UBS - India Oil and Gas Sector India oil monthly: March Issue

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UBS Investment Research
India Oil and Gas Sector
India oil monthly: Issue 7
􀂄 Monthly oil demand growth further slows down
Based on data from Reuters and PPAC, India’s domestic oil product demand rose
2.4% YoY (4.6% in Jan’11) to 3.06mbpd in Feb’11. The growth was supported by
higher gasoline and jet fuel use. YTD demand growth remained at 2.4% like in
Jan’11 which is below expectations. Oil demand grew 1.4% in H1FY11.

􀂄 Gasoline, diesel & LPG grow 7.2%, 5.5% & 5.4% YoY in February’11
Diesel sales have continued to slow down after a high jump of 9.5% YoY in
December. Gasoline demand grew 7.2%, lower than 8.6% in January. There has
been no increase in diesel prices since Jun’10, so we believe demand could have
been distorted in favour of diesel. Jet fuel demand grew fastest with a 10.8% YoY
increase. As expected, naphtha demand has stabilised (2.3% YoY growth in Feb)
post the run up in Dec’10 (41.7% YoY). Bitumen demand rose 5.8%, a positive
indicator for road sector.
􀂄 Oil demand rose 4.6% YoY in January 2011
Oil demand rose 4.6% YoY in January 2011 versus an increase of 2.4% in
February. In January, YoY gasoline and diesel demand had risen 8.6% and 6.4% as
compared to 7.2% and 5.5%, respectively, in February. So far in FY11, out of total
oil demand, diesel and gasoline account for 42% & 11%, respectively.
􀂄 We expect demand growth to be slower in 2HFY11
We expect consumer demand to drive a 8% growth in gasoline sales in FY11-14.
While we believe diesel demand will grow at 5% on the back of agricultural and
industrial growth.