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Gasoline demand in India may hit record this fiscal year on easing of COVID-19 curbs

September 07/2021

MOSCOW (MRC) -- India's gasoline demand is set to hit a record this fiscal year, with consumption accelerating as more people hit the road for business and leisure travel after easing of COVID-19 curbs, reported Reuters.

Shunning trains, buses and planes, safety-conscious Indians are buying more cars and increasingly using personal vehicles to commute as they embark on 'revenge travel' - flocking to tourist destinations after months of restrictions, despite record high fuel prices.

Annual passenger vehicle sales in India rose by 45% to 264,442 units in July, driven by pent-up demand, according to data from the Society of Indian Automobile Manufacturers.

The stronger-than-expected gasoline consumption growth could prompt Indian refiners to import the fuel or boost gasoil exports in coming months. Indian refineries are traditionally configured to maximise production of diesel, where demand is still below pre-COVID levels, hurt by an uneven economic recovery.

"We may have to import some quantity of petrol if momentum in demand continues," said an official at an Indian state-run refiner, who declined to be identified as he is not authorised to speak to the media.

"We cannot increase crude throughput as some refiners have high levels of diesel inventory and export margins for diesel are not attractive."

The expected rise in India's gasoline imports could support Asian refiners' margins for the fuel. The country, which has a refining surplus, has shunned gasoline imports since May and raised gasoil exports by a fifth in July from April, government data showed.

Sluggish diesel demand has forced some refiners to cut crude oil processing as their fuel storage were full. That reduced India's July crude oil imports to their lowest in a year.

Changes in India's fuel demand patterns are crucial for global oil markets as Asia's third-largest economy is seen as the main driver of rising demand for energy over the next two decades, the International Energy Agency said in February.

India's gasoline demand rebound follows that of China, where consumption of the fuel is expected to rise by 11% to 13% this year to a record 3.8 million to 4.1 million bpd.

On the other hand, gasoil consumption - which accounts for two-fifths of refined fuel use in the country and is a barometer of industrial activity - is expected to take well into the fourth quarter or even next year to recover to pre-pandemic levels.

India is also gradually cutting dependence on diesel as it looks to fully electrify its vast railway network by end-2023, allow trucks to carry more weight, and increase power generation capacity from cleaner fuel sources.

As MRC informed eearlier, India plans to force refineries and fertilizer plants to use some green hydrogen, junior oil minister Rameswar Teli said in late August, as Asia's third-largest economy strives to reduce carbon emissions.

We remind that Indian Oil Corporation (IOC) will build the nation's first 'green hydrogen' plant at its Mathura refinery, as it aims to prepare for a future catering to the growing demand for both oil and cleaner forms of energy.

We also remind that Indian refiners, anticipating a lifting of US sanctions, plan to make space for the resumption of Iranian imports by reducing spot crude oil purchases in the second half of the year. The world's third-largest oil consumer and importer halted imports from Tehran in 2019 after former US President Donald Trump withdrew from a 2015 accord and re-imposed sanctions on the OPEC producer over its disputed nuclear programme.
Author:Margaret Volkova
Tags:crude and gaz condensate, gas processing, petrochemistry, Indian Oil Corp, India, China.
Category:General News
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