Demand for petroleum products likely to rise

India expected to consume 167 mt of refined fuels in 2015-16, against an estimated 162 mt in 2014-15

India's annual demand for oil products is expected to grow 3.3 per cent next financial year, according to the Petroleum Planning and Analysis Cell (PPAC), India's energy data body.

The country is expected to consume 167 million tonnes of refined fuels in 2015-16, against an estimated 162 million tonnes in 2014-15. With the Indian economy projected to grow close to 7.4 per cent in 2014-15, the growth in demand for diesel, is set to rise 4.1 per cent to 71.32 million tonnes. Diesel accounts for about 40 per cent of refined fuel consumption. Demand for petrol is expected to grow 7.2 per cent to about 19.7 million tonnes.

The slump in crude oil prices, down 50 per cent to $53.64 per barrel from its peak levels of $109 per barrel in June 2014, has made petroleum products cheaper.

Petrol prices are down 11 times since August 2014 and diesel prices seven times since October 2014. On April 2, petrol prices were cut 49 paise a litre and diesel Rs 1.21 when international oil rates recovered from a fall.

Prices of LPG cylinders (non-subsidised domestic) have gone down by 35 per cent. According to PPAC, the consumption of all petroleum products grew 2.7 per cent till January, 2015, compared to that by January 2014. Except for kerosene, naphtha, lubes, bitumen and ATF, all other products recorded positive growth during January and a cumulative growth of 3.8 per cent during April 2014-January 2015.

There has been 17.7 per cent growth in the consumption of petrol during January 2015 and cumulative growth of 10.5 per cent for April 2014-January 2015.

For a third month, diesel consumption recorded growth of 3.2 per cent during January and cumulative growth of 1.5 per cent during April 2014-January 2015.

K Ravichandran, senior vice-president, ICRA Limited, said: "Going forward, demand for petrol will go up. Consumers are also moving away from diesel to petrol. Therefore, demand for petrol should be buoyant. Demand for diesel will depend on overall macroeconomic growth. ATF, will see five to six per cent growth."

During April 2014-January 2015, new registration of 2.12 million passenger vehicles and 13.4 million two-wheelers across the country have substantially contributed to growth in consumption of petrol.

With domestic sales of 1.32 million units during January 2015, the two-wheeler segment recorded growth of 1.06 per cent and cumulative growth of 9.97 per cent in April 2014-January 2015. The scooter/scooterette segment recorded growth of 25.1 per cent in January 2015.

Naphtha consumption, on the other hand, registered a decline in growth of -16.4 per cent in January 2015 and cumulative de-growth of -5.3 per cent for April 2014-January 2015. There has been a decrease in consumption in the fertiliser sector in MCFL (Mangalore) and MFL due to discontinuation of subsidy to naphtha-based plants from October 2014. The power and petrochemical sector has also seen substantial reduction in the consumption of naphtha.