New Delhi: India’s oil product exports surged 45% in the fiscal year that ended in March, as it sucked in crude and expanded refining capacity to earn profits overseas from high world prices.
Asia’s third-largest oil consumer imported 11.5% more crude in the past financial year, faster growth than for domestic oil sales that came in at a less-than-expected 5.9%, though demand was still strong enough to push up imports.
“Exports from India have risen sharply as private refiners exported more products in the absence of a level playing field in the domestic markets,” said an oil ministry official, who did not want to be identified.
Oil product exports climbed 21.4% in March versus the previous year, taking 2006/2007 financial year exports up to 31.14 million tonnes, government data obtained by Reuters on 25 April showed.
The export growth came as Essar Oil commissioned its 210,000 barrels per day (bpd) refinery, while Indian Oil Corp.doubled the capacity of its Panipat refinery to 240,000 bpd and private refiners exported more products.
Oil product imports in March still grew 16% to leave full-year imports surging 26.9%, as the world’s second most populous country shipped in 17.05 million tonnes.
Fuel prices are state-controlled in India while world oil prices above $60 a barrel mean better profits for selling abroad. India compensates state-run firms for selling auto fuels at lower prices, but no such mechanism exists for private retailers.
Domestic sales a proxy for oil demand grew 7.1% in March, taking sales for the year up 5.9% to 119.8 million tonnes, less than estimated growth of about 9.2% in Asia’s fourth-largest economy.
“Overall consumption is close to the Planning Commission’s estimates of 120.4 million tonnes,” the official said.
The International Energy Agency marginally increased its 2007 product demand forecast for India to 3.4% in its latest report, to slightly above 2.7 million bpd.
India plans to add 2.14 million bpd by 2012 to its existing 2.98 million-bpd capacity, with a view to become a global refining hub.
Diesel sales, which account for nearly a third of consumption, rose 11.6% last month and 6.7% over the year, the data showed. Petrol sales jumped 15.6% in March and 7.5% over the year.
Automobile sales rose 13.5% last year as India’s expanding middle class purchased more vehicles and industrial production was high.
Domestic sales of naphtha surged 22% in March as power shortages meant more plants used the light oil product.
India has been trying to trim its oil consumption through a move to substitute imported liquefied natural gas for naphtha in fertiliser and power plants, offsetting demand for jet fuel in an airline boom and higher motor fuel demand.
But scarce gas supplies have limited its impact as it imported more naphtha during the year. Petrochemical plants imported 1.4 million tonnes more naphtha in 2006/07, the data showed.
Kerosene imports during the year rose 36.4% as private refiners did not supply the product to state-run companies.
India expects domestic demand to grow at a compounded annual growth rate of 2.9 percent to 132 million tonnes by 2012.