Kuala Lumpur: Growth in India’s demand for gasoline and jet fuel is expected to slow slightly this year, the head of the country’s largest refiner said on Tuesday, as prospects for world trade deteriorate.
“Growth in the first six months “has been slightly subdued because of many different reasons including monsoon impact,” Indian Oil Corp Chairman Sanjiv Singh said.
IOC’s Singh said overall demand will remain at 4 per cent to 4.5 per cent.
“Anything between 4 per cent and 4.5 per cent is fairly decent,” he said.
Still, the growth rate could be lowest for the country since fiscal year 2013-2014, according to government data, a sign that demand in India, one of the two pillars driving global oil consumption growth other than China, is slowing.
The International Energy Agency has revised down its 2019 oil demand growth estimate by 100,000 barrels to 1.2 million barrels per day due to the worsening prospects for world trade, although stimulus packages and developing countries should boost growth going into 2020.
Simon Flowers, chief analyst at Wood Mackenzie said at the Asia Oil and Gas Conference on Tuesday that further U.S. tariffs on Chinese goods could cut global oil demand growth by 400,000 bpd by 2020.
Demand for gasoline and jet fuel demand is expected to rise by 7-8 per cent this year, Singh said, down from rates of 9-10 per cent in the previous year.
Diesel consumption could increase by 3 per cent this year, which is “still a decent growth,” IOC’s Singh said on the sidelines of the conference.
The country’s plans to add smaller airports to improve domestic transport systems will drive appetite for jet fuel, he added.
The nation is preparing to raise its fuel quality to so-called Euro 6 standards from Euro 4 from April 2020 to fight pollution. Several refineries in India are scheduled to shut throughout 2019 to prepare for the upgrade.
India could increase fuel imports slightly during the refinery shutdowns, Singh added.
IOC, along with other refiners in India, have halted Iranian oil imports because of US sanctions.
“All of our supplies have optional (additional) volumes so depending on availability month to month, we source extra oil from other suppliers,” Singh said.
“Saudi percentage will be a little more because they have a little more spare capacity compared to others.” IOC, which has term contracts with US oil sellers, is also open to buying more spot cargoes but this will depend on economics, Singh said.