Singapore mandates SAF use for departing flights, to introduce levy from 2026

Highlights

Targets 1% SAF uplift from 2026

Levy will be set based on SAF target, projected price

Flights departing from Singapore will be required to use sustainable aviation fuel from 2026, with a 1% SAF uplift target in 2026 and plans to subsequently raise it to 3%-5% by 2030, the Civil Aviation Authority of Singapore said Feb. 19.

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“We have consulted key stakeholders and assess that the cost impact of the 1% target is manageable. This will provide an important demand signal to fuel producers and give them the incentive to invest in new SAF production facilities,” Singapore’s Transport Minister Chee Hong Tat said at the Changi Aviation Summit.

“We will monitor global developments and the wider availability and adoption of SAF in the next few years, before deciding on the SAF target beyond 2026,” Chee said. “In making the decision, we will aim to strike a balance between economic competitiveness and environmental sustainability, to achieve our objective of having sustainable growth.”

Singapore will also introduce an SAF levy to provide cost certainty to airlines and travelers, which will be set at a “fixed quantum based on the SAF target and projected SAF price”, Chee added.

For instance, the levy in 2026 will be set based on the volume of SAF needed to meet its 1% target and the projected SAF price that year.

“Whether we are able to meet, or exceed, our SAF target will be based on how much SAF can be purchased with the SAF levy at the prevailing SAF price. If the supply increases and prices come down, we could go beyond our set target. Conversely, if SAF prices shoot up and exceed projected levels, we would purchase less than our set target,” Chee said.

To meet the 1% uplift target in 2026, authorities estimated that air ticket prices for an economy class passenger flying from Singapore to London to pick up by around S$16 ($12), with passengers in premium classes paying higher levies.

Further details on the SAF levy will be announced in 2025, the CAAS said, adding that sufficient lead time will be provided for the industry and travelers before the levy kicks in from 2026.

These initiatives are part of the Singapore Sustainable Air Hub Blueprint launched Feb. 19, which charts out the country’s aviation decarbonization plans. The blueprint will be submitted to the International Civil Aviation Organization as Singapore’s State Action Plan this month.

Under the Blueprint, CAAS will work with aviation stakeholders to reduce domestic aviation emissions from airport operations by 20% from 2019 levels (404,000 mt) in 2030 and achieve net zero domestic and international aviation emissions by 2050, it added.

India to invite bids soon under $60 mil renewable hydrogen subsidy plan for transport

Highlights

Plan part of India’s Rupee 197.44 bil green hydrogen mission

Transport Ministry to invite bids

Benefits fuel cells, IC trucks, busses

India will soon invite competitive bids for its Rupee 4.96 billion ($60 million) subsidy plan for the use of renewable hydrogen in pilot transport projects, a senior government official said Feb. 16, following the issuance of guidelines earlier in the week.

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The subsidy plan is part of India’s Rupee 197.44 billion National Green Hydrogen Mission issued in 2023, which targets the production of 5 million mt/year of renewable hydrogen for exports and domestic use by 2030, the guidelines said Feb. 14.

“The Ministry of Road Transport and Highways will issue bids,” the official said without giving a timeline.

“The scheme will provide financial assistance to close the viability gap due to the relatively higher capital cost of hydrogen powered vehicles and the infrastructure for hydrogen refueling stations in the initial years,” it said.

The larger objective of the plan is to establish a renewable hydrogen ecosystem for the transport sector, the guidelines added.

With the expected reduction in the renewable hydrogen production cost over the years, the utilization in the transport sector is expected to increase, it added.

However, an LNG analyst at S&P Global Commodity Insights, Ashish Ranjan, said hydrogen vehicles will see a slow pickup in India.

“By 2030, we don’t expect hydrogen only based vehicles on road, rather blending of hydrogen in CNG would be more feasible,” Ranjan said. “Further, LNG is being explored in long-haul trucking.”

Some of the pilots, which are already being discussed on the blending of hydrogen in CNG, allow for blending of up to 2% by volume of hydrogen, and blending ratios are expected to increase as pilots mature, Ranjan added.

Currently, India’s CNG demand of 734 MMcf/d is expected to grow to 1,580 MMcf/d by 2030, according to Ranjan.

The Rupee 4.96 billion outlay is until fiscal 2025-26 and will not provide expenses for hydrogen production and land, the guidelines added.

Next steps

The scheme will apply to busses and trucks with fuel cell-based propulsion technology; buses and trucks with internal combustion engine phased propulsion technology and four-wheelers with a fuel cell or internal combustion engine-based propulsion technology, it said.

A couple of large oil companies have hydrogen bus programs on an experimental basis.

Indian oil has been plying conventional hydrogen-based busses in New Delhi with a refueling station close to the city in the last few years.

Reliance Industries, with its vehicle partner Ashok Leyland, unveiled hydrogen internal combustion engine technology solution for heavy-duty trucks in February 2023.

Reliance said it will test and validate the H2ICE technology for heavy-duty trucks before its first commercial deployment at scale, initially across its captive fleet.

In an inflection case, S&P Global sees India’s hydrogen use in transport at 0.35 million mt in 2030, rising to 3.49 million mt by 2040.

India announced winners for the first round of auctions for subsidies for producing renewable hydrogen and electrolyzers on Jan. 10. It announced another auction intending to aggregate renewable hydrogen demand from the fertilizer plants and refineries on Jan. 19, S&P Global reported previously.

Platts, part of S&P Global, assessed New South Wales hydrogen produced via alkaline electrolysis at $2.10/kg Feb. 15, up 6.60% month on month.

It assessed Qatar hydrogen produced via alkaline electrolysis at $1.79/kg Feb. 15, unchanged on the month

Cost competitiveness

The scheme will also support the blending of methanol/ethanol and other synthetic fuels derived from renewable hydrogen in automobile fuels, the guidelines said.

“With the falling costs of renewable energy and electrolyzers, it is expected that vehicles based on green hydrogen can become cost-competitive over the next few years,” the guidelines said.

“Future economies of scale and rapid technological advancements in the field of vehicles powered by hydrogen are likely to further improve the viability of transport based on green hydrogen,” it added.

Designated “hydrogen highways” will see the hydrogen-fueled interstate buses and commercial vehicles ply, it said.

A Scheme Implementing Agency will be formed, which will issue a call for proposals and select an executive agency through a transparent process. It will identify the routes covering different terrains and climatic conditions across India, it said.

Winners will be awarded after taking into consideration the specific needs, merits and feasibility of each project, it added.

INTERVIEW: India’s 2024 gas consumption to rise 5%-6%, says Adani Total Gas CEO

Highlights

MSME, LTM offer huge untapped potential

Company cuts reliance on spot amid volatile prices

Pursuing CGD network expansion, green energy moves

India’s natural gas consumption in 2024 will likely grow 5%-6% corresponding to an estimated economic growth of 6%-7%, with its share boosted in future if the country taps two “hidden jewels” — Micro, Small and Medium Enterprises (MSMEs) and LNG for transport and mining (LTM) — Adani Total Gas Executive Director & CEO Suresh P Manglani said.

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An additional demand of around 100-120 MMSCMD can fructify if a supportive eco-system is provided to the MSMEs to switch to natural gas, Manglani told S&P Global Commodity Insights in an interview during the India Energy Week 2024 in Goa.

India offers productivity-linked incentive to manufacturing because it wants to be a manufacturing hub, Manglani said

“Our view is that if India brings in some sort of consumption linked incentive or CLI — like a direct benefit transfer for the MSMEs — the country can make a faster progression toward natural gas,” he said.

This step will boost trade for CGD companies, which in turn will have a ripple effect on both pipeline utilization and terminal utilization, he opined.

When it comes to transportation, there is growing industry consensus that diesel must be phased out in a calibrated way for long haul vehicles such as trucks and buses, Manglani said.

“Presently, India uses about 80 million mt/year of diesel with [around] half of that being directed towards LTM. By 2030, we are expecting this 80 million mt/year figure to grow to 120-130 million mt/year because India is a burgeoning economy,” he said.

“Even if we achieve a 25%-30% switch from diesel to LNG, we will see a major surge in LNG’s demand for transport and CGD is well positioned to capture that market,” he added.

Meanwhile, from the infrastructure point of view, India is passing through an “exciting phase”, Manglani said.

Significant increase in domestic gas production, improved pipeline connectivity, increasing RLNG capacity with about 20 million mt/year of new capacity on the anvil in the coming years, and multiple CGD licensing rounds in the past few years bode well for increased natural gas consumption, he said.

Reshaping strategy

While LNG prices will always retain some element of volatility, triggered by events like the Russia-Ukraine war or the Red Sea attacks, prices have mostly stabilized presently, Manglani said. Because of increasing domestic gas production and the strong CGD distribution network, I think India is well placed, he said.

Platts, part of S&P Global, assessed March JKM up 41.2 cents/MMBtu on the day at $8.925/MMBtu Feb. 15, while on the same day it assessed the LNG West India Marker at $8.725/MMBtu, at a discount of 20 cents/MMBtu to the March JKM assessment.

“We expect a supply glut of LNG from 2025-26 onward. That is also a favorable factor for India because by that time infrastructure build-up will take place and we will be able to receive this LNG from all terminals in India,” Manglani said.

As far as the company was concerned, it has reshaped its strategy to trim its reliance on spot contracts, he said. “Earlier it used to be [about] 20% of the total portfolio but now it is much less,” he noted.

“Moreover, we also calibrate on multiple tenures, multiple indices — we could have JKM, HH, Brent and/or a hybrid system. This helps because if one index is more volatile, we can still source a similar amount of gas because we have a mixed portfolio,” Manglani said.

The company is also forging ahead with various growth strategies including green energy pursuits.

For the nine-month period ended Dec. 31, 2023, the company’s CNG sales volumes rose 21% year on year to reach 408 MMSCM, while its PNG volumes grew 1% on the year for the same period, Adani Total Gas said in its latest quarterly results announcement released Jan. 30.

The company continues to expand its core CGD business into new geographies after being awarded CGD licenses in the 9th, 10th and 11th bidding rounds, Manglani said.

In addition, it is signing agreements with “a lot of corporates” to promote LTM while also accelerating e-mobility through the launch of several EV charging stations, he said.

ATGL in January said it was building its first LNG Retail Outlet in Dahej, Gujarat which is expected to be commissioned by July 2024. Meanwhile, Adani TotalEnergies E-mobility Limited has already commissioned 329 EV charging points across 10 states while over 1050 EV charging points are under construction.

In addition, Adani TotalEnergies Biomass Limited is developing a biomass plant.

“So, Adani Gas is developing a holistic basket of clean and sustainable fuels,” Manglani said.

Singapore and Indonesia to collaborate on cross-border carbon capture, storage


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Singapore and Indonesia have signed a letter of intent to collaborate on cross-border carbon capture and storage (CCS), with work underway for a legally binding agreement to enable transport and storage of carbon dioxide between both countries, according to a joint statement released late Feb. 15.

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This comes after Indonesia issued a presidential regulation Jan. 30 to allow CCS operators to set aside 30% of their storage capacity for imported carbon dioxide.

“Singapore is the first country to sign an LOI with Indonesia after its presidential regulation to allow cross-border CCS was announced. With this LOI, Singapore and Indonesia can become the pathfinders to catalyze deployment of cross-border CCS projects in Southeast Asia,” said Singapore’s Ministry of Trade and Industry Deputy Secretary Keith Tan.

Indonesia — with an estimated carbon storage potential of up to 600 GT — aims to develop CCS technologies and establish itself as a key CCS player as it strives towards achieving net zero by 2060.

“The initiative positions Indonesia as a key player in the Southeast Asian CCS landscape, offering a model for cross-border environmental cooperation,” said Indonesia’s Deputy Coordinating Minister for Maritime Sovereignty and Energy Jodi Mahardi.

Singapore aims to achieve net zero by 2050 through low-carbon technological pathways like hydrogen and CCS, with plans to capture 2 million mt/year of carbon dioxide by 2030, and 6 million mt/year by 2050.

There are currently no cross-border CCS projects in Asia, although countries like South Korea and Japan have announced plans to implement such projects.

Outside of Asia, Belgium and Denmark had signed an agreement in 2022 to trial cross-border shipping of captured carbon dioxide and to permanently store them in a sandstone reservoir.

EU approves Eur7 billion state aid for hydrogen across 33 IPCEI projects

Highlights

Support for 3.2 GW electrolyzers, 2,700 km pipelines

Decision to unlock Eur12 billion investment

Seven member states, focus on 24 German projects

The European Commission approved state aid for 33 hydrogen infrastructure projects as part of a third wave of funding under the IPCEI Hy2Infra ‘important projects’ initiative, it said Feb. 15.

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The projects, shortlisted almost three years ago, could unlock investments of Eur12 billion ($13 billion), of which EU member states are to contribute Eur6.9 billion, the EU’s competition commissioner Margarethe Vestager said in a statement.

Germany was a likely beneficiary of the latest round with 24 projects representing investment of Eur8 billion shortlisted, the German energy ministry said in a separate statement.

“The projects of the Hy2Infra wave are important building blocks for the hydrogen ramp-up in Germany and Europe,” said Germany’s energy and economy minister Robert Habeck.

Clusters of projects seeking support were prepared by seven member states: France, Germany, Italy, the Netherlands, Poland, Portugal and Slovakia, the EC said.

Some 3.2 GW of electrolyzer capacity, around 2,700 km of new and repurposed hydrogen pipelines and 370 GWh of hydrogen storage plus related port infrastructure would be supported across the IPCEI projects, it said.

Previously the EC approved Hy2Tech and Hy2Use project clusters in 2022.

Other significant projects have been approved on a case-by-case basis, the German energy ministry said, notably those focused on green hydrogen for steel production.

S&P Global Commodity Insights analysts see 2030 EU green hydrogen production of around 3.2 million mt under its European Planning Case.

Europe is among the most expensive global regions for electrolytic hydrogen production, according to the Platts Hydrogen Price Wall.

Shipping firms enter EU ETS at market trough; admin backlogs expected

Highlights

EC allocates over 2,200 firms to member states for holding accounts

Many non-EU shipping groups to surrender allowances to Spain

EUA prices close to lowest since October 2021

New EU rules will provide shipping companies with more opportunities to buy greenhouse gas emissions allowances at a market trough via opening a holding account, but market players worry that their application process could be prolonged by administrative backlogs.

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As part of Brussels’ regulation to extend the Emissions Trading System to cover shipping from this year, the European Commission on Jan. 31 allocated some 2,200 shipping companies each to an EU member state for registering a Maritime Operator Holding Account.

The announcement came as Europe’s compliance carbon market is mired in near-term bearishness, with lower emissions forecast from power plants, soft gas prices and the EU’s “front-loading” program to bring forward some allowance auction volumes to 2023-2026 from 2027-2030.

Platts — part of S&P Global Commodity Insights — assessed the December EUA contract at Eur56.52/mtCO2e ($60.67/mtCO2e) Feb. 14, close to it lowest since October 2021 and a far cry from an all-time high of Eur100.23/mtCo2e seen on Feb. 27, 2023.

“EUA prices currently reflect a discount compared to those observed in the past two years,” said Bernhard Schulte Shipmanagement’s emission compliance manager, Alexander Senteris. “Nonetheless, a purchasing strategy should account for future market expectations [among other factors].”

In their latest monthly market outlook, S&P Global analysts expect average EUA prices to fall from Eur85.3/mtCO2e in 2023 to Eur63.9/mtCO2e in 2024 before recovering to Eur82/mtCO2e in 2025.

“Prices are lower due to certain factors, one being the EU’s policy of front-loading,” shipbroker SSY’s carbon specialist James Ash said. “This is possibly a good time to buy EUAs for future compliance needs.”

Red tape

Irrespective of the MOHA rules, shipping companies have been allowed to set up trading accounts under the ETS if they can meet certain criteria, such as having a bank account in the EU, or complying with the Markets in Financial Instruments Directive when intending to profit from EUA transactions.

But market participants suggested many have struggled to opt for this route due to stringent documentation requirements and a long application process.

“Several countries have extensive delays when opening trading accounts” that could last three months, Albrecht Grell, managing director of maritime tech firm OceanScore said, citing Malta and Portugal as examples.

Establishing an MOHA requires fewer documents, but the EC requires shipping companies to file their applications within 40 working days from the Jan. 31 announcement — even though they only need to surrender EUAs for the first time in September 2025 for this year’s emissions.

“If before the problem was bureaucracy, now the problem is the number of companies jumping in the application all together at the same time collapsing the process of many registries,” said Mattia Ferracchiato, head of carbon markets at shipbroker BRS.

Senteris, whose company has subsidiaries required to register MOHAs in different countries, said: “Considering the considerable number of shipping companies that need to be registered under the member states, there’s a concern that significant administrative burden could lead to delays.”

Moreover, many non-EU shipping firms will have to set up the holding accounts as their ships trade in the bloc, and industry participants expect some teething pains.

“The 40 days deadline will be a challenge” for the industry and EU member states, Grell said. “We are talking about non-European addresses, unfamiliar processes.”

Spain in focus

Based on the EC announcement, 707 shipping companies — including Costamare and Maran Tankers Management — will register for their MOHAs in Greece, Europe’s top ship-owning nation. This is more than any other EU states.

Spain is No. 2 with 450 companies, including some large non-EU players like Abu Dhabi National Oil Co., Anglo Eastern Ship Management and Cosco Shipping Bulk, even though the country doesn’t hold top positions at ship-owning or seaborne cargo volumes.

“Out of companies with reporting obligations there, only 15 are Spanish,” Ferracchiato said. “The rest are mainly Turkish, Chinese or Singaporean.”

A non-EU firm is allocated based on the number of its port calls, according to EU regulations, and industry participants suggests the EC might have not distinguished commercial calls involving cargo operations from bunker calls. Spain is where Algeciras and Barcelona, some of Europe’s largest marine refueling hubs, are located.

While Spain could face administrative headaches for handling the applications from the large number of companies, the country would also be entitled to a larger share of EUA auction proceed, Grell said.

Shipping companies need to pay for 40% of their reported emissions in 2024, 70% in 2025 and 100% from 2026 onward under the ETS, and their exposure could reach 90 million mt/CO2e when the system is fully in place, according to the EU.

Brussels has agreed to allocate the revenues from selling 20 million mt/CO2e of EUAs to maritime decarbonization projects via the Innovation Fund, and the remainder of revenues from the shipping sector would be distributed to member states via various schemes.

“We would expect some disputes between national governments as the funds resulting from the ETS will to a large extend go to the countries where the EUAs are surrendered,” Grell said.

EU says small modular reactor deployment can help cut emissions 90% by 2040

Small modular reactors should help the EU to bring greenhouse gas emissions 90% below 1990 levels by 2040, the European Commission said Feb. 9.

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Details of a “European Industrial Alliance on SMRs” were announced following EC recommendations published Feb. 6 to decarbonize EU energy systems by between 2040 and 2050.

“As we are facing a race to generate sufficient decarbonised electricity to achieve our climate ambition, nuclear energy, and Small Modular Reactors (SMRs) in particular, has a central role to play,” Thierry Breton, EU commissioner for the internal market, said in a statement Feb. 9.

“The European Industrial Alliance on SMRs will guide the process for the deployment of the first SMRs in Europe by the early 2030s, creating a strong European supply chain for our climate ambition and the competitiveness of our industry,” Breton added.

The upcoming launch of the SMR Alliance was also announced, without details, in a separate Feb. 6 document.

The EC, in its Feb. 9 statement, called for “membership applications” from reactor vendors, specialized nuclear companies, financial institutions, research organizations, training centers and non-profit groups. “The key objective of the Alliance is to reinforce the nuclear supply chain in Europe by leveraging its manufacturing and innovation capacity and strengthening EU cooperation,” the EC said.

“Compared to the larger, conventional nuclear power plants, SMRs have several advantages — such as shorter construction time schedules, enhanced safety features and a sounder appeal to private investors thanks to their lower initial costs and shorter development timelines,” the commission added.

Kadri Simson, energy commissioner, said “the EU Industrial Alliance on Small Modular Reactors will bring together the technology side and energy companies to make the most of safe and versatile new nuclear technologies. They can contribute on our decarbonisation pathway to complement renewables, and provide baseload energy production.”

Deployment challenges

Yves Desbazeille, director general of industry group NuclearEurope, in a statement Feb. 6 welcomed the SMR alliance, saying it would help Europe to resolve challenges for the “smooth deployment” of SMRs, such as supply chain, research and investment gaps.

“We are delighted that the commission is moving ahead with this Industrial Alliance in order to work on viable solutions to overcome these challenges,” he said. “The deployment of SMRs will bring significant benefits to Europe, including greater energy sovereignty, lower CO2 emissions, new jobs and economic growth.”

However, in a statement Feb. 2, Greenpeace criticized the SMR alliance’s role in hitting climate targets. “Research shows that this technology is nowhere near ready, bears the same safety and environmental risks as the current nuclear technology and is facing huge financial challenges,” it said.

“Investment in this technology risks diverting money away from the rollout of solutions already proven to cut fossil fuel use, such as public transport, home insulation and renewable energy,” it added.

The Feb. 6 document, which announced the launch of the Alliance, referred to “Europe’s 2040 climate target and path to climate neutrality by 2050.”

This document, known as a communication, said “All zero and low carbon energy solutions (including renewables, nuclear, energy efficiency, storage, CCS, CCU, carbon removals, geothermal and hydro-energy, and all other current and future net-zero energy technologies) are necessary to decarbonise the energy system by 2040.”

The communication also said that the EU’s installed nuclear capacity was projected to decline from around 110 GW in 2015 to 94 GW in 2030 and 71 GW in 2040 and 2050. Nuclear energy was also projected to supply 129 million tons of oil equivalent of energy across the 27 EU member states in 2040, down from 139 MTOE in 2030.

An impact assessment accompanying the communication noted, however, that all assumptions “reflect the situation until March 2023.” However, in June 2023, France adopted a law which removes the previous policy objective of reducing the share of nuclear power in the power mix, and adds plans to deploy an additional 3.3 GW of nuclear capacity by the mid-2030s.

The document added in a footnote that “French nuclear capacity is projected to decline in 2040 in the scenarios analysed,” whereas in fact, following the June announcement, “current estimates suggest that French nuclear capacity could actually increase to 54-71 GW. In the EU, this would translate to an estimated nuclear capacity of between 82 GW and 101 GW in 2040.”

“Future analysis” will take the revised French policies into account, the communication said. It noted, however, that “With the new French policy, the installed capacity of nuclear plants in Europe” is likely to be around 88 GW in 2040, rather than the 71 GW assumed in the “key energy indicators” used for predictions throughout the text.

Nuclear alliance could change picture further

Predictions are further complicated by the creation in May 2023 of a “nuclear alliance” led by France with 14 other European nations.

The alliance said May 17 it will develop plans to have 150 GW of nuclear power capacity in the EU by 2050. “Recent announcements by several Member States show a renewed interest in nuclear energy,” the Feb. 6 commission communication noted.

The estimates and 90% emissions reduction target presented by the commission are recommendations only, setting out the agreed objectives of current senior EU officials. Binding emission targets legislation could be proposed by a new “college” of 27 European commissioners, who are due to be selected and take office before the end of 2024.

Member countries direct IEA to investigate cooperation with non-members on strategic oil stocks

Highlights

No new oil projects with 7-8 years lead time needed

Ministers adopt steps to bolster IEA’s gas security role

Ministers from member countries called for the International Energy Agency to investigate cooperation with non-members on strategic oil stocks, in a communique released after the IEA’s 2024 ministerial meeting in Paris on Feb. 13-14

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The move comes despite IEA forecasts that supply growth in the US, Canada, Brazil and Guyana will outweigh oil demand growth of around 1.2 million b/d in 2024.

“Given that participation of non-members into the IEA collective actions would benefit and contribute to future-proofing the system and to strengthening global oil security, we direct the Secretariat to investigate the possibility, advisability and feasibility of such participation,” the ministers said.

Ministers said they encouraged non-members to consider holding and maintaining emergency stocks.

The IEA said previously that any extreme weather in the Americas or escalation of the conflict in the Middle East in 2024 could see supply security deteriorate and necessitate IEA intervention.

IEA Executive Director Fatih Birol refuted that the IEA has criticized OPEC for its production cut policy, but warned of the consequences of policies that increase prices.

“We have only mentioned that if the oil prices continue to go up and if we take steps to push the prices up, it may well provide upward pressure, inflationary pressures and this may in turn create challenges for the already fragile global economic growth,” he said.

Oil prices have seen some growth in recent weeks. Platts, part of S&P Global Commodity Insights assessed Dated Brent at $86.00/b on Feb. 13, up from $83.315 on Feb.1.

The IEA is also targeting global expansion after Latvia became a member during the ministerial meeting.

The IEA has launched talks with India over membership and is establishing an office in Singapore. Eyeing further expansion, the IEA approved Costa Rica becoming an accession country during the meeting, and added Kenya and Senegal as association countries.

No new projects

In the communique, the ministers acknowledged the IEA’s Net Zero Roadmap report.

They said it was important that “no new unabated coal power” plant should be built, and noted that “in a scenario that hits global net zero emissions by 2050, declines in demand are sufficiently steep that no new long lead-time conventional oil and gas projects are required.”

The inclusion of these lines on new unabated coal power and long lead-time conventional oil and gas projects in the ministerial communique is significant because the IEA represents more than 80% of global energy demand.

Birol said that depending on the project, long-lead times are on average 7-8 years. “Whether or not the world will need in 7-8 years’ time substantial new oil production is a key question,” he said.

During a session earlier in the day, Irish Minister for Environment, Climate and Communications Eamon Ryan said that members of IEA see no need to develop new unabated coal or long-lead time conventional oil and gas projects if they are to live up to the commitment to transition away from fossil fuels.

“That is a historic shift in my mind,” said Ryan, who was co-chair of the 2024 IEA ministerial meeting.

The IEA estimates the world needs to invest $4.5 trillion/year in energy transition by 2030.

Ryan said $2.2 trillion-2.8 trillion of that should be spent in emerging markets, where it is difficult to secure financing.

Gas security

The communique also confirmed that ministers adopted measures to bolster the IEA’s gas security role. It recognized the agency’s work to help countries assess and mitigate the impacts of supply disruptions, which may lead to price peaks and harmful volatility, and diversify gas supplies through regular market monitoring and recommendations.

“We further recognize the importance of well-functioning global LNG markets and gas storage and reserve mechanisms and regulatory frameworks, where appropriate,” the ministers said.

“In this context, we request the IEA Governing Board, at official level, through appropriate bodies, to exchange information, explore and analyze ways to enhance flexibility, transparency, and security of supply, such as through enhanced gas storage and reserve mechanisms,” they said.

Concerns about stable gas supply increased significantly in 2022 after Russia invaded Ukraine. Russia was a major pipeline gas supplier to Europe before the war started, but attacks on infrastructure and Russian counter sanctions led to the suspension of supplies to many countries, as well as major price hikes.

Emergency measures taken to mitigate the impact of Russian cut-offs, as well as milder weather, have eased some of the pressure on buyers to secure supply.

France’s Elengy confirms extension of reduced LNG sendout at Fos terminals

Highlights

Fos LNG sendouts down 86% vs Feb. 8

Strike action led by CGT continues

Elengy could flare excess gas

French energy company Elengy confirmed an extension of reduced LNG sendouts at its Fos terminals to Feb. 15 amid staff strike action led by the General Confederation of Labour (CGT) union, an Elengy spokesperson told S&P Global Commodity Insights by email.

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The strike action follows the filing of a strike notice from the CGT two weeks ago, originally set to span Feb. 5-12, with the negotiations surrounding salary compensations, a company spokesperson said in an earlier correspondence.

“Due to the continuation of the strike movement, Elengy has extended its notice to reduce emissions from the Fos Cavaou and Fos Tonkin terminals until Feb. 15,” an Elengy spokesperson told S&P Global Commodity Insights by email.

The spokesperson added the next CGT general assembly would be held on Feb. 15 in Fos “to decide on the continuation (or not) of the strike.”

Workers at the French ports are expected to stop work for the entire working day on Feb. 16, 22 and 27, following a call from the French federation of port and dock workers, part of the CGT union.

Elengy, a subsidiary of France’s transmission system operator GRTgaz, said on a local messenger platform that during the industrial action it may have to flare the excess gas that evaporates from the storage.

LNG nominations to France’s Fos terminals were last seen at 4 million cu m/d on Feb. 13, some 86% below the 28.4 million cu m recorded on Feb. 8, data from S&P Global Commodity Insights showed.

Platts, part of S&P Global, assessed the French PEG day-ahead contract at Eur24.52/MWh on Feb. 13, down 0.5% on the day.

INTERVIEW: Oman’s Duqm refinery plans to exceed capacity, mulls upgrading naphtha product

Highlights

To be maintenance free for four years

Processing medium sour grades

Global octane shortage

Oman’s Duqm refinery which is already producing at capacity of 230,000 b/d will add another 5%-10% of output in 2024 and is considering an upgrade of its naphtha production for use in gasoline, the company’s CEO David Bird told S&P Global Commodity Insights in Dubai on Feb. 13.

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The Duqm Refinery & Petrochemical Co., which is owned equally by Oman and Kuwait, last week marked its official inauguration with rulers from both countries meeting to celebrate after six years of development. The 230,000 b/d refinery is designed to process crudes from the “bottom of the barrel” into high-margin middle distillates including LPG, naphtha, jet fuel and diesel, and to be maintenance free for four years, Bird said.

“We should be able to get an extra 5%-10% of production just by pushing it, so we are very optimistic on that. It is a game of utilization. Then there is growth. We have to earn our right to grow,” Bird said.

Duqm is part of what Bird considers the beginning of a “golden age of refining” as new modern and efficient plants come online to meet the supply left by decades-old refineries being shut all over the world, including the UK, Germany, the US and Australia.

“I applaud our shareholders for their willingness to invest in a fuels refinery which is arguably the most modern, the most efficient, the most automated refinery in the world,” Bird said. “Whatever you think about the outlook for fuels, we all agree they will make up a significant portion of the energy mix for decades to come.”

The petrochemicals use for naphtha is also a growing market, as plastics are considered for use in the energy transition to produce lighter-weight airplanes and vehicles, Bird said.

For now, due to a supply and offtake agreement with Omani and Kuwait shareholders, the refinery is focused on processing medium sour grades, including Kuwait Export Crude and Omani Export Blend, and later heavy sour crudes, Bird added.

The crude is shipped in both from Kuwait and from Oman’s Muscat port, Bird said, adding: “The effect of not being on the end of a pipeline provides us with a huge opportunity to open up our crude slate and really leverage our basis of design.”

The biggest product sold so far is diesel, Bird said, with Europe “definitely” a target. “Right now, we are a fully export refinery and we will go wherever the highest margin market presents itself,” he said.

Those markets now include Asia, India, Sri Lanka and “the most exciting” has been East Africa. “Together with our shareholders trading arms, OQT and KPC, we are perfectly positioned to target those markets,” Bird said.

Kuwait’s Al-Zour refinery, which recently marked its maximum capacity of 615,000 b/d, is not considered a competitor, Bird said. “We see ourselves as part of a broader ecosystem. I have yet to see whether my conversion units can be fully utilized by the crudes we run. So, if they are not fully utilized, we will be looking at bringing in direct feedstock to those conversion units and that could be fuel oil from Kuwait for example. They make a lot of low sulfur fuel oil.”

Expanding capacity is not only production but in diversifying the products offered, Bird said.

Duqm is considering upgrading its naphtha product as a petrochemical feedstock to serve the gasoline market through reformate which gets blended into gasoline, Bird said, noting there is a global shortage of octane and using naphtha to blend into gasoline could be a way to fill that octane shortage. Flexibility in the product line may also ultimately include exploring green hydrogen.

Duqm was always planned to be a phased-in investment, with petrochemicals production next on the drawing board. Saudi Arabia, Kuwait and Oman have been discussing a petrochemicals joint venture for several years, and a final investment decision is yet to be made, according to Bird. The feedstock for the petrochemicals project if it goes ahead would come from the refinery’s LPG and naphtha output and from Oman’s natural gas liquids, Bird said.

Indian refiners push expansion with tilt towards petrochemicals, smaller carbon footprint

Highlights

BPCL, ONGC, HPCL, Reliance, Nayara invest in petrochemicals

Diversification will insulate from oil industry’s cyclicality: S&P Global

India to remain a reliable oil products supplier in coming years: IEA

India will be one of the few countries to witness refining capacity growth over the next few years, but expansions will reflect a bigger share of petrochemicals as refiners look to widen their product slate to reduce overdependence on transport fuels, according to speakers at the India Energy Week and a report by the International Energy Agency.

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Refining CEOs who attended the conference in Goa were unanimous in their view that India would need to grow its refining capacity as well as increase its bandwidth to produce more petrochemicals. But at the same time, there was a need to be conscious of their responsibility to fight climate change. As a result, refiners will need to increasingly use technologies to ensure that emissions are minimized.

“Driven by a vision of transforming India into a net exporter of petrochemicals, we are commencing our maiden journey into the high-growth petrochemicals industry with a propylene recovery unit/polypropylene unit project at our Vadinar refinery,” said Prasad Panicker, head of refineries at Nayara Energy.

India’s oil secretary Pankaj Jain said Indian state refiners’ expansion programs would focus increasingly on boosting conversion ratios from crude to petrochemicals to about 10%-15%, from around 4%-5% currently.

“We are bullish about India’s growing economy, and we are aggressive on building refining capacity to cater to the rising energy demand, but in a responsible manner. We will be moving largely from transportation to petrochemicals and balance capacity increase,” BPCL chairman Krishnakumar Gopalan told the conference.

“Oil may have a significant presence in the world until 2050. The challenge is how we build our refineries [while] keeping the emissions reduction factor in mind,” he added.

HPCL-Mittal Energy Ltd CEO Prabh Das also said it was considering adding new capacity to its plant at Bhatinda in northern India.

Long-term strategy

Sumit Ritolia, refinery economics analyst at S&P Global Commodity Insights, said Indian refiners were proactively embracing petrochemical ventures as part of a broader strategy to adapt to changing market dynamics, enhance competitiveness, and position themselves for sustained growth in the future in the event energy transition and electric vehicles hit demand for transport fuels.

“Investments by BPCL, ONGC, HPCL, Reliance Industries and Nayara Energy in the petrochemicals sector indicate conscious efforts to diversify portfolios beyond traditional refining activities. This diversification allows them to tap into new revenue streams and insulate themselves from the cyclicality of the oil and gas industry,” he added.

The IEA released a report titled “Indian Oil Market — Outlook to 2030” at the conference in which it said that Indian oil companies were investing heavily in the refining sector to meet the rise in domestic oil demand.

“Over the next seven years, 1 million b/d of new refinery distillation capacity will be added — more than any other country in the world outside of China. Several other large projects are currently under consideration that may lift capacity beyond the 6.8 million b/d capacity that we expect so far,” it added.

On a global basis, the most important driver of oil demand growth over the medium term is expected to be petrochemicals, accounting for about 2.7 million b/d of additional oil products demand during 2023-2030, the IEA said.

“We estimate that a combination of new plants and incremental expansions will see Indian feedstock demand rise by about 210,000 b/d over the period. Of this growth, 120,000 b/d is additional naphtha input to steam crackers and for aromatics production, and 90,000 b/d is LPG and ethane used in steam crackers and propane dehydrogenation plants,” it added.

Oil products export hub

The IEA said India’s refining industry had built an enviable reputation as a key source of light and middle distillate supplies to global markets, in addition to meeting robust domestic demand growth. This assessment of oil demand and refining dynamics points to India being well placed to cement its position as a reliable international products supplier.

“Despite increased competition from Middle East Gulf export refineries, the 1 million b/d increase in crude processing and upgrading capacity expansions by 2030 offers the prospect of private and public refinery operators meeting both robust domestic oil demand growth and sustaining substantial product exports,” the IEA added.

In 2023, India was the fourth-largest exporter of middle distillates globally and the sixth largest refinery product exporter at 1.2 million b/d, the IEA said.

“New refining capacity is forecast to boost product supplies to global markets to 1.4 million b/d through mid-decade before edging lower to 1.2 million b/d by 2030, given the steady rise in domestic demand,” it added.

Some drag on domestic demand for refined products will come from the push for a 20% ethanol-blending mandate. This will dampen gasoline demand growth as the share of ethanol increases over time. Similarly, rising sales of EVs, particularly in the two-wheeler and three-wheeler segments, will crimp gasoline demand growth, especially towards the end of the decade, the IEA said.

“These factors will boost the volume of gasoline available for export,” it added.

WM to add three recycling facilities in North America in 2024: CEO

Highlights

Automation upgrades at 10 sites to conclude in 2024

WM assumes average recycled commodity price of $125/mt

US-based waste collection company WM is on track to add three recycling facilities in new markets in North America in 2024, and to complete automation upgrades at 10 sites, said CEO Jim Fish Feb. 13 during a quarterly earnings call.

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Automation will help increase WM recycling capacity by 1 million mt/year by 2026, vice president of recycling Brent Bell previously said during an Investor Day in April 2023.

Executives also referred to two new recycling projects in Canada that WM has awarded through a competitive process. Although details about the projects were not immediately clear, WM media relations later confirmed the Canada projects via email:

“WM has two recycling projects planned in Ontario, Canada. These are related to EPR [extended producer responsibility] and are a great example of how our investments in automation and technology differentiate us in the marketplace.”

CFO Devina Rankin said expected returns were limited in 2024 for commodity sales, including post-consumer plastics such as polyethylene terephthalate and high-density polyethylene.

“They’re pretty muted on a year-over-year basis,” she said. “But as a reminder, commodity price expansion in the recycling line of business can have some margin compression because of a really high return on invested capital part of our brokerage business.”

However, higher recycling commodity prices help provide downward pressure on margins, which WM has built into its 2024 outlook, she said.

WM assumes average pricing of $125/mt for blended recycled commodities (including paper, metal, glass and plastic) and $26/MMBtu for renewable natural gas for its financial outlook through 2026, Rankin said.

In late 2022, WM acquired controlling interest in Natura PCR (part of Avangard Innovative), which processes low-density polyethylene film into pellets. Natura PCR previously announced plans to build a new recycled resin plant in Indiana.

Platts last assessed prices for post-use LDPE A-grade (95/5) film bales at 17 cents/lb FOB Chicago on Feb. 13. Prices have remained within a narrow range of 15-18 cents/lb since late July 2023, amid lackluster yet steady demand both domestically and in export markets such as Southeast Asia.

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