New Delhi/Singapore: India’s domestic oil product sales in January rose 7.3% from a year earlier, led by naphtha and diesel, extending a period of rapid demand growth in Asia’s third-largest consumer, according to official data released on Monday.
Domestic refined product sales—a proxy for oil demand —rose to 10.46 million tonnes, the data showed.
The growth came a month after India’s first reduction in domestic fuel prices and just ahead of its second, pushed through two weeks ago to combat inflation at a two-year high. Pump prices of petrol have fallen by 4.5% and diesel by 3.2%.
Diesel sales, which account for nearly a third of the country’s consumption, rose 8.2% in January from a year earlier to 3.71 million tonnes (900,000 barrels per day).
But oil demand was also fuelled by growing industrial usage of naphtha, as fertilizer firms and some power plants struggled to get enough cheaper natural gas. Domestic naphtha sales surged 28%, their third successive double-digit increase.
Despite the increase in consumption, however, the data showed an unexpected trebling in naphtha exports to 1.3 million tonnes for January, although this was partly offset by imports, which rose by nearly 154% to 476,900 tonnes.
“Higher naphtha imports resulted in more domestic surplus available for exports,” said a government source.
Indian Oil Corporation (IOC), the country’s biggest refiner, has bought up to 800,000 barrels of Neutral Zone Ratawi sour crude in a rare tender for heavy crude, a company source and a trader said on Monday.
The refiner bought the crude from US major Chevron at a discount of around $6.85-$6.90 a barrel to Dubai quotes, the trader added. Price details had yet to be confirmed.
IndianOil rarely tenders for heavy crude but may start seeking more after it completes a blending facility at Mundra in Gujarat that will be used to blend crude for the Panipat refinery, traders have said.
The refiner was looking for April-loading crude. Traders expect the Mundra facility to be ready either this month or the next.
The capacity of IndianOil’s Panipat refinery was doubled last year to 240,000 barrels per day and traders said IOC is likely to bid for similar tenders on a regular basis once the blending facility, and new storage, are completed.
IOC had asked for offers of heavy sour West Asian and South American crudes such as Brazil Marlim, Colombian Cano Limon or Venezuelan Mesa crude, which the refiner rarely, if ever, buys.
The tender document also mentioned sweet grades such as Equatorial Guinea’s Ceiba or Zafiro crude.
IndianOil, which has about 10 refineries spread across India for a total capacity of 1.204 million barrels per day, tenders several times a month to buy crude, mainly light sweet West African grades.