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March 01, 2019

Sector Report: Refining and Marketing

This report is available to users in India for ₹40,000 + applicable taxes


Table of Contents


  • Summary
  • Overall demand
  • High-speed diesel
  • Liquid petroleum gas
  • Motor spirit
  • Naphtha
  • FO/ LSHS
  • Superior kerosene oil
  • Aviation turbine fuel
  • Bitumen
  • Petcoke
  • Domestic supply
  • Global demand
  • Global supply
  • GRMs
  • Under-recoveries




Petroleum products demand to grow at ~3.8% CAGR until fiscal 2023


Over the next five years, demand for petroleum products is expected to rise at ~3.8% CAGR to reach ~246 mtpa by fiscal 2023, vis-a-vis 5.5% CAGR during fiscals 2013-2018, largely driven by high-speed diesel (HSD), motor spirit (MS) and liquid petroleum gas (LPG).


The demand for MS is expected to grow at 7.2% CAGR due to healthy growth in sales of passenger vehicles (PV) and two wheelers.Improving fuel efficiencies, substitution of petrol by CNG on account of cost advantage, development of urban     infrastructure projects such as metro and increasing popularity of cab aggregation are the key factors that are likely to restrict the volume growth in this category of fuel.


The diesel demand growth is expected to be ~3.8% CAGR supported by a pick-up in economic activity and implementation of GST and e-way bill. The factors that are likely to limit the volume growth in this category are electrification of the railways for which the government has set a target, electrification of industrial areas, shift of agri pumpsets from diesel-based to electric and solar and declining power deficit scenario, leading to lesser consumption of diesel in DG sets.


Similarly for LPG, we expect the demand to grow slower than in the previous five years as new connections would be mostly added in the rural and BPL category. This is expected to increase the LPG penetration at overall level but per capita consumption is lower for the rural as well as BPL category. This would restrict the volume growth. Hence, the LPG demand is also expected to grow at ~6% CAGR during the next five years until fiscal 2023 against the past five years' growth of 8.4%.


Apart from the demand growth of diesel, MS and LPG, other products such as aviation turbine fuel (ATF) and Naphtha are expected to contribute to the growth of overall petroleum product over the period. On the other hand, other petroleum products such as fuel oil (FO), petcoke and super kerosene oil (SKO) are expected to witness a decline in growth due to regulatoryrestrictions.