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Diesel imports to scale new highs this fiscal

Diesel imports to scale new highs this fiscal
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First Published: Wed, Sep 12 2007. 01 10 AM IST
Updated: Wed, Sep 12 2007. 01 09 AM IST
New Delhi / Singapore: India will increase diesel imports this fiscal to the highest this decade to meet stronger demand fuelled by a booming economy and to cover shortfalls caused by major refinery maintenance work.
Asia’s third largest oil user may keep importing ample diesel volumes until 2010, when most refinery upgrades and new units will be ready, while lagging domestic supply from private refiners will add to the burden of state firms, industry officials said.
But, the officials said, inflows may ease next year as top state refiner Indian Oil Corp. (IOC) may halt diesel imports because of a slower maintenance plan and some added capacity, while Hindustan Petroleum Corp. Ltd (HCPL) may ship in some volumes.
India’s imports of low-sulphur diesel this year, averaging 200,000 tonnes a month, will help sustain high premiums in Asia, which could make barrels from this region and the Middle East too pricey to ship to Europe or Latin America, traders said.
“Diesel demand is growing at a very high speed,” said G.C. Daga, IOC’s director marketing. “We see a growth of 7% this year over a high base of last year.”
A strong economy growing at around 9% and shutdowns removing 7% of refining output will spur state refiners to import about 1.24 million tonnes (mt) of diesel this fiscal year (April-May)—up 36% from the year-ago, as demand rises between 5.6% and 7%, a Reuters poll found.
During April-July, India’s diesel imports were already up nearly 146% year-on-year to 786,100 tonnes, data showed.
The country consumed 43mt of diesel last year—up 6.7%. Diesel accounts for a third of India’s oil products consumption and its share could grow further on increased usage of electric pumpsets in farms and higher commercial vehicle sales, which jumped 11% in the first quarter. Robust imports are reminiscent of the 1990s and 2005, when the country’s monthly diesel intake topped 200,000 tonnes, before tapering off when new refining capacity and secondary units came onstream to meet higher demand for better quality diesel.
India uses 0.03% sulphur diesel in some states and will implement tighter standards in the rest of the country using the 0.05% grade from 2010.
To meet this demand and to cement India’s exporter status, a total 2.14 million barrels per day (bpd) of refining capacity will be added by 2012 to the current 2.98 million bpd. By 2010, capacity would be raised by 43% to 4.25 million bpd.
“IOC and Bharat Petroleum Corp. Ltd will be in balance (next year),” said S. Raghunath, country head of oil products division at Trafigura Beheer BV, a Dutch commodities company. “HPCL may have to import some quantity, but volumes will be less than this year.”
IOC expects to import 200,000-250,000 tonnes of diesel this fiscal due to repairs as it builds some 1,000 new retail stations in the hinterland, where diesel demand is stronger than in cities.
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First Published: Wed, Sep 12 2007. 01 10 AM IST