HT Digital,
New Delhi, Feb 9: India’s downstream oil and gas industry is poised for sustained growth in the fiscal year ending March 2024 (FY24), building on a robust performance in previous periods.
The sector has witnessed a strong 5% year-on-year increase in the first nine months of FY24, following a significant 10% post-pandemic recovery in FY23. This upward trajectory is driven by heightened economic activities across various sectors, including agriculture and power, coupled with increased holiday travel and higher car sales.
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The demand for petroleum products is expected to rise moderately, as indicated by the 4 to 6% growth in petrol and diesel sales during the initial nine months of FY24. This surge reflects the broader revival of India’s economy.
Fitch Ratings anticipates that while Indian refiners’ gross refining margins (GRM) may decline in FY25 from the high levels seen in FY24, they will remain above average historical levels. By FY26, a gradual shift towards mid-cycle levels is expected due to rising demand for finished goods.
Despite potential changes in the crude supply mix, possibly moving away from Russian imports, GRMs are predicted to stay robust, supported by the growing demand for finished products. In the exploration and production sector, there has been a modest increase in domestic oil and gas production, notably a 5% rise in gas production in the first nine months of FY24.
This trend is likely to continue, with technological investments in enhanced oil recovery techniques helping to offset natural declines.
Capital expenditure remains a focal point for the industry, especially as upstream companies prioritize boosting production. Hindustan Petroleum Corporation Limited (HPCL) and its subsidiary, HPCL Rajasthan Refinery Limited, are expected to maintain high capital investment levels.
Similarly, other oil marketing companies like HPCL-Mittal Energy Limited are projected to have lower capital expenditure needs after completing their expansion projects.
