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India’s petroleum products exports to hit 8-year low in 2019

India’s total exports of petroleum products, which account for over a tenth of the gross value of outbound shipments, are set to drop below the 1.2 million barrel per day (mbpd) mark in the current calendar year, the lowest level of annual exports in the past 8 years. 

The worrisome trend for export earnings is attributed to a robust rise in domestic demand coupled with a mega maintenance-led 
refinery shutdownslated for 2019. The country exported petroleum products – mainly petrol, diesel, naphtha, fuel oil and lubricants -- worth $35 billion last financial year (2017-18).

“Overall, heavier maintenance program is to be expected this year, which will affect refinery throughput. This, coupled with robust domestic demand (expected to grow at 235 mbpd for the year as a whole), would likely pull India’s total oil product exports below the 1.2 mbpd mark this year for the first time since 2010,” Jy Lim, Director of Asia-Pacific oil market analysis at S&P Global Platts told ETEnergyworld. 

He added domestic refinery upgradation will be required as India plans to shift to Bharat-VI standard fuel in April 2020 coupled with the upgradation required to meet the International IMO 2020 bunker fuel specifications.

Refiners with planned maintenance in 2019 include Reliance Industries, Bharat Petroleum (BPCL), Hindustan Petroleum (HPCL) and Indian Oil Corp (IOC), according to S&P Global Platts. IOC, the largest refiner, will complete its refinery upgradation activity by the second half of next fiscal (2019-20), B V Rama Gopal, the firm’s Director-Refineries told ETEnergyworld in an interview in February last month. 

According to Platts, India’s domestic petroleum product consumption reached 210 Million Tonne (MT) in 2018 and is expected to rise 4.8 per cent in 2019 on the back of increased demand for petrol, diesel and Liquefied Petroleum Gas (LPG).

The impact of the twin factors – robust demand and refinery upgradation activities – is already visible in the export numbers of the current financial year. “India’s total oil product exports dropped by 355 mbpd (or 24 per cent) year-on-year to 1.1 mbpd in January 2019, marking it the sharpest year-on-year decline in 9 months and the lowest monthly level since April 2018,” Lim said.

Data on exports sourced from Petroleum planning and Analysis Cell (PPAC), an arm of the oil ministry, shows the country’s petroleum products exports in January 2019 slumped 25 per cent to 4.5 Million Tonne (MT) as compared to 6 MT exported in the corresponding month a year ago. 

Overall, in the April-January period of 2018-19, the country’s petroleum products exports have suffered a drop of 8.70 per cent at 51.4 MT, as compared to 56.3 MT exported in the same last fiscal. 

PPAC attributes the hit suffered by petroleum product exports to a drop in out-bound shipments of petrol, naphtha, diesel, LOBS/lube Oil, Fuel Oil, bitumen and Vacuum Gas Oil due to increased domestic consumption of petrol, naphtha and diesel recorded this fiscal year. 

However, in value terms, petroleum exports increased 14 per cent to $32.6 billion during the April-January period of current fiscal as against $28.7 billion worth of exports recorded in the corresponding period of 2017-18. 

Largest export destinations for India’s petroleum products include Singapore, United Arab Emirates, Netherland, Malaysia, United States, Israel and Nepal, according to data sourced from the Directorate General of Commercial Intelligence and Statistics (DGCIS), an arm of the commerce ministry.

India exported 8.96 MT of petroleum products to Singapore in the first ten months (April-January) of 2018-2019, as compared to 10.55 MT exported in the corresponding period last fiscal. During the same period, petroleum Products exports to UAE increased to 8.18 MT from 6.72 MT while exports to Netherland rose to 5.68 MT from 3.03 MT.

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