India’s fuel demand marginally up by 0.7% in FY14

India’s fuel demand grew by slowest pace in almost 12 years at 0.7% to 158.197 million tonnes (MT) in FY14 from a year earlier. The world's fourth-largest oil consumer witnessed meager petroleum product demand since 2001-02 when demand had expanded by 0.4% to 100.432 MT. The demand for diesel, India's most consumed fuel accounting for around 45 percent of the total petroleum product demand, registered the first decline since 2001-02 and fell by 1% at 68.37 MT in FY14 as the move to deregulate diesel rates through small monthly increases dried out the domestic demand. Small adjustments of 50 paise every month has increased the Diesel rates by a cumulative Rs 8.33 per since January 2013, leading to drop in demand. Furthermore, better power production had also resulted in moderation in diesel demand. However, diesel demand had risen by 6.7 percent in 2012-13 to 69.08 MT. On the other hand, petrol consumption during FY14 rose by 8.8% to 17.13 MT while LPG demand was up 4.7 percent to 16.337 MT. Presently, petrol prices are at par with its cost of production, while the current selling price of diesel is still Rs 5.49 litre lower than its cost. In India, fuel retailers are currently losing Rs 5.49 a litre on diesel and Rs 34.43 per litre on kerosene sold through the public distribution system and Rs 506.06 per 14.2-kg cylinder of domestic cooking gas (LPG). India imports about 75 percent of petroleum products requirement and pay an import bill of around $160 billion for petroleum and natural gas alone. Presently, India imports around 80% of its total oil needs and 25% of natural gas domestic demand. Meanwhile, oil ministry has formulated a roadmap for cutting India's dependence on imports to meet its energy needs. As per the Ministry, domestic crude oil demand to be cut to 50 percent by 2020 and by 25 percent in 2025 through intensive exploration and exploitation of untapped reserves. Presently, only 0.93 million sq km area in India is held under exploration and production in 19 basins as compared to total estimated sedimentary area of 3.14 million square kilometers, comprising 26 sedimentary basins.