Indian State Oil Firms Plan to Import 8.5-8.9 Million Mt of LPG in 2015-16

Strategic Insights -

India's state oil firms plan to import 8.5-8.9 million mt of liquefied petroleum gas (LPG) in 2015-16, up 6-11% from the previous fiscal year, driven by lower prices and government subsidies. The country's LPG demand is expected to grow 3.5% to 18 million mt in 2015-16, with 60% of the demand being butane and 40% propane. The Indian government's direct cash transfer scheme has initially dampened LPG demand, but it is now recovering as customers adjust to the new subsidy system.

Key Takeaways:

  • Indian state oil firms plan to import 8.5-8.9 million mt of LPG in 2015-16, up 6-11% from the previous fiscal year.
  • LPG demand is expected to grow 3.5% to 18 million mt in 2015-16, with 60% of the demand being butane and 40% propane.
  • The Indian government's direct cash transfer scheme has initially dampened LPG demand, but it is now recovering as customers adjust to the new subsidy system.
  • Saudi Aramco's monthly Contract Prices have fallen almost 43% between May 2014 and May 2015.
  • Platts Saudi Aramco Contract Prices FOB daily assessments for physical propane cargoes slid to $445/mt in early May 2015, down 44% from $800/mt in early May 2014.
  • India's LPG demand is expected to grow 7-8% in the next three to four years, but slow to 2-3% after 2019.
  • Indian ports are already operating overcapacity, and new port construction plans are uncertain due to the national oil companies' commitments from buyers.

Statistics:

  • 8.5-8.9 million mt: planned LPG imports in 2015-16
  • 6-11%: growth in LPG imports in 2015-16 compared to the previous fiscal year
  • 3.5%: growth in LPG demand in 2015-16
  • 60%: proportion of LPG demand being butane
  • 40%: proportion of LPG demand being propane
  • $445/mt: Platts Saudi Aramco Contract Prices FOB daily assessment for physical propane cargoes in early May 2015
  • 44%: decline in Platts Saudi Aramco Contract Prices FOB daily assessment for physical propane cargoes between May 2014 and May 2015
  • 7-8%: expected growth in LPG demand in the next three to four years
  • 2-3%: expected growth in LPG demand after 2019
  • 5.9 million mt: capacity to import LPG
  • 125%: current usage of port capacity
  • $100/mt: freight rates above recent weeks

Sources:

  • Platts news release
  • Petroleum Planning & Analysis Cell (Indian oil ministry's research arm)
  • Industry sources