• Report
  • Energy Equipment & Services
  • Refining and Marketing
  • Premium
  • CRISIL Research
  • Energy and Natural Resources
September 01, 2018

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 ~4.8% CAGR during 2016-17 to 2021-22


Over the next 5 years, demand for petroleum products is expected to rise at ~4.8% CAGR to 245 mtpa by 2021-22 vis-a-vis5.6% CAGR during 2011-12 to 2016-17, largely driven by HSD, MS & LPG. MS is expected to grow at 8.7% CAGR due healthyPV sales growth and stable cost of ownership. The diesel demand growth is expected to be ~4.9% CAGR owing to pick up ineconomic activity driving transportation activity. LPG demand is also expected to grow at 6.8% CAGR in the next five years onaccount continuing policy push by the government to promote use of LPG & target of rolling out 10 crore connections in thenext 3-4 years. Apart from demand growth of Diesel, MS and LPG, other products like ATF, petcoke as well as naphtha areexpected contribute to petroleum product growth over the next five years.


Under-recoveries to increase to Rs 320-370 billion in 2018-19


In 2018-19, CRISIL Research expects a ~10-15% y-o-y increase in under-recoveries to Rs 320-370 billion in FY18 from ~Rs257 Billion in FY17. The decline in under-recoveries in 2018-19 are on account of :

  • About ~15 % y-o-y increase in crude oil prices in 2017-18
  • Government policy push towards use of LPG as a household fuel

GRMs of Indian refiners expected to marginally increase to $6.5-7.5 per barrel in 2018-19


Core gross refining margin (GRM) excluding inventory gain or losses, the main indicator of profitability of Indian refineries, islikely to range $6.5-7.5 per barrel in 2018-19, which is similar to 2017-18 levels. This will be on account of product spreadsremaining stable this year owing to a relatively similar demand growth for refined products compared to 2017-18 (althoughmoderation of spreads is expected from the previous highs seen in 2015-16). In addition to the product spreads, ramp-up ofoperation at the new & complex refining capacities are expected to aid the Indian GRMs further.