Private Indian refineries are spearheading an export boom, shipping their products as far as Latin America as India accounts for nearly half of this year's global increase in crude oil processing.  Like China, rapidly industrialising India is adding refining capacity, according to the IEA's December Oil Market Report. Indian capacity has increased by almost 50% in the last five years, making the country a regional export hub and meeting rapidly growing domestic demand. Much of the expansion came in the private sector, which now holds a combined 1.6 mb/d of capacity, or a third of the country's total. This year alone, capacity has expanded by 400 000 barrels a day (400 kb/d), through one new 180 kb/d refinery and expansions at existing plants. Projects scheduled to be completed in 2013 would add a further 420 kb/d. In October, India processed a record 4.5 million barrels a day (mb/d) of crude oil, nearly 18% more than a year earlier.
The increased capacity has led not only to record crude oil runs, but also to record exports of refined products. According to the government's Petroleum Planning & Analysis Cell, total product exports reached 1.5 mb/d in October, 300 kb/d higher than a year earlier. The surge in exports is led by the private sector, which prefers to sell to international markets at international prices, while state-owned refiners must supply the rising domestic demand at regulated prices for several key products such as LPG, kerosene, gasoline and diesel.
Most of India's product exports remain in the region, where demand is growing, but shipping data show significant increases in exports to OECD Europe, which had a deficit in diesel and where refinery capacity is shrinking. Shipments also went to Latin America and the Middle East, regions that have had limited refinery expansion. Diesel and gasoline led Indian product exports, accounting for 39% and 25% of the total, respectively
The boom in exports added to India's 6.4% increase in total oil demand for October, based on preliminary estimates, for a total of 3.7 mb/d. Strong domestic economic growth easily offset a reduction in subsidies that effectively raised diesel prices by 14%, and based on the surge so far in the second half, the December OMR increased its India demand forecast for all of 2012 to 3.7 mb/d, a 4.2% increase from 2011.
But India faces export pressure from refineries starting up in the Middle East whose competitive advantages include lower shipping costs, particularly for European markets.
Source: IEA