India's energy import bill to fall in 5 years: CRISIL

Fuel import bill will see a marginal increase of 1.6% annually to $175 bn by 2019

Signalling better days for the fiscal situation of the government, CRISIL said India’s energy import bill is likely to fall in the coming five years as the price of liquefied natural gas, coal and crude oil will remain under pressure. The independent research body, in its latest report said fuel import bill will see a marginal increase of 1.6 per cent annually to $175 billion by 2019 because prices of the three commodities are forecast to decline.

Over the next five years, significant supplies of oil are expected from the US, Canada, Brazil and Iraq [6-7 million barrels per day (mbpd), or about eight per cent of demand in 2013]. Similarly, incremental thermal coal supplies of 1,000 million tonne are expected, primarily from Australia and Indonesia.

Growth of alternative fuel, structural shift and slowing demand will help push the prices down. It also said with significant increase in supplies, spare capacity with Oil Producing and Exporting Countries would  increase to eight mbpd by 2018 from 3.4 mbpd in 2013, even after assuming 1-1.5 mbpd of oil disruptions globally.

CRISIL expects the demand growth for oil to be subdued at 0.8-1.0 per cent over 2014 to 2018. It was 1.2 per cent during the last five years.

Brent crude could decline to $90-100 per barrel by 2018 from $109 in 2013, while thermal coal is seen at $77-82 per tonne compared with $84 in 2013. Spot LNG is forecast at $13-14 per mmbtu from $15 per mmbtu in 2013, said Crisil.

In the energy demand forecast, Crisil said crude oil, which currently caters to one-third of global energy demand, will witness a structural slowdown in demand.

“There is a sustained regulatory push in other major energy consuming countries to increase the share of renewable energy sources such as solar, wind and hydropower in their primary energy mix, which will further limit demand for conventional fuels,” said Crisil.