Indian fuel demand hits nearly 19 MMtpy in November

MOSCOW (MRC) -- India's fuel demand climbed to an eight-month high in November, as festivals and a pick-up in industrial activity boosted sales in the world's No. 3 oil consumer, said Hydrocarbonprocessing.

Consumption of fuel, a proxy for oil demand, was 2.4% higher than the previous month, and rose 10.2% year-on-year to 18.84 MMt in November, according to the data from Indian oil ministry's Petroleum Planning and Analysis Cell (PPAC). "The festive season has been supporting oil demand growth," said Refinitiv analyst Ehsan Ul Haq. "Demand growth might slow slightly in the next few months as present expansion has been from a low base, but since the Indian economy is robust, we'll continue to see high consumption numbers," Ul Haq added.

Retail sales always peak during October-November, when the nation of 1.4 B celebrates major festivals of Dussehra and Diwali. India's factory activity in November expanded at its fastest pace in three months to 55.7, compared with 55.3 in October, showed the Manufacturing Purchasing Managers' Index, compiled by S&P Global.

Sales of diesel, which account for about four-fifth of India's refined fuel demand, were up 19.1% from 2021 at 7.76 MMt, while sales of gasoline, or petrol, rose 8.1% at 2.86 MMt, the PPAC data showed. The rise in diesel demand "points to a strong economy," said Ul Haq, noting a pick-up in private as well as public transport demand along with a recovery in demand from the agricultural sector after the monsoon season.

Cooking gas or liquefied petroleum gas (LPG) sales increased 5.2% to 2.47 MMt, while naphtha sales fell 18.2% to 1.01 MMt. Sales of bitumen, used for making roads, rose 30.3% while fuel oil use edged up 8.4% in November.

We remind, there are signs that China and India are pulling back from buying Russian crude oil ahead of the Group of Seven nations' proposed price cap and a European Union ban on imports. However, the more important question for the market is whether any slowing by China and India of purchases from Russia is a temporary factor that will be reversed once participants figure out how to work with, or around, the price cap.
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MOSCOW (MRC) -- Germany expects a decision next week on how the Schwedt refinery will be supplied as a ban on Russian oil takes effect, the Economy Ministry said, as per Hydrocarbonprocessing.

Berlin aims to eliminate imports of oil from Russia by the end of the year, applying European Union sanctions, and has for months been working with Poland to secure supply for Schwedt, which provides 90% of Berlin's fuel. The two sides want to ensure Polish refineries in Gdansk and Plock as well as German ones in Schwedt and Leuna are adequately supplied with crude oil, ministers from both countries said earlier this month.

The two governments on Thursday met in Berlin to discuss how the two German refineries could continue to operate after the embargo on Russian oil comes into effect. "Talks have been very good," a spokeswoman for the Economy Ministry said in response to a Reuters query. "We are now evaluating the talks within the federal government and are currently expecting a decision from the federal government by the end of next week," the spokesperson added.

Germany in September took control of the Schwedt refinery, which was majority owned by Russia's Rosneft, as part of efforts to shore up the country's energy supply. It put Rosneft Deutschland under a trusteeship of the German industry regulator but Rosneft still holds 54.17% of the refinery. Schwedt's co-shareholders are oil major Shell with a 37.5% stake, and Italy's Eni, which holds 8.33%.

Germany and Poland this month signed a memorandum of understanding on oil logistics, which could unlock non-Russian flows and help Poland's top refiner, PKN Orlen, pursue its interest in Schwedt.

As per MRC, Poland is seeking German support to slap EU sanctions on the Polish-German section of the Druzhba crude pipeline so Warsaw can abandon a deal to buy Russian oil next year without paying penalties. Poland is seeking German support to slap EU sanctions on the Polish-German section of the Druzhba crude pipeline so Warsaw can abandon a deal to buy Russian oil next year without paying penalties.

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MOSCOW (MRC) - China may close the year with record shipments of key transportation fuels in December as refiners rush to use their export quotas and maximize overseas profits to compensate for tepid domestic fuel demand caused by COVID-related curbs, said Hydrocarbonprocessing.

December exports of diesel, gasoline and aviation fuel combined are estimated at 6.5 million to 7.1 million tons, led by diesel shipments that could reach 3 million tons, according to estimates from Chinese consultancy Longzhong and JLC, Refinitiv Oil Research and several trading sources.

China's diesel exports hit an all-time high of 2.83 million tons in March 2020, followed by a record 6.5 million tons in April for all three products, according to Chinese customs data. Bumper shipments from China will weigh on Asian refining margins, particularly for diesel, as refiners' profit from producing the fuel from Dubai crude has already shed 15%-30% month-on-month amid sufficient regional supplies and a closed arbitrage to European markets.

Beijing's abrupt relaxation of COVID rules this week aren't likely to reverse the outflows as substantial recovery in local demand may take months to materialize, market participants said. Despite earlier expectations that part of the large set of quotas released in October could be extended into 2023, it became clear in recent weeks that refiners were being encouraged to finish them all by end-December, three trading sources said.

"Chinese refiners are still grappling with high domestic inventories, especially for gasoline and more recently gasoil," said Daphne Ho, senior analyst at consultancy Wood Mackenzie. "Healthier export margins has been a key push factor."

State refiners, which control most of the export quotas, have since November been ramping up diesel production to cash in lucrative overseas sales. Despite recent declines, refining profits for both 10 ppm sulfur gasoil and jet fuel have more than doubled this year on tight global supplies.

"State majors are very much margin-oriented and they will only redirect volumes if there is better profit elsewhere," said one China-based trading source. Gasoline exports were pegged at 2.1 million to 2.3 million tons for December, likely to surpass a record 1.9 million tons from April 2020.

We remind, Ineos has agreed a fourth joint venture with Sinopec that will see it take a 50% share in the Tianjin Nangang project, which is currently underway and due to go on stream at the end of 2023, said Chemanager-online.
“This latest joint venture with Sinopec significantly expands Ineos’ petrochemical production and business footprint in China. It is a further example of the close relationship and growing collaboration between Sinopec and Ineos,” said Ineos chairman and CEO Jim Ratcliffe.
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MOSCOW (MRC) -- Slovakia is close to an agreement to export oil products such as diesel to Ukraine after European sanctions take effect in February, Economy Minister Karel Hirman said, as per Hydrocarbonprocessing.

The country's main refiner Slovnaft, part of Hungarian energy firm MOL, will no longer be able to export products refined from Russian oil to most markets when EU sanctions take effect on February 5. The plan would allow Slovnaft to export oil products to Ukraine, which is facing severe electricity and heating shortages this winter as Russia attacks critical infrastructure.

A Slovnaft spokesman said the company was exporting unspecified amounts of products to Ukraine at the moment but the EU sanctions threaten to halt these. Hirman, returning from a visit to Kyiv, said in a news conference shown live on television that talks were under way in Brussels and with Ukraine and MOL to arrange the exports.

"We are close to an agreement that after February 5, the Slovnaft refinery will be able to export to Ukraine its products from Russian oil, which flows to us through the Druzhba pipeline," Hirman said. "In this situation, supplies of diesel for diesel generators are a question of life and death," he said. Hirman added that supplies would be on a commercial basis, as well as potential supply of electricity to Ukraine.

Slovakia receives nearly 100% of its crude oil from Russia via the Druzhba pipeline that passes through Ukraine, but Slovnaft plans to cut the proportion to around 60% next year to keep its export possibilities to other markets open.

The Slovnaft refinery currently exports a substantial part of its 124,000-barrel-per-day production. A separate short-term exception will also allow Slovnaft to export Russian oil-based products to the Czech Republic next year. The company said earlier it was testing various blends to replace part of its Russian supply.

We remind, Slovak oil refiner Slovnaft said on Wednesday it expected Russian oil flows through Ukraine to resume in the coming days after it had made a payment for transit through Ukraine to remove an obstacle that halted flows through the southern leg of the Druzhba pipeline earlier this month.
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MOSCOW (MRC) -- Saudi Aramco and Shandong Energy signed a Memorandum of Understanding to collaborate on downstream projects, including the construction of a refining and petrochemicals integrated complex, said Hydrocarbonprocessing.

The deal, which includes the potential for a crude oil supply agreement and chemicals products offtake agreement, helps support Saudi Aramco's goal of building downstream assets in Shandong, China.

The JV will also explore cooperation across hydrogen, renewables and carbon capture technologies.

We remind, Saudi Aramco has signed 59 corporate procurement agreements (CPAs) worth a potential total of USD11 billion with up to 51 domestic and international manufacturers, as a part of its coveted in-kingdom total value add (IKTVA) localisation programme.

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