India, with the fourth largest refining capacity in the world and which had made rapid strides in export of petroleum products, saw exports of these items falling for two consecutive years (FY15 and FY16) in volume terms, reports Siddhartha P Saikia in New Delhi. While the fall in value terms is steeper — 55% between FY14 and F16 — and reflects the crash in global oil prices, the decline in export volumes could be attributed also to a demand slump overseas besides an expansion of domestic demand, analysts said. They expect the export of oil products from India to stabilise at current levels with mild recovery in the next two to three years.
“The decline in export of petroleum products is due to increase in domestic demand of products such as petrol, diesel and naphtha in the country. Further, due to quality upgradation and residue upgradation projects, there is a decline in production of naphtha and fuel oil in refineries leading to reduced availability for exports,” said petroleum minister Dharmendra Pradhan.
The sales volume in the automobile industry saw a growth of 3.78% in FY16, which is pushing up the demand for auto fuels.
“The fall in exports is due both to the global economic slowdown and a relatively sharper economic crisis in the emerging market economies. Many oil exporting countries have suffered massive current account and fiscal imbalances on this account. The adverse effect is both on the volume and value of oil exports,” said DK Srivastava, chief policy advisor, EY India.
India is seen as the most important driver of energy demand growth in the world in the years to come with its oil consumption seen rising by 6 million barrels per day (bpd) to about 10 million bpd by 2040, according to the International Energy Agency.
“Crude oil prices are likely to stabilise at relatively low levels in the medium term, say in the range of $35-55 per barrel. The global economic slowdown is likely to continue for the next two-three years with a mild recovery,” Srivastava explained.
Pradhan said that the existing refinery capacity is sufficient to meet domestic demand. Any increase in the existing capacity will give rise to surplus products resulting in consequential increase in quantum of exports. At present, India has 23 refineries with nearly 230 million tonnes per annum capacity run by both public sector and private players.
