Expect a surge in LPG demand over next 5 years

Vol 7, PW 26 (24 Mar 04) Midstream & Downstream
     

India has a ravenous appetite for Liquefied Petroleum Gas, mainly used as cooking fuel in urban households.

But the oil ministry is encouraging its use as transportation fuel and in rural households that traditionally utilise kerosene. The result is that over the past three years annual LPG sales have surged and grown on average by 10% - the highest for all petroleum products while sales of petrol and diesel have flattened out.

LPG demand in India is met almost entirely by state-owned oil companies whose stranglehold on the retail market continues thanks to the oil ministrys unwillingness to extend the subsidy on LPG cooking gas to private retailers. Yet demand still outstrips supply and India is forced to import LPG in ever-increasing quantities.

Estimated domestic LPG production in 2006-07 will be 8.65m tonnes as against a demand of 11.85m tonnes. The balance 2.3m tonnes will have to be imported.

Conscious of this, the ministry is actively pursuing a strategy to set up strategic LPG storage tanks across the country to ensure against a disruption of supplies. Until recently no precise demand projections for LPG were available but last month oil minister Ram Naik submitted a break-up of LPG demand till 2009-10 to parliament.

These figures were culled from a study carried out on behalf of state-owned oil refiners by market research group Marketing and Development Research Associates. Break-up of sector-wise LPG demand in India till 2009-10.

Figures in thousand tonnes Year Sector Domestic Commercial Industrial Automotive Grand Total Urban Rural Total 2000-01 5,133 1,445 6,578 402 236 Nil 7,216 2001-02 5,432 1.745 7,177 437 255 133 8,002 2002-03 5,759 2,055 7,814 474 274 150 8,712 2003-04 6,106 2,372 8,478 513 294 168 9,453 2004-05 6,473 2,697 9,170 552 315 187 10,224 2005-06 6,859 3,029 9,888 593 336 207 11,024 2006-07 7,264 3,369 10,633 635 358 228 11,854 2007-08 7,687 3,716 11,403 678 380 250 12,711 2008-09 8,128 4,070 12,198 723 402 272 13,595 2009-10 8,589 4,432 13,021 768 425 296 14,510