India's gasoline exports to fall 97.8% during 2014-19

New Delhi: India's gasoline or petrol exports will fall by 98 percent by 2019 and will become the second largest importer of gasoline after Indonesia by 2024, BMI Research said.

"We forecast India's net gasoline exports to decline by 97.8 percent over the next five years, from 306,800 barrels per day in 2014 to just 6,760 bpd in 2019.

"This decline will be a result of rapid growth in domestic demand in India, which will require output normally designated for exports to be directed inwards," said BMI Research, a Fitch Group company.

India, it said, will become a net importer of gasoline from 2020, despite a significant increase of production domestically.

"Our forecasts show that India will become the second largest net importer of gasoline after Indonesia by the end of the decade, overtaking the likes of China, Australia and Malaysia as consumption growth slows in these key consumer countries," it said.

The rise in domestic demand will provide an import outlet for India's growing gasoline production - set to rise 10.3 percent over the next five years.

At present, India remains the largest gasoline exporter in the Asia-Pacific region, exporting the majority of its output to Asia and the Middle East, which accounted for nearly half of India's total refined fuels exports in 2014.

However, falling demand in these two markets will see their imports diminish over the coming decade, it said.

India's refined fuel shipments to the Middle East decreased by 14.3 percent over 2013-2014; a trend that may persist with output from new refineries expected to ramp up to full capacity over the next few years.

Also, India's gasoline exports to the rest of Asia also declined by 9.7 percent over the same period.

Rising fuel efficiency gains in the developed economies, such as Japan and Taiwan moderated gasoline use in the transport sectors, while refining capacity expansions in the emerging economies, such as Vietnam, has intensified competition in the exports market.

Although a pick-up in refined fuels demand from Australia, due to the closure of some of its refineries is expected to provide some respite, it will not be sufficient to offset the loss in demand from Middle East and Asia, BMI said.

Alternative growth markets exist - such as Africa or Latin America.

"However, India would face considerable competition in these markets, as North American and European refiners look to offload large surplus of production in coming years," it said.

India's strong domestic consumption growth will require more of its gasoline output to be directed inwards to meet domestic demand, thus reducing volumes available for exports.

"We forecast India's gasoline consumption to rise by an average 10.2 percent per annum over the next 10 years, driven by solid economic growth, strong passenger car sales growth and structural rebalancing away from diesel," BMI said.

Even as India adds about 1 million bpd of refining capacity by 2020, the pace of the country's consumption growth will outstrip that of refining capacity, rendering local production insufficient to meet domestic gasoline demand and turning the country into a net importer of the fuel.