Green-energy Push To Reduce Petrol And Diesel Demand By Halving

Green-energy push to reduce petrol and diesel demand by halving

Mumbai, November 22nd : .The decline in demand for petrol and diesel will be 1.5 percent per annum in this decade, as compared to 4.9 percent in the previous decade.This is due to increasing use of compressed natural gas (CNG), and electric vehicles (EVs).
Policy interventions, such as India’s goal of net zero emission by 2070 will be able to convince the trend.This was according to a CRISIL report.

 Green-energy Push To Reduce Petrol And Diesel Demand By Halving-TeluguStop.com

The report stated that oil refiners will be changing their production mix to include petrochemicals.This should help them increase their profitability.

Hetal Gandhi is the Director of CRISIL Research.He said that a more than 3-fold increase in CNG stations and the advancement of the ethanol blending goal, as well as a substantial decline in EV batteries prices, are expected to reduce demand growth for petrol to 1% this decade, from 8.4% in the previous.

The non-exposure of the two-wheeler market, which is more likely to shift to electric vehicles, will make diesel demand resilient.

The demand for petroleum products will change, and the ratio of petrol and diesel in our consumption is likely to drop to 44% by 2030.It was 50 percent now.

However, refiners will add 37 million tonnes per year of capacity (an increase of 15% over the base) in fiscal 2025.This investment is more than Rs 1.5 lakh crore.Nearly all of these facilities could produce both transportation fuels and petrochemicals.

India’s consumption of petrochemicals will grow by a healthy 8-10%.By fiscal 2030, the per-capita polymer consumption is projected to increase to 18-20kg.

According to the research report, this, combined with a slower demand for transport fuel, would lead to the petroleum product share rising from 7 percent in fiscal 2020 at 17% in fiscal 2030.

The healthy demand for petrochemicals will partially offset India’s decline in crude oil demand, which is now at 3.5 percent this decade, compared to the previous 4.5%.

The flexibility to diversify would help stabilize refiner margins.With margins slowly returning to pre-pandemic levels, their profitability and that of oil marketing firms (OMCs), has improved, so too is their profitability.

CRISIL Ratings Ltd Director Nitesh Jain says, “Most Indian refineries are designed to produce more diesel and petrol (57%), and less petrochemicals (12-15%).” Their flexibility in production is typically limited to light, medium, and heavy distillates.The upcoming integrated facilities, or crude-to-chemicals compounds could yield significantly more petrochemicals.

Although such facilities require higher capital, the interest coverage and gearing can be expected to rise at 5 and 1.5 times respectively over the medium-term.This is due to better optimization of output in order maximize overall profitability.

According to the report, the decline in demand for petrol and diesel will not affect the credit profile of refiners or OMCs.

Credit profiles that remain stable over near-to medium term indicate a CRISIL Ratings analysis on public sector refineries, OMCs, and OMCs which account for 65 percent of India’s oil marketing and 65% of India’s refining capacities.

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