India’s fuel demand rises 3.8 per cent in February
India’s fuel demand rose 3.8 per cent in February as free cooking gas connections spurred LPG consumption while petrol and diesel use continued to rise. Fuel consumption in February totalled 17.41 million tonnes as compared to 16.77 million tonnes in the same month last year, data from the Petroleum Planning and Analysis Cell (PPAC) of the Oil Ministry showed. Consumption rose for the third month in a row as ensuing general elections are likely to spike demand further. With retail prices moderating, petrol consumption soared 8 per cent to 2.25 million tonnes while the government push to give every household a cooking gas connection led to LPG demand spiking by 14.2 per cent to 2.2 million tonnes. Diesel, the most consumed fuel in the country, saw consumption rise by 2.7 per cent to 6.7 million tonnes. Hectic campaigning is likely as India goes to poll over the next two months, which will boost the use of transportation fuel as political parties traverse the country courting voters. General elections will be held in seven phases starting on April 11. During February, aviation turbine fuel (ATF) sales were up 10.5 per cent to 6,80,000 tonnes. With the government pushing for use of cleaner liquefied petroleum gas (LPG) as cooking fuel by giving free connections to poor women, kerosene usage dropped 12 per cent to 272,000 tonnes in February when compared to the year-ago period. Naphtha sales were up by a steep 25.2 per cent at 1.28 million tonnes as power demand soared, while consumption of petroleum coke dropped 15.3 per cent to 1.58 million tonnes.
Oil consumption jumps for third month ahead of elections
Oil consumption in India continued to gather strength in February as increased demand for transportation and cooking fuel ahead of federal elections outweighed an economic slowdown. India’s total usage of oil products increased 3.8 percent to 17.4 million tonnes in February from a year ago, according to the oil ministry’s Petroleum Planning & Analysis Cell. Key Insights India’s oil demand in January grew at the fastest pace in six months after declining for three months in the second half of last year. Hectic campaigning during the world’s biggest election, set to kick off next month, will boost the use of transportation fuel as political parties traverse the country courting voters. Demand for liquefied petroleum gas is also surging, with state refiners seeking to import cargoes of the cooking fuel as the government tries to keep voter morale high by ensuring rural households are well supplied. Yet, headwinds remain. With oil prices rising again and economic activity remaining soft, demand growth may moderate in the coming months, Jefferies India analysts including Somshankar Sinha said in a Feb. 19 note. India’s economy slowed in the last quarter on weaker domestic demand and a global slowdown. Animal spirits in the South Asian country had a tame start in 2019 amid a pullback in exports and weak business activity. Domestic car sales declined in February as sentiment remained subdued across urban and rural markets. Get More Consumption of diesel, which accounts for about 40 percent of the South Asian nation’s oil usage, increased 2.7 percent to 6.72 million tonnes last month. Gasoline consumption expanded 8 percent to 2.26 million tonnes. LPG usage jumped 14 percent to 2.22 million tonnes. Petroleum coke consumption fell 15 percent to 1.58 million tonnes.
Russia’s Gazprom held talks with Serbia over gas pipeline
The chief executive of Russia’s Gazprom, Alexey Miller, has held talks with Serbian President Aleksandar Vucic over the construction of a gas pipeline in the Balkan country, Gazprom said on Tuesday. The gas pipeline would run from the border with Bulgaria to the border with Hungary, the statement said. Gazprom has built the first line of the TurkStream pipeline to Turkey for local gas consumption and is considering various ways to extend the second part of TurkStream to Europe.
Gasoline demand growing in China, India
Gasoline demand in China and India has experienced growth to start 2019, Kallanish Energyreports. Opec’s Monthly Oil Market Report (Momr) released last week shows oil demand is growing in both countries. China’s figures rose by 0.40 million barrels per day (Mmbpd) in January, compared to the same period in 2018. India’s oil demand accelerated by 0.31Mmbpd year-over-year (y-o-y), with total consumption over 5 Mmbpd. In China, gasoline demand continued to grow in January compared to previous months, reaching total consumption of 3.03 Mmbpd. The jump was due to increased driving for the lunar New Year holidays, according to the Momr. The trend in car sales, however, declined by 14% y-o-y in January, marking the seventh month of falling sales. In India, gasoline was the third-highest petroleum product for gains in January in terms of product mix, after diesel fuel and liquefied petroleum gas (LPG). Gasoline demand increased by 0.08 Mmbpd, which is 13% y-o-y. Total consumption was 0.66 Mmbpd. More India consumers were encouraged to use gasoline because of a diminished difference between diesel fuel and gasoline retail prices. An improved economy in rural and urban areas, along with a better road network also led to more traffic. However domestic car sales dropped due to financing restrictions. The Momr projects Chinese oil demand will increase by 0.34 Mmbpd in 2019, as the petrochemical sector and the overall economy are expanding. However, growth could be impacted by policies encouraging the use of cleaner fuels. In India, there may be steady improvement in the economic outlook, especially with general elections coming up in Q2. Gasoline for transportation is expected to keep leading oil demand growth.
Green nod to HPCL Shapoorji’s LNG terminal
Setting the stage for building the fourth liquified natural gas (LNG) terminal in Gujarat, the ministry of environment, forest and climate change (MoEF) has accorded environmental and CRZ (coastal regulatory zone) clearance to HPCL Shapoorji Energy Private Ltd (HSEPL) for developing new LNG storage and re-gasification terminal at Chhara in Kodinar of Gir Somnath district. HSEPL, a joint venture between Hindustan Petroleum Corporation Ltd (HPCL) and Shapoorji Pallonji group’s SP Ports Pvt Ltd (SPPPL), plans to set up 5 million tonnes per annum LNG terminal within the proposed area of Chhara port. The project cost is estimated to be Rs 5,408.82 crore. ALSO READ: ONGC gets single bid from Schlumberger for oil field production upgrade “As per recommendations of the EAC (expert appraisal committee), the ministry hereby accords environmental clearance to the project ‘development of LNG storage and re-gasification terminal’ at village Chhara taluka Kodinar, district Gir Somnath, Gujarat by HPCL Shapoorji Energy Ltd,” the ministry said in its recent notification. HSEPL’s LNG terminal will have LNG ship unloading jetty, LNG storage, LNG transfer and vaporization as well as other utilities and infrastructure facilities. “The terminal will be provided with latest state of art instruments and controls for safe handling of LNG and LNG terminal operation,” the company said in its environment impact assessment (EIA) study. Petronet LNG already operates 15 MTPA terminal at Dahej and Shell Gas runs 5 MTPA terminal at Hazira. The third LNG terminal by GSPL LNG Ltd at Mundra in Kutch was inaugurated by the prime minister Narendra Modi in October last year. According to a recent research report by the rating agency Crisil, natural gas demand in India is expected to grow at compound annual growth rate of 3.5 per cent between fiscals 2018 and 2023. The demand is estimated to be 191-193 million metric standard cubic meter per day (mmscmd) across the country. “Given the sustained domestic gas deficit, LNG demand is expected to increase at CAGR of 4-4.3 per cent to 24.4- 24.7 million tonnes per annum (MTPA) between fiscals 2018 and 2023. Over the period, installed re-gasification capacity is forecast to increase to 50 MTPA from 26.7 MTPA (considering operational terminals only),” the report added.
Unavailability of cheap natural gas may pinch distributors: Regulatory Board Chief
A squeeze in supply of cheap local natural gas in the future can erode the margins of city gas distributors but the business would remain viable due to the present price advantage gas has over petrol and diesel at present, state’s support for the cleaner fossil fuel and creation of an efficient gas ecosystem over time in the country, said the chief of downstream regulator. The Petroleum and Natural Gas Regulatory Board (PNGRB), the downstream regulator, has worked overtime in a year to give away city gas distribution licences for 136 geographical areas, aimed at raising piped gas coverage to 70% of the country’s population from 20% now. Distributors face the risk of inadequate supply of cheap local gas — its production has stagnated for years and has claimants from several sectors. A tweak in domestic pricing formula or tax structure can make gas expensive. “If cheap gas is not available, it will hurt implementation of projects. That goes without saying. But what are the chances of this fear fructifying?” PNGRB chairman DK Sarraf told ET in an interview. Irrespective of the political party in power, the state support for the environment-friendly natural gas is unlikely to waver, Sarraf said. “Natural gas is still a holy cow,” he said, adding that natural gas would always have an advantage over petrol and diesel even after they are brought under the goods and services tax (GST). For a driver, compressed natural gas (CNG) turns out to be about 60% cheaper than petrol, and 40% cheaper than diesel, giving city gas distributors ample scope to accommodate future increases in natural gas price and yet stay profitable, Sarraf said. With services planned for so many licences areas, an efficient city gas ecosystem would evolve across the country and drive costs down for players, he said. Distributors’ demand for cheap local gas will rise roughly eightfold to about 95 million metric standard cubic meters a day (mmscmd) in about eight years, Sarraf said. This is a ballpark calculation factoring in the work programme committed by new licensees as well as the expected expansion by already operating players. India currently produces about 90 mmscmd of natural gas, of which only about 70 mmscmd is available for sale after flaring, loss and internal use by producers. Much of the incremental gas expected to be produced in the coming years will be outside of the government-set price formula, which keeps prices low. Local gas offered at market rates is likely to be priced closer to import rates, which is currently about double that of formula price.