The oil and LNG demand in India is expected to slow further after the country extended its nationwide lockdown until May 3. This will likely prompt refiners to deepen their utilization rate cuts and weigh on LNG imports. On the other hand, LPG demand is expected to grow positively, thanks to an increase in home cooking.
Analysts expected India’s crude throughput to drop by 1.4 million bpd in the second quarter, compared to a year earlier. Despite the fall, production is expected to exceed local demand, causing an increase in prompt exports of refined products. Domestic demand for refined products is estimated to have fallen 17.8% from a year ago to 16.08 million tons (4.07 million bpd) in March.
Diesel suffered the steepest fall in demand, plunging by 24.2% year-on-year to 5.65 million last month, as commercial vehicles and trains stopped operations. Flight bans and transport restrictions also caused the demand for jet fuel and gasoline to decline by 32.4% year-on-year to 484,000 tons and by 6.4% year-on-year to 2.16 million tons, respectively, over the same period. Conversely, LPG demand rose 1.9% year-on-year to 2.31 million tons.
Under the lockdown, the government allows cargo movement of essential commodities, including oil and gas, although it requires clearance of quarantine protocol by the port authorities. Upstream oil and gas operations are also exempted from several restrictions. ONGC and Cairn managed to continue production, but workforce shortages led to a 10%-15% fall in output.
The lockdown also impacts India’s LNG demand, with deliveries to regasification facilities falling to near last year’s level. Analysts expect any further extension in the lockdown to push India’s LNG imports to fall below 93 Mcmd recorded in Q2 2019.
