India's gasoline demand seen hitting record as COVID curbs ease

ICRA

02/09/2021 10:04

By Nidhi Verma, Mohi Narayan and Koustav Samanta
    NEW DELHI/SINGAPORE, Sept 2 (Reuters) - 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.
    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.  O/INDIA2 
    "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.
 O/INDIA1   urn:newsml:reuters.com:*:nL1N2PW01P
    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.
 urn:newsml:reuters.com:*:nL1N2KF3JF
    Credit rating agency Moody's India unit ICRA expects India's
gasoline consumption to rise 14% to a record 31.9 million tonnes
(739,000 bpd) in the fiscal year to March 2022, higher than the
12.2% growth estimates by the Petroleum Planning and Analysis
Cell of the oil ministry. 
    Consultancy FGE now forecasts quarterly gasoline demand will
rise by 20,000 barrels per day (bpd) to 760,000 bpd for October
to December, up from an earlier estimate of 740,000 bpd. This
brings FGE's annual forecast to March 2022 to 725,000 bpd, up
11% from the previous year.
    "Owning a personal vehicle used to be a status symbol but
because of the hunger to travel during the pandemic, people are
buying cars and scooters, and driving up gasoline demand," Sri
Paravaikkarasu, director for Asia oil at FGE said.
    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.  urn:newsml:reuters.com:*:nL4N2P41UG
    
    DIESEL
    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.  O/INDIA2 
    
    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.
    Mukesh Surana, chairman of Hindustan Petroleum Corp
 HPCL.NS  (HPCL) said diesel demand could reach pre-COVID levels
on a monthly basis later this year but for the fiscal year it
would still remain below pre-pandemic level.
    "There has to be a complete recovery of the industrial and
construction sectors and whole demand and supply chain should
come to full swing, until that happens you will not get the full
impact of recovery on the diesel side," Surana said.

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
India's gasoline and diesel demand    https://tmsnrt.rs/3joqXxo
Retail selling price of gasoline in New Delhi    https://tmsnrt.rs/3jAZOHL
India vehicle sales    https://tmsnrt.rs/3zEwNQU
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Nidhi Verma in New Delhi, Mohi Narayan and
Koustav Samanta in Singapore; Editing by Florence Tan and Kim
Coghill)
 ((nidhi.verma@thomsonreuters.com; +91 11 49548031; Reuters
Messaging: nidhi.verma.thomsonreuters.com@reuters.net))