Indias Hunger For Diesel Declining Down

The countrys growth in diesel consumption is slowing down to levels well below government forecasts, figures showed yesterday. Overall oil products consumption was also slowing, the figures showed.

India, the worlds second most populous nation, has been a major swing factor for global oil markets because of strong demand growth. The government has forecast current oil consumption will double to 155 million tonnes by 2006. Refinery capacity of around 62 million tonnes will almost triple to 170 million tonnes by 2006, the government forecasts. But for now, oil products consumption is slowing down, government data shows.

The slow down has prompted oil traders to cut their expectations for Indias monthly import tender for key product diesel.

 

Indian Oil Corporation is due to award the tender this weekend for April deliveries of diesel.

Traders in Singapore said they expected the giant oil group to buy up to seven cargoes of diesel, well below the 18 cargoes India purchased in its April tender for 1997.

Cargo sizes vary between 30,000 tonnes and 45,000 tonnes, depending on the point of delivery. A government official, who declined to be identified, said on Friday that India consumed 27.10 million tonnes of diesel during April-December 1997. That indicated a rise in consumption of 6.4 per cent versus the 25.48 million tonnes consumed in April-December 1996. But the data also indicated that consumption growth was slowing down, confirming a trend of recent months.

In the financial year to the end of September, diesel consumption grew 9.2 per cent versus the year earlier period, slowed to 8.5 per cent by the end of October and 7.6 per cent by the end of November. The government had forecast diesel demand would grow 10.8 per cent in the financial year 1997-98.

But in November 1997, it lowered its expectations to a growth rate of 9.5 per cent because of an economic slowdown. Diesel represents the biggest portion of oil products sold in India. Used for transport, agriculture and captive power generation, it accounted for 35.18 million tonnes of the total oil product consumption of 77.22 million in 1996-97.

Overall oil products consumption rose 4.6 per cent during April-December 1997, compared with a year-on-year growth rate of 6.4 per cent in the same period last year. However, overall products consumption is slowing too, the official said. In April-November 1997 oil products consumption grew 5.3 per cent against 6.7 per cent during the corresponding period a year earlier. l Reuters

The official did not provide the volume of products.