Ind-Ra: India's LNG Imports Up 20% y-o-y in March 2018

India Ratings and Research (Ind-Ra) credit news digest on India's oil and gas sector highlights the trends in the oil & gas sector with a focus on domestic production, import, consumption, refining and gross under-recovery, regulatory changes and the recent rating actions.

Natural gas (NG) production during March 2018 was 1.2% y-o-y higher. The production volume grew for Oil & Natural gas Corporation and 'from private/joint venture fields' (higher 2.1% y-o-y and 1.0% y-o-y respectively), whereas for Oil India Limited it declined y-o-y (negative 5.6%). NG consumption increased by 10.5% y-o-y during March 2018. The increase in consumption was on account of an increase domestic demand. Additionally, there was a 19.6% y-o-y increase in liquefied natural gas (LNG) imports during March 2018, augmented by arrival of first ever LNG cargo from United States. On a cumulative basis, the LNG import was higher by 7.3% y-o-y during FY18.

Domestic NG price has been raised by around 6% to USD3.06/mmbtu for April-September 2018. Prior to this, the gas price was raised by around 17% to USD2.89/mmbtu for October 2017-March 2018 after it was revised downward five times consecutively since the implementation of the domestic gas pricing formula in October 2014. The increase in gas prices is likely to impact the fertiliser, power and city gas distribution entities which are the primary consumers of NG.

India's crude oil production decreased 6.2% y-o-y during March 2018. Production volume of Oil India Limited and fields under production sharing contracts increased by 2.3% and 3.9% respectively, while it declined by 12.0% for Oil & Natural gas Corporation during March 2018, on a y-o-y basis. The crude oil import volume increased marginally by 1.1% y-o-y during March 2018. India's import dependency of crude oil had been around 82.8% during FY18. Petroleum Planning and Analysis Cell estimates crude import of 262 million ton (mt) in FY19 (FY18: 220mt).

Refining throughput in March 2018 was 21.3mt, which was 0.5% y-o-y lower. For FY18, the refining throughput was higher by 2.7% y-o-y. Public sector refineries processed higher volume aiding the overall increase in volume. India's petroleum products output was higher 1.0% y-o-y to 22.1mt during March 2018. On a cumulative basis, the production was 4.5% y-o-y higher during FY18.

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