Oil and gas
BMI has said that the Modi led government is enacting an incremental reform to improve the country’s wider business environment. Key reforms include streamlining bureaucratic procedure and an increase in companies’ operational flexibilities. The government has also reportedly looked to enact various domestic pricing reforms, including an increase in the domestic gas price cap and a reduction in diesel and petrol subsidies. Changes in licensing terms however, from a profit sharing to a revenue sharing structure could dissuade some IOCs from investing. A revenue sharing contract poses higher risk and entails a significantly longer period of cost recovery. A sharp drop in the price of crude, BMI has said, may also dampen interest in the round, straining the economic viability of the more expensive unconventional and deepwater developments.
When it comes to the refining sector, BMI has said that the outlook remains heavily bullish, supported by both fuel price liberalisation, rising consumption and the sharp fall in the cost of imported crudes. The company has also said that the downstream sector is set for strong growth which will be in fact supported by falling subsidisation, the price liberalisation, rapidly rising domestic demand and lower crude feedstock costs.
The indefinite closure of the Haldia petrochemicals complex, has in BMI’s opinion, undermined growth in investment and output in part. However, the company expects improvements to the country’s outlook in the years ahead under the new government administration. Petrochemicals consumption is expected to follow the trends in the wider economy, which is witnessing stronger growth with improved output expected in the automotive industry, soaring domestic consumer goods demand and rising construction activity.
BMI has forecast that by 2019 ethylene capacity will be at 10 million tpy, PE at 6.37 million tpy and PP at 5.92 million tpy. Growth will be led by Reliance Industries’ projects at Jamnagar and Dahej, with investments in polyesters and rubbers riding on the back of broad consumption trends.
Edited from report briefs by Claira Lloyd
Read the article online at: https://www.hydrocarbonengineering.com/refining/16022015/oil-gas-petchem-india-bmi/