Easwaran Kanason

Co - founder of NrgEdge
Last Updated: January 19, 2017
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Business Trends
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For the third year in a row, Indian fuel consumption has eclipsed China’s. In fact, it grew by 10.7% in 2016, the highest growth rate in 16 years, according to the Indian Oil Ministry. This should be a cause for cheer; as one of the main reasons that crude prices collapsed in 2015 was due to China's economic slow down. With India now apparently taking China’s place as the motor of oil growth in Asia and the world, how long can this hold?

Indian growth in 2016 was down to cheap oil, an advantage that is being erased as crude oil prices climb on OPEC’s decision to enforce a supply freeze. Higher crude means higher oil product prices; so the transport boom in gasoline and aviation fuel sales might peter out. LPG penetration was also a major factor in expanding demand, but this will also begin to slow down. The surge in automotive ownership following two years of low oil prices led gasoline and diesel sales to leap by 12.2% and 5.6%, while LPG grew by 11.3%. This sort of growth figures might not be able to continue. It should be noted, however, that these statistics are based on the Oil Ministry’s fuel consumption statistics, which is generally higher than official oil demand figures as it excludes oil for non-fuel use but indicates trends.

The annual figures, however, mask developments that occurred at the end of 2016. A demonetisation drive to crackdown on tax dodgers and counterfeiters by removing the 500 and 1,000-rupee notes from circulation has dented consumption; fuel consumption spiked in November as consumers rushed to stock up, and grew by only 4.3% in December. Across India, there is a slowdown in consumption, affecting all products from coconut oil to diesel to scooters, as consumers hold back on purchases to monitor the ongoing demonetisation (even though old notes are still valid for buying automobile fuel and cooking oil). This has affected the rural population in particular, heavily cash dependent. Alarmists are saying that that demand growth could slow by as much as 80%. That would be a worst-case scenario. The more likely outlook is that growth will fall to the 6-8% range instead. Because oil demand is resilient, the population will adapt to the new monetary rules and the cash crunch will abate, leading to stronger growth in the second half of 2017 offsetting a slower first half.

And even the first half has bright spots. This is an election year for India, and the political arena will see the main parties stage huge rallies across the vast country, requiring gasoil for generator and heavy transport, as well as gasoline. The size of the country, including its large rural population, also means voters will have to travel great distances to reach a ballot box, with political parties and the government again stepping in to ferry people to cast their vote.

Looking forward, the government’s "Make In India" initiative to boost local manufacturing and a slew of new petrochemical projects onstream should ensure a stable basis for growth over the next 3 - 5 years. Higher fuel prices might choke off some momentum, but India is ready to inherit the crown of the world’s oil demand driver from China. Take note that, India’s economy is very different from China’s centrally-planned one, India's economy is more dependent on private entreprise and complex political factors. Though this should provide a broader base for fuel growth, but will probably not reach the dizzying heights of double-digit growth that China did. But grow it will, and the oil world will be banking on that.

Easwaran Kanason

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The Role of Floating Storage During An Oil Price War

In any war, there are winners and losers. Sometimes surprising ones. As the price war between friends-turned-foes Saudi Arabia and Russia rumbles on without any sign of a thaw or a possibility of halting without external intervention, oil producers globally are hurting badly as crude oil prices plunged by nearly 50% over less than a month. This will wreak havoc with the economies and budgets of many countries, particularly at a time when demand is extremely soft given the global Covid-19 pandemic. But in any war, there are opportunities for profit, and that has given a boost to a sector of the industry that had previously been suffering.

With the dramatic drop in prices, and a super-contango structure appearing in the crude oil price future curves, crude cargoes are available on cheap. Part of this buying is coming from entrenched buyers such as India (which took in some cargoes that were turned away by China in the early days of the Covid-19 pandemic). Part of this is coming from government purchases, to fill up strategic petroleum reserves in an effort to support domestic producers (although a US plan to do so was scuppered due to lack of federal funding). But most is this is coming from global oil traders, eager to cash in cheap oil by betting that prices will eventually have to rise somehow. Whether that is in a month, three months or longer, the traders are preparing for this.

The problem is storage. Where does one store millions of barrels of crude? Onshore storage is estimated at a practical upper limit of some 1.2 billion barrels of capacity; much of this is already utilised, with not much room to grow. And what room there is is becoming expensive.

Enter floating storage.

In 2008 during the Great Financial Crisis and again in 2015 when crude prices retreated dramatically, the same scenario presented itself. The solution then, as it is now, was to charter ships to serve as floating storage. Millions upon millions of crude oil barrels sat sloshing in the hulls of VLCC and other crude-carrying ships off the coast of Singapore, Fujairah, the US Gulf and Guangzhou in 2009, waiting for traders to assess an opportune moment to seize a trade.

That is repeating itself now. At the start of March, VLCC charter rates hovered at around US$40,000 per day for delivery from the Middle East to China. As charter rates go, that’s not that bad, and certainly far better than rates of less than US$10,000 day in mid-2019 that caused a world of pain to the oil shipping industry. At the dramatic about-face in Vienna when the OPEC+ alliance splintered, VLCC charter rates jumped up to US$190,000 per day as the price for Brent dropped 30% in a single day. Charter rates continued to spike, up to a peak of US$275,000 per day, as it became very apparent that Saudi Arabia and Russia were engaging in more than just a game of brinkmanship. Prices did calm down, after the initial rush of bookings, but have started to rise again as Brent drifts dangerously close to the US$25/b mark.

Reports suggest that since the price war began, more than three dozen supertanker bookings have been made by the world’s largest oil traders, including Vitol, Shell and Litasco. The largest of them all, Glencore has chartered Europe, one of the world’s two ULCCs (Ultra Large Crude Carriers) that can store 3 million barrels of oil for an indefinite period. The traders are also competing with an unlikely party: Saudi Arabia and its allies that sparked a bidding war for supertankers in a bid to flood the market. That this is happening against a backdrop of weak demand is, frankly, ridiculous. But that is what is happening now, and expect it to go on with Russia entering the fray. While all this drama plays out, the real immediate winners are shipowners. While the traders are betting on the possibility of a profitable trade in the future, shipowners are making profits hand over fist now with the bookings, a great change after terrible 2019 when shipowners were gloomily talking about decommissioning tankers.  

How long will this last? It is anyone’s guess. There are two main variables: the length of the oil price war and the length of the Covid-19 pandemic. The most optimistic scenario points to things returning to relative normality by July 2020; the worst could see the depression continuing into 2021. But, as they say, there is no time like the present. And shipowners are now happy to keep their supertanker bellies full of oil and money in the bank, even if those ship remain anchored and that oil is going nowhere soon.

Recent VLCC Freight Rates

  • March 1: US$40,000 per day
  • March 6: US$190,000 per day
  • March 12: US$275,000 per day
  • March 20: US$90,000 per day
  • March 27: US$125,000 per day
  • March 30: US$180,000 per day
April, 05 2020
The Oil Price War – What Are The Options for Trump

As Saudi Arabia and Russia dig in their heels and prepare for extended trench warfare over oil prices, the important questions now are: how long will this last, and what (or who) can bring these friends-turned-foes back to the negotiation table? China is the major buyer of crude from both countries, but with little production of its own, should be relishing in lower oil prices, particularly as it plots a potential recovery from the Covid-19 pandemic. That leaves the USA.

To say the US has a vested interest in where oil prices are is an understatement. The country, after all, has a major oil production industry and has recently become the largest producer in the world. Prices at US$50-60/b were perfect. Anything above that risked higher fuel prices causing demand disappearance; anything lower than that risked putting American drillers – particularly in the prolific shale patch – out of business. Which is why President Donald Trump embarked on a campaign of sanction threats and fiery rhetoric when crude rose above US$70/b last year. And also why the US oil industry is urging an intervention as WTI crashes to nearly US$20/b. At risk is not just the health of the US oil industry, but the very life of the shale patch.

There are various options available to Trump when he intervenes. Trump said that he would only get involved in the price war ‘at the appropriate time’, noting that low gasoline prices were good for US consumers. This suggests that he values the positive effects of low oil prices on the wider economy, perhaps noting that the oil industry will still remain a solid electorate base for him in November 2020 come what may. But with no sign that Russia or Saudi Arabia are open to new talks, Trump has to do something at some point.

Some new policies have been put in place. Instead of selling barrels from the US strategic petroleum reserves, adopted when the global supply/demand dynamics were much, much different – the White House now wants to fill those coffers to the brim, buying as much as US$3 billion from US independents to shore up the industry. But that’s only a temporary balm; if the price war rolls on for too long, those US independents will either go out of business or be forced to continue pumping to pay the bills. Either way, this won’t achieve much.

The next weapon is diplomacy. There is already happening, with the US Senate reaching out to the Saudi Ambassador to seek ‘clarity’. Diplomacy is likely to be taken with Saudi Arabia and its Middle Eastern allies, as a more combative approach could jeopardise geopolitical alliances. However, when cajoling, the US will also have to put something on the table. Saudi Arabia’s ultimate goal is to have steady oil prices at a level acceptable to all (or most); since Russia isn’t cooperating but the US may want to, then it must shoulder some burden as well. Imposing a national quota in the US, however, is pure anathema, although the Texas state oil regulator has already suggested introducing production curbs. President Donald Trump said on Thursday, 2nd of April that he expected Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman to announce a deal to cut production by up to 15 million barrels, and that he had spoken to both countries’ leaders.

The much anticipated virtual meeting between OPEC and its allies scheduled for 6th of April  has been postponed, as reported by CNBC, amid mounting tensions between Saudi Arabia and Russia. The meeting will now “likely” be held on Thursday, 9th April, sources said. "The delay is likely to hit oil prices next week following a record-setting comeback week for crude. U.S. oil surged 25% on Thursday for its best day on record, and gained another 12% on Friday. It finished the week with a 32% surge, breaking a 5-week losing streak and posting its best weekly performance ever, back to the contract’s inception in 1983." 

The other more potent weapon is sanctions. This has worked well, at least from the perspective of the policy’s goal, but certainly not in humanitarian terms in Iran and Venezuela, where the exports of these OPEC members have shrunk dramatically. The US has already imposed sanctions on certain parts of the Russian energy machinery, notably to stop the Nordstream-2 LNG pipeline and is now reportedly considering pursuing a dual-pronged strategy of diplomacy with Saudi Arabia and sanctions on Russia. But what could this do? What would this even achieve? Russia hardly sells much oil to the US; its markets are in Europe, India and China. Imposing sanctions, especially at a time of a global crisis, risks it being completely ignored. Worse, this would make Russia even more determined to get back at the US by destroying the shale patch. With its deep pockets, it could very well do so.

The US is caught in a dilemma. Participating in a coordinated production alliance is unthinkable existentially, although stranger things have happened which leaves Trump with few weapons to participate in this price war. It could go on the offensive, and risk worsening the situation. It could exert diplomatic pressure, and risk that going nowhere. Or it could do what it has always done: prop up the industry but leave survival to the free-market, with the knowledge that in the cyclical world of oil, this bust will one day become a boom again.

Infographic: Top Three Crude Producers

  • Saudi Arabia: 12 mmb/d, 1 producer (Saudi Aramco)
  • Russia: 12.5 mmb/d, 10+ producers (including Rosneft and Lukoil)
  • USA: 13 mmb/d, 100+ producers
April, 05 2020
Is Document Verification effective in managing identity theft?

Technology has indeed changed the way we think, act and react. Every activity we perform is directly or indirectly linked to technology one way or another. Like everything else, technology also has its pros and cons, depending on the way it is used. Since the advancement in cyberspace, scammers and hackers have started using advanced means to conduct fraud and cause damage to individuals as well as businesses online. 

According to the Federal Trade Commission (FTC), 1.4 million cases of fraud were reported in 2018 and in 25% of the cases, people said they lost money. People reported losing $1.48 billion to fraudulent practices in 2018. This has caused considerable loss to individuals and businesses. Global regulatory authorities have introduced KYC and AML compliances that businesses and individuals are encouraged to follow. However, banks and financial institutions have to follow them under all circumstances.

KYC or Know Your Customer refers to the process where a business attains information about its customers to verify their identities. It is a complex, time-taking process and customers nowadays don’t have the time or resources to deal with the government, consulate, and embassy offices for their KYC procedures. However, due to technological advancement, the identity verification process has been automated through the use of artificial intelligence systems. These systems seamlessly increase the accuracy and effectiveness of the identity verification process while reducing time and human efforts.


The following methods are used to digitally authenticate identities nowadays:

  • Face Verification

The use of artificial intelligence systems to detect facial structure and features for verification purposes.

  • Document Verification

The use of artificial intelligence systems to detect the authenticity of various documents to prevent fraud.

  • Address Verification

The use of artificial intelligence technology to verify addresses from documents to minimize the threat of fraudsters.

  • 2-Factor Authentication

The use of multi-step verification to enhance the protection of your accounts by adding another security layer, usually involving your mobile phone.

  • Consent Verification

The use of pre-set handwritten user consent to onboard only legitimate individuals.


Digital Document Verification

Document verification is an important method to conduct KYC or verify the identity of an individual. The process involves the end-user verifying the authenticity of his/her documents. In banks, financial institutions and other formal set-ups, customers are required to verify their personal details through the display of government-issued documents. The artificial intelligence software checks whether the documents are genuine or have been forged. If the documents are real and authentic, the digital documentation verification is completed and vice versa. 

There are four steps that are mainly involved in the digital document verification process. First, the user displays his/her identity documents in front of the device camera. Then the document is critically analyzed by artificial intelligence software to check its authenticity. Forged or edited documents are rejected by the software. The artificial intelligence system then extracts relevant information from the document using OCR technology. The information is sent to the back-office of the verification provider and analyzed by human representatives to further validate the authenticity. Then the results are sent to the business or individual asking for the verification. The whole process takes less than five minutes.

The document authentication process can detect both major and minor faults in the documents. It can detect errors and faults in forged documents, counterfeed documents, stolen documents, camouflage or hidden documents, replica documents and even compromised documents. The verification process can be done on a personal computer or a mobile device using a camera. Although only government-issued documents are used for the authentication process, the following are accepted by most verification providers:

  • Govt ID Cards

  • Passports

  • Driving Licenses

  • Credit/Debit Cards

Illegal and fraudulent transactions have dangerous consequences for both individuals as well as businesses. Losses due to scams and frauds trickle down at every level and ultimately have negative consequences on the whole system. Therefore it is imperative to conduct proper customer verification and due diligence in order to minimize the risks of fraud. Digital documentation verification plays a key role in the KYC process. 



April, 02 2020