India's Demand for Petroleum Products Higher in 2008-09 than Last Fiscal Year

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Researched by Industrial Info Resources (Sugar Land, Texas)--Murli Manohar Deora, India's Minister for Petroleum and Natural Gas, recently announced that the country's demand for petroleum products in 2008-09 has been estimated at 133.4 million tons. This is about 4.5 million tons higher than the demand in 2007-08, when it was about 128.95 million tons. The commissioning of a new refinery in Jamnagar on December 25, 2008, will ramp up the demand for crude oil by about 150,000 barrels per day (BBL/d) in the first quarter of this year. The new refinery has been set up by Reliance Petroleum Limited (BSE:532743) (Mumbai) with a crude oil processing capacity of 580,000 BBL/d.

Indian Oil Corporation Limited (BSE:530965) (IOCL) (New Delhi) intends to commission a number of major refinery projects this year. Among the projects scheduled for commissioning in 2009 are the $176 million Panipat refinery expansion from 257,000 BBL/d to 321,000 BBL/d, the new $3 billion naphtha cracker and polymer complex in Panipat, Haryana, and the $672 million hydrocracker project in Haldia, West Bengal. The naphtha cracker project will mark the entry of IOCL into the business of petrochemicals. The cracker's feedstock will be sourced from the Panipat refinery.

India addresses a large portion of its crude oil requirements through imports from nations including Iran, Iraq, Kuwait, Saudi Arabia, the United Arab Emirates, Angola, Malaysia and Nigeria. The last three years have also seen crude oil being imported from the Caspian Sea region, with most of it being sourced from Azerbaijan.

India and Turkey are envisioning a new pipeline project called the Medstream project. The project involves the laying of a sub-sea pipeline for the transportation of crude oil from the Caspian Sea region through the Red Sea and the Mediterranean Sea into India. The project will mean an agreement of cooperation between India, Israel and Turkey. Central Asian and Russian crude oil will initially be transported in very large crude carriers from Turkey's Ceyhan port to Israel's Ashkelon port in the Mediterranean Sea. The proposed pipeline will later be used instead of the carriers. The next stretch involves the already existing Ashkelon-Eilat pipeline from Israel to the Eilat port on the Red Sea. Crude oil can then be carried in supertankers from Eilat to India and other parts of Asia. The project is still being conceptualized and no concrete details are currently available. India, Israel, and Turkey met at Turkey's capital city of Ankara in September 2008 to discuss the features and feasibility of the project. If the project is considered feasible, construction is likely to begin in the latter part of 2009.

India was invited to join the project by Ali Babacan, Turkey's Minister of Foreign Affairs. India's interest in the project stems from the fact that with the laying of the pipeline, oil tankers will reach India in 19 days instead of the current 40 days. Also, India can then avoid the congested Suez Canal and the delays involved in carrying oil around the Cape of Good Hope.

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