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UBS Investment Research
India Oil and Gas Sector
India oil monthly: Issue 12
„ Monthly oil demand growth slows
Based on Reuters and Petroleum Planning and analysis Cell (PPAC) data, oil
product demand in India rose 3.1% YoY in July to 2.78mbpd. The YoY growth
was led by higher diesel consumption. FY12 (YTD) product demand was up 3.6%
from the same period last year.
„ Diesel sales bounced back, gasoline/LPG weak but ATF strong
Oil product demand maintained its mixed trend. 1) Demand for diesel rebounded to
normal levels. 2) LPG and gasoline demand was sluggish. 3) Aviation turbine fuel
demand remained robust. The increase in diesel demand could have been from the
agriculture sector and some switch from petrol vehicles (due to the almost 50%
price differential between the two fuels), while the slowdown in LPG and petrol
could have been more to lower consumption by the urban middle-income group.
We would attribute strong demand for ATF either to higher demand or to the
higher income groups not yet feeling the impact of an economic slowdown.
„ Oil demand rose 3.1% YoY in July 2011
Oil demand rose 2.1% YoY in June 2011 compared with the increase of 3.1% in
July. In June, YoY gasoline and diesel demand rose 0.8% and 2.9% compared with
4.7% and 5.2%, respectively, in July. We estimate that of the total demand for oil
so far this year, diesel and petrol account for 44% and 11%, respectively.
„ We expect 4.6% demand growth in FY12
We expect 8% growth in petrol in FY11-14, driven by consumer demand and 5%
diesel growth from demand in the agricultural and industrial sectors.
Q Statement of Risk
Changes to our outlook on the global economy as well as foreign exchange rates
can have a material impact on our outlook for global oil prices, refining margins
and petrochemical spreads. Oil prices, refining margins and petrochemical
spreads are highly seasonal, which can sometimes lead to volatile earnings in the
sector from quarter to quarter. For India, government regulatory changes affect
the oil sector, for example downstream price controls and taxes, can pose a risk
to our outlook. Timing and execution risks exist for all upstream and
downstream projects. Mechanical failure is also a risk for downstream assets.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
India Oil and Gas Sector
India oil monthly: Issue 12
„ Monthly oil demand growth slows
Based on Reuters and Petroleum Planning and analysis Cell (PPAC) data, oil
product demand in India rose 3.1% YoY in July to 2.78mbpd. The YoY growth
was led by higher diesel consumption. FY12 (YTD) product demand was up 3.6%
from the same period last year.
„ Diesel sales bounced back, gasoline/LPG weak but ATF strong
Oil product demand maintained its mixed trend. 1) Demand for diesel rebounded to
normal levels. 2) LPG and gasoline demand was sluggish. 3) Aviation turbine fuel
demand remained robust. The increase in diesel demand could have been from the
agriculture sector and some switch from petrol vehicles (due to the almost 50%
price differential between the two fuels), while the slowdown in LPG and petrol
could have been more to lower consumption by the urban middle-income group.
We would attribute strong demand for ATF either to higher demand or to the
higher income groups not yet feeling the impact of an economic slowdown.
„ Oil demand rose 3.1% YoY in July 2011
Oil demand rose 2.1% YoY in June 2011 compared with the increase of 3.1% in
July. In June, YoY gasoline and diesel demand rose 0.8% and 2.9% compared with
4.7% and 5.2%, respectively, in July. We estimate that of the total demand for oil
so far this year, diesel and petrol account for 44% and 11%, respectively.
„ We expect 4.6% demand growth in FY12
We expect 8% growth in petrol in FY11-14, driven by consumer demand and 5%
diesel growth from demand in the agricultural and industrial sectors.
Q Statement of Risk
Changes to our outlook on the global economy as well as foreign exchange rates
can have a material impact on our outlook for global oil prices, refining margins
and petrochemical spreads. Oil prices, refining margins and petrochemical
spreads are highly seasonal, which can sometimes lead to volatile earnings in the
sector from quarter to quarter. For India, government regulatory changes affect
the oil sector, for example downstream price controls and taxes, can pose a risk
to our outlook. Timing and execution risks exist for all upstream and
downstream projects. Mechanical failure is also a risk for downstream assets.
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