A report by India Ratings and Research (Ind-Ra) on India’s oil and gas sector highlights the trends in the sector, with a focus on domestic production, import, consumption, refining and gross under-recovery, regulatory changes and recent rating actions.
India’s dependency on imported liquefied natural gas (LNG) has increased, indicated by stagnant domestic natural gas (NG) production and increased imports since 2008, opines Ind-Ra. The average imported LNG share was 45% of the overall domestic NG consumption in FY18 as compared with 25% in FY08.
LNG imports increased at a CAGR of 9.2% to 73 million metric standard cubic meters per day (mmscmd) in FY18 from 30mmscmd in FY08 due to sustained demand. The increased use of NG in fertiliser and power sectors coupled with growth of city gas distribution network has driven the domestic NG consumption. On the other hand, domestic NG production has been stagnant at 90mmscmd with a CAGR of 0.1% since FY08. This has led to increased reliance on the import of LNG, as domestic consumption has been gradually increasing.
Ind-Ra notes that LNG imports continue to increase despite the rise in Asian spot LNG prices since April 2016, thus indicating strong demand for NG and dependence on LNG imports to fulfil the same.
Furthermore, In June 2018, NG production was 2.8% yoy lower and NG consumption was 15.9% higher. During the month, production volumes of Oil & Natural Gas Corporation Limited, Oil India Limited and private/joint venture fields declined 1.1% yoy, 7.1% yoy and 7.1% yoy, respectively. The increase in consumption was on account of an increase in domestic demand. The domestic demand was met by a 39.0% yoy increase in LNG imports during June 2018. On a cumulative basis, LNG imports were up 19.1% yoy in 1QFY19.
India’s crude oil production decreased 3.4% yoy in June 2018. During the month, the production volumes of Oil & Natural Gas Corporation, Oil India Limited and fields under production sharing contracts declined 4.6% yoy, 0.1% yoy and 1.7% yoy, respectively. Crude oil import volume increased 6.4% yoy during June 2018. India’s crude oil import dependency was 84.1% in June 2018 and 83.9% in 1QFY19. Petroleum Planning & Analysis Cell (PPAC) estimates crude imports at 227 million metric tons (mmt) for FY19 (FY18: 220mmt).
In June 2018, refining throughput was 21.9mmt, up 9.1% yoy. The refining throughput was up 5.0% yoy in 1QFY19. Public sector refineries processed higher volumes on a yoy basis, supporting the overall increase in the throughput. During the month, India’s petroleum product output increased 12.0% yoy to 22.7mmt. On a cumulative basis, the production was 6.6% yoy higher in 1QFY19.