A new report from the Energy Industries Council found that energy supply chain bosses are not seeing all the hype and ambitious net-zero pledges translate into consistent and profitable work on green projects.EIC CEO Stuart Broadley contends that at the end of the day, if the volume and profitability metrics for net-zero solutions aren’t showing up in order books, energy supply chain businesses will have no other choice but to focus on the booming oil and gas space. He joined the podcast to discuss how these realities on the ground are playing out for the oil and gas sector, what it means for the already wide gap between green ambitions and actions, and the policy challenges and needs going forward.Stick around for Binish Azhar with the Market Minute, a look at near-term oil market drivers.Then, tell us more about your podcast preferences so we can keep improving our shows. Take our survey here: https://www.surveylegend.com/s/4xyzRelated content:High-level talks to reform climate finance set to begin (premium content)UK falls behind climate commitments, loses global leadership role: reportIn Middle East, a green energy transition may rely on continued oil, gas revenues (premium content)Western US grid official flags 'real question' on energy transition pace (premium content)
In partnership with African Energy Chamber, join us as we look at the geology highlighting the differences and similarities, dig into the exploration history and time to production, look at how licensing is changing in Guyana, and suggest what may happen in Namibia. Finally, we will look at the rapid expansion of Guyana's upstream industry and use that as a plausible analogy for Namibia and what are some of the best practices Namibia could draw on from Guyana.With special guests: Maggy Shino, Petroleum Commissioner, Ministry of Mines and Energy Namibia; Verner Ayukegba, Vice President, The African Energy Chamber.To learn more about our Upstream Solutions in Africa, head to: https://www.spglobal.com/commodityinsights/en/ci/topic/africa-upstream.html
Aug 14 2023
In the decades to follow, oil and gas have been projected to be part of the energy mix. It is, however, critical to ensure that the upstream operations underpinning this development resort to a low carbon footprint. S & P Global Commodity Insights uses a bottom up approach in this interactive to outline the evaluation of the ongoing crude production, provisioning for transparent insights into best practices associated with decarbonizing upstream production. Click here to view the full-size interactive .
May 19 2023
Does the global trade industry require up to USD 500 million in working capital to maintain its flow? In the DMCC’s report released in the last year, one of the key areas of recommendation is the importance of enhanced trade finance mechanisms to facilitate trade flows globally. Rising interest rates, price volatility and trade pattern changes which contributes to the increased financial costs. With the pandemic allowing for devise of newer trade routes, consolidating the existing once, especially in concern with scarcity of bunker space. Featuring Sanjeev Dutta, Executive Director of Commodities, DMCC. He explores the underlying intricacies required in reducing the strain on trade finance – AI assisted supply chain management, utilizing the world class logistical infrastructure of central hubs such as Dubai and more in this exclusive video interview by S&P Global Commodity Insights. Learn how Dubai’s strategic location can enable reduced carbon -intensive trade in our upcoming Middle East Petroleum & Gas Conference in Dubai, UAE on 22-23 May, 2023. KNOW MORE
May 15 2023
The S&P Global Commodity Insights India CEO Series is a compilation of exclusive interviews by Asia Energy Editor Sambit Mohanty with top government and industry leaders in India's oil and gas sector. Get insights on how those companies are planning to strike a balance between traditional and new businesses at a time when energy transition is changing the industry's landscape, while geopolitical turbulence is throwing up new challenges. India's promising growth outlook for oil and gas demand in coming years is increasingly opening up opportunities for private and foreign players in the upstream sector, but they will need support through a more investor-friendly policy framework, Cairn Oil & Gas CEO Nick Walker told S&P Global Commodity Insights in an exclusive interview. He said that India, which imports 85% of its oil requirements, had rich hydrocarbon potential, and oil and gas would continue to play a critical role in meeting the country's energy needs and supporting economic growth despite the increased talk of energy transition altering the energy landscape. "In the near term, India's oil and gas demand will get a boost due to population growth as well as urbanization and economic development. To cater to this demand, investment in exploration and production of new resources, as well as in the infrastructure required to support transportation and distribution, will be necessary," Walker said. "But in the longer term, while India is likely to see a shift towards a more diversified energy mix, oil and gas will continue to play an important role in meeting the country's energy self-dependency push," he added. Cairn, part of Vedanta Resources, currently contributes about 25% to India's domestic oil and gas production. It has set a target to raise its share to 50% as the upstream investment climate has improved, with many procedural complexities having been sorted in the upstream oil & gas sector by the government. But more on the policy front still needs to be done if New Delhi wants to achieve its ambitions to reduce energy imports to 50% of its energy basket by 2030. "For this journey to be successful, attracting correct investments and foreign players will be important. And for that, the ease of doing business in the oil and gas sector will be crucial," Walker said. He added that in addition to exploration, even production processes need further simplification, while levies and taxes on the upstream sectors need to come down. "It ultimately boils down to creating a more conducive policy environment that prioritizes hydrocarbon expansion. The government has done well to reduce tax burdens, introduce production-linked incentive schemes and more. I strongly believe similar initiatives for the oil and gas sector could play a vital role in attracting large-scale foreign investments," Walker said. Sky is the limit Walker said that India had huge untapped oil and gas resource potential; in existing basins yet-to-find resources are estimated at 30 billion barrels of oil equivalent and including frontier un-explored areas, this figure could be significantly greater. "In moving towards actualizing this, a crucial component will be to incentivize current producing blocks for ramping up production through the deployment of enhanced recovery techniques," Walker said. Cairn has interest in a total of 62 blocks in India. In 2004, Cairn made the largest onshore discovery in more than two decades in Mangala, Rajasthan. In its 20 years of operations, Cairn has opened four frontier basins with numerous discoveries and 38 in Rajasthan alone, which is its largest producing onshore oil block. The company's current total production capacity stands at 147,000 boe/d, with the Rajasthan block contributing 120,000 boe/d, or nearly 82% of total production. Cumulatively, the block has produced over 700 million boe in the last decade. Cairn said in October 2022 that it signed a 10-year production sharing contract for its oil and gas block exploration works in the western state of Rajasthan with the Indian petroleum and natural gas ministry. The contract extension would be applicable from May 2020. According to S&P Global, the Rajasthan assets are the company's main cash cow and positions the company to remain highly liquids-weighted as compared to a general E&P-wide push toward gas-weighted assets. Cairn's portfolio is an attractive dollar hedge for the government. "Although the Rajasthan block has been producing for 14 years, we have until now produced 12% of hydrocarbons in place. And that's because a lot of the untapped resources are in more difficult reservoirs and unconventional shale targets," Walker said, adding that new technologies would help to unlock the opportunities in a profitable way. Realistic carbon goals Walker said that there was a need to fully support the transition to lower carbon sources of energy and produce fossil fuels in a more responsible manner, but the country must be realistic about the pace at which this can unfold. "For India especially, fossil fuels will remain important. Cairn's skill and focus is as an oil and gas explorer and producer and that is what we will continue to focus on to meet India's energy needs, but it is important that we do that in a responsible way," Walker said. He added that Carin had set a target to become net carbon zero by 2050 in the production of its barrels. "We are taking real action to achieve this -- for example, meeting our energy needs though investment in renewables. It is our aim to accelerate these initiatives as much as possible." Cairn not only operates the world's longest continuously heated and insulated pipeline and the biggest enhanced oil recovery polymer flood project, it is also working on the longest horizontal well in India, as well as some of the biggest jet-pump operations, Walker said. "We are constantly on the lookout for innovative technologies, great ideas that will help us find and develop new resources as well as state-of-the-art innovations that will improve efficiency and make our operations more cost-effective," Walker said. More from the series: Essar says for upstream investments to flow, it's now or never Oil India sees time ripe for upstream sector to bask in glow of high oil prices IOC's refining expansion landscape will reflect a shade of green India's crude strategy a cushion for both global, domestic prices, says Puri
May 11 2023
The S&P Global Commodity Insights India CEO Series is a compilation of exclusive interviews by Asia Energy Editor Sambit Mohanty with top government and industry leaders in India's oil and gas sector. Get insights on how those companies are planning to strike a balance between traditional and new businesses at a time when energy transition is changing the industry's landscape, while geopolitical turbulence is throwing up new challenges. Essar Oil & Gas Exploration and Production Ltd. is accelerating capital expenditure plans to pursue exploration of unconventional hydrocarbons at its flagship eastern India block, as well as eyeing new blocks amid an improved upstream investment climate, CEO Pankaj Kalra told S&P Global Commodity Insights in an exclusive interview. Global energy price levels are well-suited for both producers and consumers of oil and gas currently and a lack of upstream investments now would mean the opportunity to tap these opportunities in the fossil fuel segment would increasingly close amid a changing energy landscape, Kalra said. Essar, which has already invested around Indian Rupees 50 billion ($610 million) developing its flagship Raniganj block, is looking to invest another Rupees 20 billion over the next 18 months on the back of relatively high current global oil and gas prices -- which would make any potential upstream investment commercially attractive, he added. "Our key focus is the block in eastern India where we are seeing a lot of good results but we will be looking at other blocks offered by the government," Kalra said. "Some of the policy reforms are quite encouraging to spread our wings to other parts of the country. Our teams are evaluating those models to gauge their technical suitability," Kalra added. Essar, focusing on the upstream sector, was carved out by the owners of Essar Group after they sold Essar Oil -- which mainly comprised downstream and retail oil operations -- to a consortium comprising of Rosneft, Trafigura and United Capital Partners for $12.9 billion. Main producing blocks Essar now owns Raniganj in West Bengal as well as the Mehsana block in Rajasthan. The upstream producer has also received environmental clearance for exploring shale gas reserves in its Raniganj block after New Delhi overhauled its exploration policy and decided to allow operators freedom to explore both conventional and non-conventional sources, such as coalbed methane and shale reserves, within exploration acreage. Kalra said that Essar currently has a market share of 65% of total CBM production in India and was committed to actively contributing to India's vision of becoming a gas-based economy, under which New Delhi aims to raise the share of gas in the energy mix from the current 6% to 15% by 2030. The company, which has been pursuing E&P activity for CBM for the past 25 years, has about 12 Tcf of resources in place -- comprising about 4 Tcf of CBM and 8 Tcf of shale -- at Raniganj East Block, Kalra said. "We have produced over 80 Bcf of CBM until now. We are now working on more than 350 wells. There are 200 additional CBM wells in the pipeline over the next 18-24 months on which work will be done with additional investments," Kalra said. Essar said the company would strive to contribute about 5% to India's total gas production over the next five years. Following the announcement of a series of investor-friendly upstream policies, India's upstream sector is now increasingly attracting interest from many private players, Kalra said. "The government has moved away from a cost-sharing to a revenue-sharing mechanism. It really helps to expedite approvals. And now with the recent pricing and marketing freedom given to upstream operators, the environment for attracting investment is all set," he added. The oil ministry last June said India would allow operators to sell locally-produced crude in the domestic market without restrictions. Under the previous policy, the operator of a field could not directly sell locally-produced crude into the market and needed government permission for any sale of crude and condensate within the country. But under the new policy, the government would cease its function of allocating domestic crude and condensate output. Asia's recovery Kalra said the sustained recovery in Asian oil and gas demand is a sign the worst of the pandemic's impact on the industry is over, creating opportunities for the region's upstream sector to rebound strongly. He added that the Asian market is the major driver of global energy dynamics, with about 40% share in global energy consumption and primarily oil-and gas-centric. "During the recent geopolitical conflict and market turbulence we saw prices going through the roof, but now prices have come back to realistic levels for any developments to happen. We think prices will remain supportive for investments in the foreseeable future," Kalra said. S&P Global expects Dated Brent prices to average $85.50/b in 2023 and lower at around $84/b in 2024. The gas market, on the other hand, will be well supplied in 2023 as production growth outpaces demand, yielding an annual average Henry Hub price of approximately $2.80/MMBtu. Kalra said the surge in energy prices over the past couple of years was a wakeup call for the oil and gas industry to know that not enough investment was flowing in to boost production. "The demand outlook for oil and gas will remain robust for quite some time to come. Therefore, it is very important that investments keep flowing into that sector despite the increased push towards energy transition," Kalra added. More from the series: Oil India sees time ripe for upstream sector to bask in glow of high oil prices IOC's refining expansion landscape will reflect a shade of green India's crude strategy a cushion for both global, domestic prices, says Puri
May 10 2023
The S&P Global Commodity Insights India CEO Series is a compilation of exclusive interviews by Asia Energy Editor Sambit Mohanty with top government and industry leaders in India's oil and gas sector. Get insights on how those companies are planning to strike a balance between traditional and new businesses at a time when energy transition is changing the industry's landscape, while geopolitical turbulence is throwing up new challenges. State-run Oil India Ltd. is in talks with global oil companies to tap their expertise for upstream projects and grow its exploration acreages multi-fold as high prices whet appetite for upstream investment, its chairman and managing director Ranjit Rath told S&P Global Commodity Insights in an exclusive interview. Highlighting that India now offers a promising upstream opportunity to global investors, Rath said the signs are already visible as many global oil majors -- such as TotalEnergies, ExxonMobil, Equinor and Baker Hughes -- are presently in discussions with state-owned upstream players. "Oil India has already reached out to select international oil companies for collaboration in the upstream segment of the hydrocarbon value chain in India," Rath said. "Discussions are underway for farm-in opportunities and submission of joint offer in Open Acreage Licensing Policy -- which is the OLAP IX bidding round -- primarily for offshore blocks to ensure synergy gains through the adoption of advance technological interventions and joint exploration campaigns. Concurrently, we are also in the process of securing exploratory drilling service providers to undertake offshore drilling activities," Rath added. Oil India contributes about 10% of India's domestic crude oil production and 8.5% of natural gas output from its operated domestic fields. He added that about Rupee 200 billion ($2.44 billion) has been set aside for capital expenditure until fiscal year 2025-26 (April-March) to meet the company's targets under exploratory and development efforts and infrastructure development, including overseas investments in existing blocks. "The latest reassessment of hydrocarbon resources had indicated a 49% increase in prognosticated resource to current 41.9 billion mt of estimated oil and oil equivalent of gas, with yet-to-find resources of 29.8 billion mt of estimated oil and oil equivalent of gas. This is providing a boost to the Indian upstream industry. About 80% of yet-to-find resources are in Category I basins," Rath said. Untapped potential He said that in order to enhance exploration opportunities in India for the yet-to-be discovered volumes, Oil India has expanded domestic acreages by actively participating in various bidding rounds under the country's OLAP. Oil India's operating domestic acreage has grown roughly sevenfold to 62,923 sq km from 9,302 sq km in FY 2017-18 (April-March). "Seismic acquisition has been completed in nearly all OALP blocks awarded until Round V and several prospects have also been identified. Oil India has already commenced exploratory drilling campaigns in Assam Shelf, Rajasthan Basin and Mahanadi Basin," Rath said. "In the next 10 years, exploration activity will be dominating the industry, leading to future oil and gas discoveries and keeping India's E&P sector on a growth trajectory," he added. India's government recently released around 99% of the 'no-go' areas in the Indian Exclusive Economic Zone for E&P operations covering a total area of 1 million sq km offshore areas in west coast, east coast and the Andaman and Nicobar Islands to provide a boost to the oil and gas exploration, Rath said. "Oil India is currently evaluating to submit offers under the mega offshore OALP IX bidding round, in which about 26 blocks are under offer," Rath added. Rath said Oil India had carried out a detailed review of its operated fields to identify thrust areas for possible production enhancement in the short to medium term at four fields in Assam and Arunachal Pradesh and one field in Rajasthan. It is envisaged that with accelerated development efforts by drilling and workover in these thrust areas, the company can achieve output of more than four million mt of oil and 5.0 Bcm of gas by FY 2024-25. Oil India is undertaking various interventions such as drilling of a total of 150 wells -- 75 each year -- over the next two years across India. Additionally, exploration opportunities in Assam and Arunachal Pradesh are being identified that can be put on production immediately after discovery, Rath said. New energy initiatives Oil India made a foray into the renewable energy domain in 2012 with the commissioning of the Wind Energy Power Project in Rajasthan. It has since established 188.1 MW of renewable energy -- 174.1 MW of wind and 14 MW of solar -- in Rajasthan, Madhya Pradesh and Gujarat. "All renewable energy projects have been successfully connected to the power grid of the respective states," Rath said. Oil India has also sealed an agreement with Assam Power Generation Corporation Limited to form a JV for collaborative initiatives in the field of green energy, especially solar, beginning with a 25 MW solar power project. The company has also entered into an agreement with the Himachal Pradesh state government for the establishment of alternate energy projects in the fields of solar energy, green hydrogen, geothermal and compressed biogas. "Additionally, Oil India has also undertaken projects to help develop hydrogen-based infrastructure in the country. The projects are hydrogen fuel cell e-bus developed through its start-up program and the development of Liquid Organic Hydrogen Carrier for hydrogen storage and transportation," Rath said. As part of the national biofuels policy, Oil India, through its subsidiary NRL, is implementing a bio-refinery project for the production of 2G Ethanol from non-food grade feedstock. NRL will hold 50% stake in Assam Bio Refinery Projects Ltd., with Fortum 3 BV and Chempolis Oy holding the remaining 50%, Rath said. More from the series: IOC's refining expansion landscape will reflect a shade of green India's crude strategy a cushion for both global, domestic prices, says Puri
May 09 2023
The S&P Global Commodity Insights India CEO Series is a compilation of exclusive interviews by Asia Energy Editor Sambit Mohanty with top government and industry leaders in India's oil and gas sector. Get insights on how those companies are planning to strike a balance between traditional and new businesses at a time when energy transition is changing the industry's landscape, while geopolitical turbulence is throwing up new challenges. State-run Indian Oil Corp will pursue an ambitious refining expansion strategy in coming years amid a strong belief that oil demand is nowhere near its peak, while diversifying into cleaner forms of energy to meet part of the incremental demand growth, its chairman Shrikant Madhav Vaidya told S&P Global Commodity Insights in an exclusive interview. While most of the refining expansion will proceed at a relatively lower carbon footprint, the company has drawn up a growth roadmap that will witness large inroads into petrochemicals, hydrogen and electric mobility. "It is my primary requirement to ensure that energy security, energy access and energy availability are never compromised. For that, we are strengthening the core business since we formally believe that demand for petroleum products will continue to be there in very large volumes in the country for at least a couple of decades," Vaidya said. He added that IOC aimed to lift refining capacity from the current 80 million mt, or 1.6 million b/d, -- nearly one-third of India's total refining capacity of 5.1 million b/d -- to 107 million mt by 2025-26. "All these are approved projects. We are already working at the ground level to make sure that the core is strengthened," Vaidya said. The total current capacity of 1.6 million b/d included the capacity of IOC's wholly-owned subsidiary Chennai Petroleum Corp. Vaidya added that IOC aims to increase the use of electricity generated by renewable energy sources as it expanded its core refining capacity. "For all refinery expansions, we will not be investing in captive power plants, which is the current model for our refineries. We'll be taking green grid power. So that will be one big step for us in ensuring that we achieve net zero operationally by 2046," Vaidya said. Ratnagiri Refinery in a phased manner One of the biggest projects on the drawing board is a mega refinery-cum-petrochemicals complex in the western coast of India, the planned Ratnagiri Refinery, which would have an annual capacity of 60 million mt. It is jointly built by three state-run refiners -- Indian Oil Corp, Hindustan Petroleum Corp and Bharat Petroleum Corp -- while Saudi Aramco and ADNOC have signed initial agreements to take a joint stake in the project. However, the project was facing delays as the land acquisition process has yet to complete. "The Ratnagiri Refinery is very much required. The capacity, what we have thought of, is extremely important for the country to bridge the energy gap," Vaidya said. "But at this point we have taken a conscious call that we will not try and put up the entire 60 million mt capacity at one go. Now, the considered opinion is we will be going in batches of 20 million mt." Currently, he said the ongoing land study was focused on soil and other things associated with the site proposed by the Maharashtra state government. Once the report from Engineers India Ltd is available, IOC and other stakeholders will engage with the state government to finalize details. Highlighting IOC's petrochemical push, Vaidya said the IOC board recently approved setting up the Paradip Petrochemical Complex in the eastern state of Odisha. The mega project was estimated to cost around Indian Rupees 611 billion ($7.39 billion) and will be IOC's biggest investment in a single location. "Today, we are about 5 million mt of petrochemical capacity and we are trying to take that to nearly 15 million mt by 2030. That way our petrochemical intensity index rises from the current 4.6 to 15," Vaidya said. "India is a big importer of petrochemicals but if I make those products myself, it will be a natural hedge against the volatility of crude prices." Room for all With India's economic growth outlook expected to remain robust over the coming years, India would need all forms of energy -- fossil fuels as well as renewables, Vaidya said. Gas and LNG would continue to be a key component of IOC's portfolio and therefore IOC was undertaking capacity expansions at terminals, such as Ennore. In addition, IOC aimed to boost the use of gas in its own refineries. "All my refineries are switching over to gas. Three refineries will be switching over in the next few months, that is Paradip, Barauni and Haldia. They will be taking gas from the Dhamra terminal," Vaidya said. He added that IOC's current renewables footprint was only about 250 MW, but it planned to raise this to 5 GW by 2030, and to 12 GW by 2046. For that, IOC signed strategic partnerships with state-run National Thermal Power Corp and SJVN. For electric mobility, IOC was not taking the lithium-ion battery route since India is a net importer, Vaidya said, adding that IOC had tied up with Israeli company Phinergy for aluminum air batteries. "Field trials are going on for four-wheelers. And once these trials are done, we'll have definitive agreements with four-wheeled vehicle manufacturers and we'll be putting a factory in India for the aluminum air battery," Vaidya said. "We already have a tie-up with Hindalco for the supply of aluminum." The battery-swapping segment was gaining popularity in India and IOC intended to make inroads into the sector in a big way, especially for two-wheelers and three-wheelers, he added. "Green hydrogen is one area where we are going to really push ourselves. I'm a big consumer of hydrogen as it is today because of the hydro desulfurization processes," Vaidya said. "And my intent of entering the green hydrogen phase is, once I give the volumes, I'm sure the prices will come down," he said. IOC has finalized joint ventures with ReNew and L&T to push ahead in that segment. More from the series: India's crude strategy a cushion for both global, domestic prices, says Puri
May 08 2023
The S&P Global Commodity Insights India CEO Series is a compilation of exclusive interviews by Asia Energy Editor Sambit Mohanty with top government and industry leaders in India's oil and gas sector. Get insights on how those companies are planning to strike a balance between traditional and new businesses at a time when energy transition is changing the industry's landscape, while geopolitical turbulence is throwing up new challenges. India's crude import diversification, including purchases from Russia and other new suppliers, has helped to ease the pressure on other mainstream oil producers and keep world prices in check, while also helping to keep fuels affordable in the domestic market, petroleum minister Hardeep Singh Puri told S&P Global Commodity Insights in an exclusive interview. Puri, who took charge of the petroleum ministry in 2021 when the pandemic was in full swing, said India had successfully managed to navigate global market gyrations and all strategic decisions on crude purchases were taken with the prime aim of making fuels affordable to a population of more than 1.4 billion in a country that imports 85% of its oil needs. "Today, we are in the situation where India can take reasonable satisfaction of having dealt with the trilemma -- which is availability, affordability and sustainability," Puri said. "There's been no shortage of fuels and our retail prices are amongst the lowest in the world. Other than a few large oil producers, our prices are very competitive. We have been able to navigate the challenges reasonably well," he added. Puri said India's decision to buy more oil from Russia and other new suppliers was aimed purely at making fuel affordable to its consumers. He added that global oil prices would be much higher currently if India was competing to buy from Middle Eastern and other suppliers the volume it is now buying from Russia. "It's a message which is anchored in ground reality. Even as the global transition takes place to green energy, the fact of the matter is global oil consumption is about 100 million b/d," Puri said. "If two well-known producers are sanctioned -- Venezuela and Iran – and if energy coming out of the third producer, Russia, is also taken off, consumption cannot come down overnight. That's because you're not going to stop travelling or heating your home," he added. New supply landscape According to S&P Global data, India's imports of crude oil from Russia reached a new high of 1.8 million b/d in April -- double its purchases from Iraq, India's traditional top oil supplier. Furthermore, the county's imports of Russian oil exceeded its combined flow from Saudi Arabia and Iraq for the first time. Combined imports from India's traditional suppliers in the Middle East have fallen to 47% over January-April from around 75% of total imports in the same period last year. Puri said the preference of some countries to keep buying Russian oil had helped the global supply-demand balance adjust better to changing market dynamics. "If that was not the case and everybody was looking to buy non-Russian oil, prices would have gone up even further," Puri added. He said India had not only diversified to buy oil from Russia but had also been increasing its energy purchases from major suppliers such as the US, as well as some new suppliers. "Today, we buy $20 billion worth of energy products from them. We used to buy oil from about 27 countries a few years ago and we have got to 39, with new sources like Guyana coming up," Puri said. He added that except for one or two OPEC producers, the ability of other oil producers to quickly raise output to fill the vacuum was limited. "What I am saying is that our buying from Russia or other new sources actually helps the global situation," Puri said. Commenting on the global supply challenges, Puri said the Russia-Ukraine war was only a part of the problem. He said that in late 2021, he was told that leading Middle Eastern producers would gradually increase production, which would eventually help prices to cool by February 2022. But then the Russia-Ukraine conflict started. "The real problem arose because producers are wanting to produce less in order to maximize profits. And the high-priced environment was not compatible with the global economic situation, which is already inflationary. Even now, therefore, whatever cutbacks in the production have taken place, the market will have to adjust to it," Puri added. Big upstream push Puri said India was pushing ahead with its exploration and domestic production ambitions as well as accelerating the move toward green energy. Under Puri's leadership, India has undertaken a series of upstream reforms, such as handing out marketing freedom to upstream producers. "Our reforms are all anchored in a sense of pragmatism, far-sightedness and an understanding that we require more domestic production. Some of the initiatives include policies to incentivize production in the northeastern region, as well as the decision to open up more sedimentary areas to exploration and production," Puri said. Following the announcement of a series of investor-friendly upstream policies, India's upstream sector is now increasingly attracting interest from global oil majors, as well as many private players, he added. "There are four or five major oil and gas majors in the world and all of them are engaging to participate in E&P in India. We are also in the market to acquire more assets and take more equity outside. Because as I see it, even if we make a very major transition to green energy, we will still need oil and gas at least for another 20 to 30 years," Puri said. He added that India's plans to raise its refining capacity from the current 250 million mt/year to 400 million mt/year was on track, even though refiners might increase their capacity to produce more downstream products, such as petrochemicals. Puri said that while India was making steady progress toward its ambition of raising the share of gas in its energy mix from around 6% to 15% by 2030, it was actively embracing new energy initiatives, such as green hydrogen and biofuels. "Gas is a bridge fuel. Our domestic production is going up at a healthy pace. We are expecting more private and international players to come on board and participate in the gas sector," he said. "We are also slowly but surely moving into a direction where India will be a major producer and consumer of green hydrogen. Our biofuels, ethanol push and biogas plants will be big stories," Puri added.
Apr 27 2023
Why isn’t US oil production growing faster despite high prices and windfall profits? It’s a loaded question with a heavily political overtone, but a crucial one for the worldwide petroleum complex since incremental US onshore barrels first transformed and then dominated oil price formation for the past decade. Thus, the seeming evaporation of US onshore supply elasticity, compounded by the pandemic recovery and the war in Ukraine, has plunged the oil market into a search not only for an equilibrium price, but also for a new mechanism for sourcing and pricing marginal barrels. In answering this question, there’s a straightforward, factual answer and a more complex, structural one that delves deeper into the near-perfect alignment of incentives to restrain investment within the US oil sector well beyond the near-term. Straightforward answer : The oil system has reached its short-term speed limit. The industry is simply not bringing enough wells onstream due to logistics, labor, and supply chain bottlenecks. Slower growth is (now) less an explicit objective for producers than a by-product of operational realities. In addition, there are factors that are relevant but that are not driving the train of underwhelming near-term onshore production: shifting decline rates, new well productivity, sweet spot exhaustion, infrastructure constraints, and government policy. More complex, structural answer : The inability to spend has been replaced by the unwillingness to spend. All of the key players—oil and gas companies, equity markets, and commodity markets—distrust the current upcycle. Longer-term, concerns related to the impact of the energy transition on the viability of oil and gas have changed the calculus of investors and companies regarding certain oil and gas investments. The impact of this “strand” risk on onshore US shale assets is lower than it is on longer-cycle assets globally. But the same is not true for the oilfield service sector, whose reticence to aggressively fund new, durable equipment is also retarding the normal investment mechanism. Importantly, there is no impetus to act quickly: the status quo is very sustainable across the oil and gas supply chain. The most likely outcome , in our view, is that the current impasse does not get resolved. Rather, we muddle through, meaning that US production growth gets stuck in a range of 0.6-1.0 MMb/d in 2023 and 2024, regardless of policy intervention or upward price momentum, though certainly there is always downward risk Read and download our full report here
Apr 18 2023
Sub-Saharan Africa's energy sector remains subject to the turbulent push-pull of conflicting forces, despite renewed regional economic activity resulting from the end of COVID-19 restrictions. COVID-19-era debt is a weight on regional economic growth, and the Russia-Ukraine conflict looms large in the region. High commodity prices resulting from the conflict have been both an economic boon and a bane, depending on the country, and the conflict has also reminded investors and policymakers worldwide why energy security is important—which has supported energy investment across the region. Although the region had a banner year for world-class frontier hydrocarbon discoveries, energy transition considerations remain a challenge to future upstream activity. The region is a leader in refined product consumption, but this also gives rise to supply concerns, including from the power sector, which increasingly has turned to liquid feedstocks to compensate for failures of grid power. Renewables, however, may increasingly fill some of these power supply gaps. Drilling into the Upstream – Gas shortages resulting from the Russia-Ukraine conflict made energy security a top concern among policymakers worldwide, lending sympathy to calls from African leaders to support the exploitation of the continent’s national hydrocarbon reserves, especially gas. – New licensing rounds in Sub-Saharan Africa remain focused on the offshore. – Frontier exploration in Sub-Saharan Africa had another banner year in 2022, further burnishing the region’s reputation as a global E&P hotspot. – Civil society continues to challenge upstream activity, which may lead Sub-Saharan Africa’s producers to turn to investors and financiers less constrained by climate policies This cross-sector report represents a review of the energy sector progress that was made over the course of the past year and offers an outlook on the complexities and questions the region will face in the coming year. Insight was pulled from our macroeconomic, upstream energy, downstream, and power and renewables research divisions. Read and download our full report here
Feb 28 2023
The North Sea is one of the world’s most significant oil and gas producing regions. With an estimated 21 billion barrels of oil equivalent reserves the basin after almost 50 years of development continues to be an important supplier of crude for European refiners and the continent's most reliable source of natural gas to guarantee energy security. As the world accelerates its ambition to achieve net zero, there is growing interest in understanding the relative greenhouse gas (GHG) competitiveness of upstream oil and gas. This insight explores the range and character of the GHG intensity of North Sea production. It is the first in a series of analyses of new emission datasets from S&P Global Commodity Insights. KNOW MORE HERE
Feb 01 2023
National oil companies (NOCs) comprise a range of petroleum resource holders and resource seekers. This group features companies with significant resources at home and other companies that must pursue these resources abroad to meet domestic oil and gas demand. Within this peer group, the one thing that NOCs have in common is state ownership. The 25 NOCs that fall under the coverage of S&P Global Commodity Insights differ in terms of their proved reserves base, production capacity, economic importance to the state, contributions to domestic budgets, and autonomy from their host governments. In a recently published report, we presented five key questions for NOCs that will guide their strategies as well as our research agenda for 2023. 1. Is geographic portfolio concentration a risk or a safeguard? Most NOCs are national in nature, with a high concentration of their reserves and production located within their borders. Dominance at home—where the company operates most of its country's oil and gas reserves—gives that NOC added leverage relative to peers. However, this also tends to come with more responsibilities, including extra taxes, local employment obligations, and a requirement to subsidize energy prices. For NOCs based in resource-deprived countries, they could face pressure from the state to venture abroad to satisfy domestic energy needs. 2. Do reserves-to-production (R/P) ratios still matter? For decades, R/P ratios have been used as an important industry metric for measuring a company's ability to sustain its current performance and grow its business. For NOCs with high ratios, untapped oil and gas reserves were viewed as the company's "bank" for the future. However, with governments and NOCs seeking to reduce their carbon footprints to combat climate change, a higher ratio is no longer a measure of long-term success but could indicate which NOCs could get stuck with stranded assets that do not get developed and remain underground. 3. With accelerated monetization now a primary goal, where are the partnership opportunities? Growing concerns about climate change are prompting governments to accelerate resource monetization. In this regard, operational capability will be a key determinant of each NOC's ability to strike the balance between petroleum monetization and climate protection. NOCs with higher operational capabilities will have more scope to operate oil and gas projects successfully on their own while those with fewer operational capabilities will be more reliant on external partners and investor friendly domestic conditions to monetize resources. 4. Will NOCs take a more definitive step into the low-carbon sector? Many NOCs have a state mandate to focus on the domestic petroleum sector or go abroad in the event that resources at home are scarce. Yet, as climate concerns have moved to the forefront, some governments are tasking NOCs with new responsibilities to invest in alternative, low-carbon energy sources. While exploration and production are likely to remain their core function, some NOCs are taking steps to invest in other energy sources as a part of strategic diversification. This pressure can be more acute for resource-strained NOCs or those who have a higher share of external financing. 5. What are NOCs doing to green their operations? Even those NOCs that are determined to keep their focus on the petroleum sector are having to adapt to new realities as pressure grows for them to address climate change. NOCs are increasingly taking steps to decarbonize their existing activities and ensure that they maintain "social license" to operate in the oil and gas sphere. This includes significant investments to "green" their operations, from reducing carbon intensity from production, to cutting methane emissions, to electrifying offshore operations—all of which improve operational efficiencies and reduce carbon footprints. Material for this post is taken from the full report, entitled "Five key questions for national oil companies in 2023" , which is available to clients of S&P Global Commodity Insights—Upstream Companies & Transactions. The report contains an in-depth analysis of these questions, additional graphics, as well as region-specific insights. For an in-depth assessment of financial and operational capabilities across the 25 NOCs in our coverage, see the S&P Global Commodity Insights NOC Benchmarking Tool . For an in-depth operational assessment of reserves, exploration, and strategic partners across the 25 NOCs in our coverage, see the S&P Global Commodity Insights NOC Operations Dashboard . These dashboards are only available to clients of S&P Global Commodity Insights—Upstream Companies & Transactions.