efficiency, allowing cargoes to clear customs before Argentine state energy company YPF has signed an quality inspections have been finalised. Key import oil agreement with the key union representing workers at the terminals along China’s coast, including the provinces of Patagonian Vaca Muerta shale oil and gas formation, Shandong, Zhejiang and Guangdong, suffered severe aimed at improving production. With the agreement, congestion between May and August as record crude YPF will be able to jack up activity in the resource-rich purchases arrived in the country. Effective from 1 southern province of Neuquen, where the shale play is October, importers will be allowed to start offloading oil located. once customs officers have collected key information and a sample of oil, the General Administration of Customs Venezuela’s state-run oil company PDVSA has begun said. Importers will still only be allowed to use or sell the loading an Iran flagged large tanker with Venezuelan oil once subsequent laboratory tests are completed. heavy crude for export, as ties have deepened between the two OPEC nations. Venezuela and Iran are under Other Asia sanctions imposed by the US, hurting their oil industries Indonesia will shorten a planned shutdown at its Banyu and hitting crude exports by shrinking the pool of Urip field and accelerate drilling at the Rokan block in a customers and shipping companies willing to send vessels bid to reach its target for oil and gas lifting this year to their ports. Washington has sought to disrupt the according to the country’s upstream regulator SKK deepening bilateral trade between the two countries. The Migas. These are among the several measures SKK Migas US seized over 1 mn barrels of Iranian fuel bound for said it would do in the remainder of 2020, aimed at Venezuela in July. The Iranian-flagged VLCC arrived in increasing average crude oil lifting for the year by 3,900 Venezuela’s main oil port of Jose this month carrying 2.1 bpd and gas by 70 mmscfd. The Banyu Urip field, mn barrels of Iranian condensate to be used as diluent for operated by a unit of Exxon Mobil, is situated in Cepu, Venezuela’s extra heavy oil production, according to the biggest oil-producing block in Indonesia. The company documents. The tanker is due to transport up regulator is ramping up talks with a Chevron unit for an to 2 mn barrels of Venezuela’s heavy Merey 16 crude on agreement about drilling of 11 wells at the Rokan block its way back, in a sale agreed by PDVSA and the National in the fourth quarter. Indonesia’s national crude oil lifting Iranian Oil Company. in January-August was 706,900 bpd, above the government's revised target of 705,000 bpd for 2020, but Canada slowing from the year's first half, while its gas lifting in Canada will spend C$320 mn ($238.56 mn) to support its the same period was 5,516 mmscfd, below this year’s offshore oil industry in Newfoundland and Labrador, revised target of 5,556 mmscfd. which has struggled as coronavirus pandemic travel Sri Lanka indicted the Greek captain of an oil tanker, restrictions reduced demand, the government said. which carried crude oil from Kuwait to India and caught Newfoundland and Labrador is Canada’s third-largest fire off the country's eastern Ampara coast, for causing oil-producing province, pumping 5 percent of the an oil spill. The Panamanian-registered New Diamond country’s crude in 2018. Low prices have forced was carrying 270,000 metric tons of crude oil from producers to cut spending globally. The province, whose Kuwait to India when a boiler explosion in its engine economy depends on oil, fishing and tourism, has the room caused fire on 3 September. The Sri Lanka Navy country’s highest unemployment rate. Russia Europe Russia plans to launch a programme to part build oil wells Some 324 Norwegian offshore oil workers planned to go this year so it can quickly ramp up production when the on strike if annual pay negotiations with employers fail global deal on output curbs expires in 2022. To ensure according to trade unions Safe, Industri Energi and Russia does not lose market share when the production Lederne. At Equinor’s Johan Sverdrup field, the largest cut agreement ends, Moscow has worked out a oil-producing field in Western Europe, 88 workers from programme to start drilling the wells, which can be Norway pumps more than 4 mn barrels of oil equivalents quickly completed and start operating once the deal per day (boed), half in the form of crude and other liquids expires and as oil prices recover. Russia expects its oil and half from natural gas, making it a major global energy production to increase after the current OPEC+ deal on supplier. The unions are negotiating on behalf of a output curbs runs its course in April 2022, the economy combined 7,300 workers, while the Norwegian Oil and ministry data showed. Russia, which the ministry expects Gas Association represents oil firms. Oil prices slipped to produce 507.4 mt of oil this year, is seen increasing its more than 1 percent after the oil worker strike in Norway production over the next three years to 560 mt, or 11.2 ended, which should boost crude output even as mn bpd, in 2023. Ministry data forecasts an increase in oil Hurricane Delta forced US energy firms to cut exports to 266.2 mt by 2023, slightly lower than last year’s production. Despite price slide, both benchmarks gained exports. The ministry forecast oil exports of 225 mt this about 9 percent, their first increase in three weeks and the year, down from 269.2 mt in 2019. biggest weekly rise for Brent since June. Oil futures climbed due to concerns the strike in Norway and the Output of LPG in the east of Russia is expected to hurricane headed for the US Gulf Coast would cut crude increase by 1.0-1.2 mt next year, according to producers’ output. plans, although exports to energy-hungry Asia could be limited by a lack of infrastructure. Production of LPG RIL: Ltd, IOC: Indian Oil Corp, BPCL: Corp Ltd, mn: million, bn: billion, mt: from eastern Russia will account for up to 15 percent of million tonnes, PPAC: Petroleum Planning and Analysis Cell, the country’s total output in the next few years. LPG MoPNG: Ministry of Petroleum and Natural Gas, ONGC: Oil production in Russia totalled 16.9 mt in 2019, while and Natural Gas Corp, FY: Financial Year, OALP: Open exports, mainly via the Baltic Sea port of Ust-Luga to Acreage Licensing Policy, LPG: liquefied petroleum gas, Europe, stood at 5.7 mt according to Refinitiv Kortes DBTL: Direct Benefit Transfer of LPG, HPCL: Hindustan data. Independent company Irkutsk Oil Company is one Petroleum Corp Ltd, bpd: barrels per day, NRL: Numaligarh of the producers in eastern Siberia expected to contribute Refinery Ltd, DCI: Dredging Corp of India, MoU: to Russia’s LPG output growth. It plans to launch the Memorandum of Understanding, ISPRL: Indian Strategic Petroleum Reserves Ltd, UAE: United Arab Emirates, bbl: Ust-Kut gas processing plant, with annual capacity of barrel, US: United States, OPEC: Organization of the 800,000 tonnes, next year. Gazprom plans to make its Petroleum Exporting Countries, EIA: Energy Information Amur gas processing plant operational in the second Administration, boepd: barrels of oil equivalent per day, quarter of 2021. The plant is set to reach full capacity of mmscfd: million metric standard cubic feet per day, NOC: 1.5 mt in 2025. National Oil Corp, UN: United Nations

NATIONAL: OIL

OMCs hold petrol, diesel prices as global oil Diesel sales out of quarantine, shoots past pre- market remains subdued Covid level in October

20 October. Oil Marketing Companies (OMCs) kept 17 October. India consumed nearly 9 percent more diesel in the first fortnight of October than it did in the same petrol and diesel prices unchanged across the four metros period a year ago and petrol sales remained 1.5 percent as global oil prices remained subdued and product prices remained steady. Petrol prices have been unchanged for 28 days at a stretch while diesel prices were the same for QUICK COMMENT the 18 consecutive days. Price of petrol in the national Revival in Diesel Demand is a sign of economic revival! Good! capital was at ₹ 81.06 per litre. In , Chennai and Kolkata, the fuel was sold for ₹ 87.74, ₹ 84.14 and ₹ 82.59 per litre, respectively. Diesel prices in Delhi, higher than the previous corresponding period, indicating Mumbai, Chennai and Kolkata were at ₹ 70.46, ₹ 76.86, a strong economic rebound on the back of festive ₹ 75.95 and ₹ 73.99, respectively. Domestic fuel prices demand. This is the first time after the countrywide lockdown that diesel consumption, an indicator of have been largely subdued off late due to low crude oil economic activities, has exceeded last year’s level. Petrol prices as global oil demand has been hit amid the sales had shot past pre-pandemic levels in September as pandemic. Retail sales, however, have picked up with the people slowly began overcoming Coronavirus fears and gradual reopening of the economic activities. First time preferred to use personal vehicles to get around. since lockdown, diesel sale in the country has crossed According to latest data, diesel sales in the first fortnight over the pre-Covid level with the country’s most widely of October jumped more than 24 percent from the same consumed fuel witnessing a nine percent year-on-year period of September as monsoon receded and festive growth in the first 15 days of October. demand kicked in. Petrol rose 1.5 percent month-on- month as the festive mood set in and people began Source: The Economic Times venturing out. Jet fuel sales too rose more than 2 percent ONGC sells December-loading Russian Sokol from September as the number of flights increased, but it is still more than 57 percent short of October 2019 level. crude at wider discount Predictably, consumption of LPG (liquefied petroleum 19 October. Indian oil explorer ONGC (Oil and Natural gas) or cooking gas, continued to rise in the first half of Gas Corp) has sold a Russian Sokol crude cargo, loading October and was 7 percent higher than the year-ago Dec. 18-24, at a discount of around 60 cents a barrel to period, indicating a lot more cooking as families get into the festive groove. Rising fuel sales will help refiners to Dubai quotes via its second spot tender, traders said. ramp up operations of their units. Prices of Sokol crude, which yields more middle distillates like jet fuel and gasoil from refining, took a hit Source: The Economic Times this year as transport fuel demand slumped due to BPCL tries to cut dependence on LPG from the government measures to contain the Covid-19 pandemic. Middle East ONGC and Exxon Mobil sold December-loading Sokol 16 October. An Indian buyer of liquefied petroleum gas crude cargoes at discounts of around 30-40 cents a barrel (LPG) is once again attempting to ease its dependence on to Dubai quotes. Middle East shipments after some supply shocks last year Source: The Economic Times stemming from drone attacks and even a trade war. Bharat Petroleum Corp Ltd (BPCL) is seeking bids from FY21 level, but remain higher than that of FY20. GRMs global suppliers for a fifth of its typical LPG needs in of Bharat Petroleum Corp Ltd (BPCL), Indian Oil Corp 2021, according to a tender. Bidding is still open to (IOC), Corp Ltd (HPCL) and Middle East producers, which already provide BPCL with Reliance Industries Ltd (RIL) fell sharply in April-June the majority of its contracted needs. India’s second- due to weak industry conditions and inventory losses. biggest fuel retailer made an attempt to broaden its The rating agency expected OMCs to defer and sources of supply earlier this year but the tender wasn’t potentially re-evaluate the feasibility of large new refining awarded due to a lack of attractive offers, traders said. projects in light of the uncertain industry outlook, while The Middle East, however, still has the advantage of investments in marketing infrastructure would continue. being the closest major producer to India. Other options for BPCL could include Europe and the US (United Source: The Economic Times States), although both alternatives face the additional cost Diesel RSP in Delhi down ₹ 2.93 per litre in of longer shipping times. BPCL is seeking bids for about September: IOC 800,000 tons of LPG in 2021, a fifth of its annual import requirement of about 4 million tons. To reduce freight 14 October. Indian Oil Corp (IOC) said that diesel and costs, BPCL will consider taking responsibility for petrol retail selling prices (RSP) in Delhi have come down shipping if cargoes are sold free-on-board from the Arab in September. The company pointed out that diesel RSP Gulf region, unlike its tender earlier this year, which in Delhi was down ₹ 2.93 per litre in September. Similarly, required the seller to deliver cargoes to India. Offers are petrol RSP declined. It fell by 97 paise per litre during to be based on a premium or discount to Saudi contracted September 2020, with corresponding price reduction in prices published every month. LPG has defied a broader other markets across the country. In terms of LPG, the demand slump for oil products in India, benefiting from company said that there has been virtually no change in authorities stocking up on supplies for lower-income the RSP of cooking gas or LPG (liquefied petroleum gas) people and as families spent more time cooking at home in Delhi and other markets across India since 1 July 2020. amid the world’s biggest lockdown. Source: The Economic Times Source: The Economic Times

Fitch expects marketing, refining volume of oil NATIONAL: GAS firms to fall 15 percent in FY21 India set to lose Farzad-B gas field in Iran

15 October. With coronavirus lockdowns pummelling 19 October. India has all but lost the ONGC Videsh Ltd fuel demand in India, Fitch Ratings expects the marketing (OVL)-discovered Farzad-B gas field in the Persian Gulf and refining volume of state-owned oil firms to fall by after Iran decided to prefer domestic companies over more than 15 percent in the current fiscal year before a foreign firms for development of the field. OVL had in gradual recovery in 2021-22. India’s fuel demand 2008 discovered a giant gas field in the Farsi offshore recovered sharply in June from April before slowing due exploration block. OVL and its partners had offered to to the reimposition of restrictions in certain cities because invest up to $11 bn for development of the discovery, of coronavirus and flooding in some regions. Fitch which was later named Farzad-B. OVL discovered gas in expects gross refining margins (GRMs) to remain under the block, which was declared commercially viable by pressure from weak product demand and crack spreads National Iranian Oil Co, on 18 August 2008. The Indian in the near term until the global economy recovers consortium has so far invested around $400 million in the block. significantly from the coronavirus crisis. It expected marketing margins to normalise from FY22 to below the Source: The Economic Times Massive fire breaks out in underground gas price depending upon their ground situation. The latest pipeline of ONGC in e-auctions from Central Coalfields and Eastern Coalfields are fetching high premium and going forward CIL 17 October. A massive fire broke out in the Oil and expects 15-20 percent premium from auctions as demand Natural Gas Corp (ONGC)’s gas pipeline passing from remains strong in September and October. The company an agriculture farm land at Kadodara village Vagra taluka said coal allocation under its four e-auction windows of Bharuch district near the Dahej industrial area. The fire registered about 65 percent year-on- year rise during the broke out due to the leakage or rupture in the first half of the current financial year. underground gas pipeline of ONGC passing from an agricultural farm land in Kadodara village in Vagra taluka. Source: The Economic Times The authorities from the ONGC Dahej immediately SECL plans 8 projects worth ₹ 31 bn for improving rushed to the spot along with the four fire tenders. The coal evacuation gas supply in the pipeline was stopped with immediate effect. 18 October. Coal India Ltd-arm SECL (South Eastern Coalfields Ltd) is executing eight 'first mile connectivity' Source: The Economic Times projects with an estimated capital outlay of ₹ 31 bn to inked pipeline right to use evacuate dry fuel, especially incremental production agreement with GAIL under the proposed plan to scale up the maharatna firm's 16 October. Assam based Numaligarh Refinery Ltd output to 1 billion tonnes. The company said because of (NRL) has inked Pipeline Right to Use (RoU) sharing the move, there would be reduction in the cost of landed Agreement with GAIL (India) Ltd. NRL said that GAIL price of coal at generators end and retain the foreign is laying its Barauni - Guwahati pipeline (BGPL), which exchange by substituting the coal imports with abundant is a part of Jagdishpur – Haldia & Bokaro – Dhamra domestic supplies, it said. In the absence of conclusive Natural Gas (NG) Pipeline Project, popularly known as overall environment benefits at the additional cost of ‘Pradhan Mantri Urja Ganga’ extended up to Guwahati power generation, recently the government had to supply natural gas to pipelines under North East Gas dispensed with the mandatory coal washing to reduce ash Grid (NEGG). NRL is also laying its 1,630 km long in the coal supplies to power plants. Coal India accounts Paradip Numaligarh Crude Pipeline (PNCPL) crude for over 80 percent of domestic coal output. It is eyeing pipeline, originating from Paradip Port, traversing through the States of Odisha, West Bengal, Jharkhand, one billion tonnes of output by 2023-24. Bihar and Assam and terminates at its refinery at Source: The Economic Times Numaligarh (Assam). Coal Minister wants Coal India units to set prices Source: The Economic Times independently

NATIONAL: COAL 14 October. India’s Coal Minister Pralhad Joshi said the units of Coal India Ltd should be allowed to CIL subsidiaries to have autonomy in base e- auction price from November independently set fuel prices in a bid to increase competition and reduce the price of coal in the country. 20 October. Coal India Ltd (CIL) subsidiaries will have Coal India has seven units and accounts for more than autonomy in fixing the base price for e-auction coal from four fifths of domestic production. It sets the price of November depending on demand. Currently, the base various grades of coal in India after consultation with price is kept aligning with the notified price but with the stakeholders. realisation trend improving, the dry fuel miner has decided to allow the respective subsidiaries to fix the base Source: Reuters NATIONAL: POWER

Adani to complete 1 GW transmission line to Power regulator wants government not to infringe Mumbai by December 2022 regulatory jurisdiction

19 October. Adani Transmission Ltd (ATL) affirmed 18 October. Power regulator Central Electricity that it will be able to execute a transmission line and sub- Regulatory Commission (CERC) has advised the power station project at suburban Vikhroli which will enhance ministry against jurisdictional overreach in framing the power supply by 1,000 MW to the financial capital, by the end of next year, as per the mandated deadline for it. QUICK COMMENT ATL said there will be growth in power load in the Compromise of Power Regulators Independence will undermine Reform of the Power Sector! megapolis and the mismatch between generation and Bad! load growth, it is committed to executing two critical transmission projects that would help channelise regulations for the power sector that infringes the additional power to Mumbai. These capacity substantive functions of the Central Commission. The enhancement projects will create an additional regulator has issued an advisory over the draft rules transmission capacity of 1,000 MW each, thereby easing proposed by the ministry, asking the government to work the existing transmission corridors, it said. in harmony by honouring the respective jurisdiction carved out in the Electricity Act 2003. The CERC said Source: The Economic Times that several of the issues contained in the draft Power consumption grows 11.45 percent to 55.37 bn regulations fall under the purview of the states and the units in first half of October power ministry should first consult with the state 19 October. India’s power consumption grew 11.45 governments before framing rules. The CERC letter percent to 55.37 bn units in the first half of October this highlights that the electricity and tariff policies in the year, mainly driven by buoyancy in industrial and country are to be framed in consultation with the state commercial activities, as per government data. Power governments and the regulatory commissions so that the consumption in the country was recorded at 49.67 bn directions given in the policy is universally followed by all units during October 1-15 last year, according to the segments universally. So under the existing framework, power ministry data. For a full month in October last year, the regulator has indicated to the ministry not to go ahead power consumption was 97.84 bn units. The government with framing of rules without taking all segments of the had imposed nationwide lockdown on March 25 to sector together. contain the spread of Covid-19. Power consumption Source: The Economic Times started declining from March onwards due to fewer KSEB to sell extra power generated at Moolamattam economic activities in the country. The Covid-19 situation affected power consumption for six months in 15 October. KSEB (Kerala State Electricity Board) has a row from March to August this year. Power received bids to purchase extra power generated at consumption on year-on-year basis declined 8.7 percent Moolamattom power plant. Earlier, the board had in March, 23.2 percent in April, 14.9 percent in May, 10.9 decided to surrender the power from Central pool and percent in June, 3.7 percent in July and 1.7 percent in make use of the additional power generated at August. The data showed that electricity consumption Moolamattom to tide over the rising water level at Idukki had grown by 11.73 percent in February. Power reservoir, KSEB said. After a meeting to discuss power consumption has shown an improvement post lockdown position, the power plant has increased its generation, easing for economic activities after 20 April. aiming to reduce the water level in the reservoir. Source: The Economic Times Source: The Economic Times NATIONAL: NON-FOSSIL FUELS/ CLIMATE CHANGE TRENDS

MNRE proposes draft policy for promoting pollution menace. He said that power plants of Badarpur distributed renewable energy and Sonipat in Delhi-NCR have already been shut down. He said mainly 5-6 aspects contribute to the pollution -- 20 October. The Ministry of New and Renewable traffic, industry, garbage, dust, stubble burning and Energy (MNRE) proposed a framework for promoting geographical factors. Listing the steps taken by the Modi application of distributed renewable energy (DRE) in government, he said that the use of BS-VI fuel reduces rural areas. DRE applications are those which are pollution by 25-60 percent, and a key step has been taken powered by renewable energy and used for earning to promote BS-VI fuel at a cost of ₹ 620 bn. He said the livelihoods directly such as solar dryer, solar powered cause of pollution in Delhi-NCR is also due to cold storage, solar charkha, solar lighting systems. For the geographical factors. He said the Modi government standardisation of research and development, MNRE framed new rules for construction and demolition and other ministries would be helping in development of management in 2016 in Delhi to manage pollution. new devices and applications for the rural economy. MNRE would be pursuing financial institutions for credit Source: The Economic Times facilitation. The market for distributed solar products for India will fully shift to renewable energy in next few rural areas -- such as solar lanterns, pump sets and mini- decades: RIL grids -- was estimated to grow to ₹ 101.17 bn by 2023 before the pandemic hit. It is now reeling under financial 19 October. India will fully move away from fossil fuels stress due to lack of liquidity to support operations and to renewable energy in the next few decades, the government schemes yet to make a visible impact. chairman of Reliance Industries Ltd (RIL), operator of Source: The Economic Times QUICK COMMENT Inox Wind wins 40 MW orders from retail customers Statements on the shift towards renewables should reflect more than serial infatuation! 20 October. Inox Wind said it has won orders to supply Ugly! and install wind turbine generators of 40 MW capacity from retail customers across various industries. The the world’s biggest refining complex, said. RIL, which projects will be executed on a turnkey basis across operates two giant refineries with a combined capacity of locations in Gujarat and Karnataka. Inox Wind provides 1.4 mn barrels per day (bpd) in western India, aims to its customers with end-to-end integrated solutions for the become a net zero carbon company by 2035. India, the entire wind power value chain. The orders are expected world’s third biggest oil importer and consumer, ships in to be commissioned by March 2021. about 80 percent of its oil needs. Source: The Economic Times Source: Reuters

60-70 polluting power plants to be closed soon: India to gradually move towards alternative fuels: Javadekar Oil Secretary

19 October. Union Environment, Forests and Climate 19 October. India will gradually transition from use of Change Minister Prakash Javadekar announced that 60- fossil fuels towards clean energy resources, Oil Secretary 70 pollution-causing power plants would be identified Tarun Kapoor said. He said Ethanol is a big focus area in and closed in the next two years as he discussed steps the government’s plan towards clean energy sources. The taken by the Narendra Modi government to tackle the government has set a target of 20 percent ethanol blending with petrol by 2030. He mentioned the Andhra Pradesh has commissioned 8.2 GW successful implementation of a bio-ethanol pilot project renewable energy capacity so far in Pune and how it is contributing towards fulfilling the 16 October. Andhra Pradesh, a major producer of targets set by the government. Also, another pilot project renewable energy (RE), has installed RE generation for blending 10 percent Hydrogen with CNG capacity of about 8,207 MW till 30 September 2020, (compressed natural gas) will be set up in Delhi to according to the latest data. The state had an installed RE improve efficiency and reduce emissions of vehicles. capacity of about 8,203 MW till 31 July 2020. Of the 8,207 Source: The Economic Times MW capacity installed till September, wind energy Chandigarh launches used cooking oil initiative to projects took the largest share with 4,080 MW capacity, make bio-diesel followed by solar energy with a capacity of 3,535 MW commissioned, according to the New and Renewable 19 October. The Food Safety and Standards Authority Energy Development Corp of Andhra Pradesh of India (FSSAI) launched Repurpose Used Cooking Oil (NREDCAP). initiative to collect and convert used cooking oil into bio- Source: The Economic Times diesel. The FSSAI has issued directions to all the states food authorities to initiate the process of disposal and ‘Mass movement needed to make Delhi solar capital’ collection of used cooking oil. More than 50 food 15 October. Stating that Delhi could become the “solar business operators from across the city along with capital of India,” Chief Minister (CM) Arvind Kejriwal authorised aggregators and bio-diesel manufacture were inaugurated a 218 kilowatt (kW) solar power plant at Lady present on the occasion. Irwin College. The power plant will generate over 3 lakh

Source: The Economic Times units of power each year resulting in a reduction in CO2 (carbon dioxide) emission of 274 tonnes annually. The MSEDCL scuttling solar roof top sector though CM said that to strengthen the solar power usage in Delhi, negative policies a mass movement was required. Discussing the 18 October. Solar Manufacturers’ government’s solar policies, the CM said, under one of Association (MASMA) has charged MSEDCL them, Delhiites only had to give their rooftops. (Maharashtra State Electricity Distribution Company Ltd) Source: The Economic Times with scuttling the solar roof top industry in the state by adopting negative policies. MASMA said that since April to develop 100 MW solar project in Gujarat 2019 there was no subsidy scheme for solar roof top in 14 October. Tata Power has got a letter of award from Maharashtra and MSEDCL demanded just 25 MW Ltd (GUVNL) to develop a subsidies for the entire state from the Ministry of New 100 MW solar project in Dholera Solar Park of Gujarat. and Renewable Energy (MNRE) last year. According to The energy will be supplied to GUVNL under a power the solar entrepreneur, when MASMA narrated the entire purchase agreement valid for 25 years from scheduled episode to the newly-appointed Energy Minister Nitin commercial operation date. Tata Power won this capacity Raut, he intervened and instructed MSEDCL to restart in a bid announced by GUVNL in March. The project the subsidy process immediately. Maharashtra Energy has to be commissioned within 15 months from the date Development Agency (MEDA) which started phase 1 of of execution of power purchase agreement. With this the subsidy almost two years ago has more than 700 award, the cumulative capacity under development in registered vendors. Currently, the solar fraternity of the Gujarat will be 620 MW out of which 400 MW will be in state has more than 6000 integrators. Dholera Solar Park. Source: The Economic Times Source: The Economic Times INTERNATIONAL: OIL

Saudi crude exports rise to 5.9 mn bpd in August: the lowest since at least 1979 when the comparison data JODI is available, the finance ministry said. The Covid-19

20 October. Saudi Arabia’s crude oil exports rose for a pandemic has hammered fuel demand as millions of second consecutive month to 5.97 mn barrels per day people restricted their movements. Japan, the world’s (bpd) in August, from 5.73 mn bpd in July, according to fourth-biggest crude buyer, imported 67.95 mn kilolitres data from the Joint Organizations Data Initiative (JODI). (2.34 mn barrels per day) of crude oil in the first six The country’s crude output rose by 500,000 bpd to 8.98 months of the fiscal 2020 year to March, the preliminary mn bpd in August, according to data. Crude exports from data showed. Saudi Arabia, the world’s largest oil exporter, fell to their Source: The Economic Times lowest on record in June, according to data. Saudi domestic crude refinery throughput rose by 23 percent to OPEC+ to discuss weakening oil demand outlook 2.58 mn bpd in August, while direct crude burn rose by 19 October. Oil producer group OPEC (Organization of 57,000 bpd to 702,000 bpd. the Petroleum Exporting Countries)+ will meet to Source: The Economic Times discuss the weakening demand outlook in the face of Singapore suspends supply licences of Hin Leong rising coronavirus infections as well as increased output shipping fuel unit from Libya but is unlikely to recommend immediate 20 October. Singapore has suspended the licences to sell action, OPEC+ said. The OPEC and allies including ship fuel held by a subsidiary of defunct oil trader Hin Russia, collectively known as OPEC+, have been Leong Trading Pte Ltd since it could no longer meet the reducing output since January 2017 in an effort to balance licensing requirements, the Maritime and Port Authority the market, support prices and reduce inventories. of Singapore (MPA) said. The MPA suspended the OPEC+ experts discussed risks of a persisting supply licences for Hin Leong’s subsidiary Ocean Bunkering overhang in 2021 in the event of a prolonged and severe Services Pte Ltd (OBS). MPA typically issues licences to second wave of the Covid-19 pandemic. supply bunker, or ship, fuel to vessels and to operate barges to transport the fuel to the ships. In 2019, OBS Source: Reuters was the third-largest bunker fuel supplier by volume in Global oil demand to recover by 2022: Saudi Singapore, which is the world’s biggest bunkering hub Aramco with about 50 million tonnes (mt) of annual sales volumes. 14 October. Global demand for crude could recover to Source: Reuters pre-coronavirus levels by 2022, Saudi Aramco said, as the Japan April-September crude import volume fell to International Energy Agency (IEA) projected it could the lowest since at least 1979 take at least a year longer. The Covid-19 pandemic has 19 October. Japan’s customs-cleared crude oil imports plunged the global economy and oil demand into a fell 21.2 percent in the April-September period on year to tailspin and sparked speculation that the world might have reached peak oil demand. the OPEC (Organization Bangladesh may cancel November LNG import of the Petroleum Exporting Countries) oil cartel tender after receiving high offers predicted crude consumption would continue to grow 19 October. Bangladesh may cancel a tender to import during the next quarter century, driven in large part by liquefied natural gas (LNG) in November, after receiving greater use of cars in developing countries. OPEC’s offers to supply the shipments that were too expensive. forecast contrasts with that of some industry players, Rupantarita Prakritik Gas Company, which is in charge including major oil firms such as BP, which in its latest of LNG imports into the country, received offers from long-term estimates predicted that oil demand had the Asian unit of Vitol and Swiss trader AOT Energy to already peaked or would soon do so thanks to increased supply 138,000 cubic metres of LNG for 12-13 use of renewable energy and the impact of the virus. November delivery. Vitol submitted the lowest offer but Source: The Economic Times it was still higher than the prices of LNG that Bangladesh pays under long-term contracts with Oman and higher INTERNATIONAL: GAS than the price of an earlier spot cargo. Bangladesh Japanese sell out of Australian LNG import project imported 3.89 million tonnes (mt) of LNG in 2019 under its long-term contracts with Oman Trading International 20 October. Australian billionaire Andrew Forrest has and Qatar gas, with price ranges of about $5.50 to $6 per taken over full control of a A$250 mn ($176 mn) gas million metric British thermal units (mmBtu). However, import terminal in New South Wales, buying out stakes held by Japan’s JERA and Marubeni Corp in a push to prices for spot cargoes, or shipments typically for next speed up the project. The deal sees Squadron take full month delivery, are gaining on expectations that colder control of the Port Kembla Gas Terminal project that weather during the Northern Hemisphere winter will AIE is developing. JERA, owned by Tokyo Electric increase LNG demand for heating. The November cargo Power and Chubu Electric Power, said the liquefied was expected to be the second one Bangladesh would natural gas (LNG) import terminal made sense for a purchase in the spot market. Rupantarita bought region that faced tight gas supply. JERA and Marubeni Bangladesh’s first spot LNG cargo ever from Vitol at have indicated they would be open to working with AIE $3.8321 per mmBtu for delivery over late September to in the future, including lining up LNG supplies and early October. Bangladesh, with a population of about building an associated gas-fired power station. AIE has 160 mn people, is set to become a major LNG importer been pushing to reach a final investment decision on the in Asia as domestic gas supplies fall. Port Kembla project this year, in order to start importing Source: Reuters LNG by 2022, with construction expected to take 14 to 16 months. The project is one of five aiming to import Greece gets three initial bids for offshore gas LNG into southeast Australia to fill a looming shortage storage facility expected from 2024 as gas supply from the Bass Strait 19 October. Greece has received three initial bids for a fields off the coast of Victoria rapidly declines. contract to develop and run an underground gas storage Source: Reuters facility in the northern Aegean Sea, the agency (HRADF), which manages the concession, said. The agency said the 2021, the company said. Poland is the only EU (European bidders are China Machinery Engineering with Maison Union) state that refuses to pledge climate neutral by 2050, Group, Greece’s DESFA with GEK Terna, and with the ruling Law and Justice (PiS) party claiming that Energean Oil & Gas. The contract covers the the country needs more time to switch its economy from development and operation of the storage facility, which coal to zero-emission sources. PGE wants to become is in an almost depleted deposit off the northern Greek climate neutral through carving out its coal assets, which city of Kavala, for up to 50 years. The almost depleted include lignite mines and power stations, and through “South Kavala” gas field, which is run by Energean, has investment in wind farms, offshore and onshore, solar an estimated storage capacity of one billion cubic meters power stations and in energy storages. Separating coal (bcm). assets will help PGE raise financing from banks, which are reluctant to provide loans to coal-related groups. Source: Reuters Source: Reuters Turkey raises Black Sea field’s reserves to 405 bcm: President Chinese coal customers have made deferment 17 October. President Tayyip Erdogan said Turkey had requests: BHP raised the estimated reserves in a gas field off its Black 14 October. BHP Group has received deferment Sea coast to 405 billion cubic meters (bcm) after finding requests from Chinese coal customers, Chairman Ken an additional 85 bcm. In August, Erdogan announced MacKenzie said, after reports that China had put a freeze that the field contained 320 bcm of gas, making it on accepting Australian coal amid trade tensions between Turkey’s biggest natural gas discovery. the two countries. Trade industry reports suggested that Source: Reuters some Chinese ports had been told not to accept either Abu Dhabi Pension Fund, ADQ to invest $2.1 bn in type of Australian coal, and that such shipments were ADNOC gas assets being sold along to other markets at the last minute. China’s coal imports had been expected to slow in the 15 October. Abu Dhabi Pension Fund (ADPF) and state second half, after heavy imports earlier this year and holding company ADQ will invest $2.1 bn in Abu Dhabi weaker than expected demand due to coronavirus-related National Oil Co (ADNOC) gas pipeline assets, ADNOC disruption, spurring China to act to support its domestic said. They will take a 20 percent stake in ADNOC Gas industry. Customs data shows that China has taken less Pipelines, it said, a subsidiary with lease rights to 38 gas coal from Australia and also Indonesia in the past month. pipelines covering 982 kilometre (km). China is the biggest importer of Australian coal, taking 27 Source: Reuters percent of its metallurgical coal in the year to June and 20 percent of its thermal coal, which the Australian INTERNATIONAL: COAL government estimates was worth A$13.7 bn ($9.82 bn) Poland’s PGE to split coal assets by end of 2021 last year behind China’s iron ore imports which were worth A$84.9 bn. 19 October. Poland’s biggest energy group PGE should separate its coal assets from other activities by the end of Source: Reuters INTERNATIONAL: NON-FOSSIL FUELS/ CLIMATE CHANGE TRENDS

EU Environment Ministers to agree to make New York approves rules allowing state to procure climate neutrality by 2050 binding renewable power

20 October. EU (European Union) Environment 17 October. New York utility regulators approved rules Ministers are set to agree this week to make the bloc’s that will allow the state to procure renewable power pledge to be climate neutral by 2050 legally binding, needed to achieve the goals of the state’s clean energy law. although tough questions about how deeply to cut New York has mandated that 70 percent of the state’s emissions over the next decade will be left to leaders to electricity come from renewable sources by 2030 and all discuss in December. The bloc, which takes big decisions power come from zero-emission sources by 2040. In by consensus among its 27 member states, is inching its 2019, 36 percent of New York’s power came from way towards tighter emissions goals in time for a year-end burning natural gas, 34 percent from nuclear, 23 percent deadline under the Paris climate agreement to spell out from hydropower, 3 percent from wind and 1 percent targets for 2030. Over the next decade, the Commission each from biomass and other sources, according to wants to cut emissions by at least 55 percent from 1990 levels. But some countries, especially those that burn coal, federal energy data. The rules announced by New York want more guarantees that the economic burden of the Governor Andrew Cuomo give the state the authority to transformation will be shared. Leaders agreed at a summit issue requests for proposals for renewable power needed last week to gather more information on how the new to implement the state clean energy plan. The state said target will affect individual countries - a key demand of the plan will increase the use of offshore wind from 2,400 coal-heavy Poland - before trying to reach a deal in MW by 2030 to 9,000 MW by 2035. December on the 2030 target. Source: The Economic Times Source: The Economic Times Norway’s Scatec Solar to buy hydropower firm SN US sees $18 bn from purchases in nuclear power Power in $1.1 bn deal agreement with Poland 16 October. Norwegian solar firm Scatec Solar said it had 19 October. The United States (US) and Poland have agreed to buy state-owned hydropower firm SN Power in struck a nuclear power agreement in which Poland will a $1.17 bn deal as it transforms itself into a global likely buy $18 bn in nuclear technology from US renewables company. The combined company would companies, the US energy department said. The US has have 450 employees and own 3.3 GW of in operation and been competing with China and Russia and other under construction power plant capacity in 14 countries, countries to supply nuclear power technology to and annual production of 4.1 terawatt hours (TWh), countries hoping to build their first reactors, or boost Scatec Solar said. Scatec owns and runs solar farms in their programs. Poland, traditionally a large purchaser of Africa, Asia, Europe and Latin America, while SN Power Russia’s natural gas, which competes with nuclear power, aims to halt those purchases after 2022. Over the next 18 builds and operates dams in southeast Asia and Africa. months, the US and Poland will work on a report for the The deal would also help Scatec Solar expand in growth program that seeks to build six reactors, as well as markets for renewable energies such as sub-Saharan potential financing arrangements, the department said. Africa and southeast Asia, Scatec Solar said. Source: Reuters Source: Reuters DATA INSIGHT

India Oil Imports by source 1200

1000

800

600

400 '000 BARRELS DAY PER BARRELS '000

200

0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Iraq Saudi Arabia Iran Venezuela UAE Mexico USA

Source: Reuters

Top 3 Oil Exporters 10000 9000 8000 7000 6000 5000

1000 B/D 1000 4000 3000 2000 1000 0

United States Saudi Arabia Russia

Source: OPEC 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 Editorial Adviser: Lydia Powell Editor: Akhilesh Sati

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