Fitch Ratings expects India’s petroleum product demand to remain moderately strong in the fourth quarter of the financial year ending March 2022 (4QFY22), as the easing of Covid-19 pandemic-led restrictions boosts economic activity. The recovery should support higher throughput at most rated oil marketing companies and we expect strong prices to improve the financial profiles of upstream oil and gas companies.

We forecast capex to stay high as oil marketing companies expand their refining capacity and retail networks, and upstream companies enhance production. We expect stable crude oil production, which should marginally increase in FY23 as upstream producers continue to invest in exploration and development. India’s natural gas production increased by 22% yoy in April-December 2021 and the momentum is likely to continue over the next 12-18 months, driven by expanded production at new fields, before stabilising in FY23.

We believe rising domestic production and higher liquefied natural gas (LNG) spot prices are likely to weigh on LNG imports through to 1HFY23. However, LNG imports should rise steadily over the medium-term as consumption picks up pace.
Source: Fitch Ratings