Domestic public and private oil refiners processed 3.6 per cent more crude oil into products in July year-on-year. This was to meet demand which grew 9.4 per cent from a year before.
Demand/consumption of petroleum products in July was pushed up by LPG, diesel and petrol sales.
Diesel consumption was up at 5.735 million tonnes from 5.073 million tonne in the same month last year.
Petrol consumption in July stood at 1.312 million tonnes (1.212 million tonnes) and LPG sales were at 1.321 million tonnes (1.261 million tonnes), according to information available with the Petroleum Planning & Analysis Cell (PPAC).
One of the main reasons for high consumption of diesel and LPG are artificially controlled prices at which these products are sold in the Indian market.
The public sector oil marketing companies sell diesel and domestic LPG at a Government controlled price.
According to PPAC the consumption estimates represent market demand and is the aggregate of sales by oil companies in the domestic market and consumption through direct imports by private parties. While the data for company sales were actual, that of private direct imports are estimated, PPAC said.
The 18 public sector and two private sector companies (Reliance Industries first refinery in Jamnagar and Essar Oil’s Vadinar) processed 14.984 million tonnes (14.458 million tonnes). Reliance Industries does not share data for its second refinery in Jamnagar, which is an export-oriented refinery.
Growing demand means refiners need to depend more on oil imports as domestic oil and gas output reported a decline. Almost 80 per cent of crude oil demand is met through imports.
India’s crude oil import bill in terms of value has increased from Rs 409,077 crore in 2009-10 to Rs 726,386 crore in 2011-12, the Petroleum Minister, S. Jaipal Reddy, told the Lok Sabha recently.
This increase in the import bill was due to the rise in global crude oil and petroleum product prices, rupee depreciation as well as a rise in domestic consumption. However, the increase in refining output has reduced import dependency on petroleum products and the country has exported petroleum products worth Rs 2,84,643 crore during 2011-12.
Domestic oil and gas explorers such as ONGC, Cairn, and Reliance Industries are under pressure as the natural gas output dipped by 13.6 per cent and crude oil production was down by 0.6 per cent in July year-on-year.
According to data released by the Petroleum & Natural Gas Ministry, the drop in crude oil output was because of a 6.9 per cent decline in production from ONGC’s Mumbai High Offshore at 1.314 million tonne in July year-on-year.
The country’s natural gas output has fallen for the 20th straight month in July due mainly to a continued drop in production from the country’s largest gas fields on the East Coast operated by Reliance Industries. Gas production from the offshore fields, including D6, fell by almost 15.8 per cent in July year-on-year.