Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Petroleum products: Overview and growth profile - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Sep 11, 2006

    Petroleum products: Overview and growth profile

    Crude and its derivatives are the propelling engines of any economy and sales of petroleum products are contingent upon the growth in economy. In the past, we have seen a fair degree of correlation between the growth in petroleum products and the growth in the overall economic activities. In this article, we provide an overview of major petroleum products in India and their growth trend. These products account for nearly 70% of the total petroleum products sold in the country in volume terms.

    Petroleum products classification:

    Petroleum products are classified into 3 categories:

    • Light distillates.
    • Middle distillates.
    • Heavy distillates.

    Petroleum products and their end uses...
    Products End-use
    Light distillates
    LPG Cooking gas, industrial application, permitted as auto fuel
    Naphtha Feestock for fertilizer unit, petrochemical units and power plants.
    Motor spirit/gasoline/petrol(MS) Automotive fuels
    Special boling point sprits( SBP) Tyres, paints and adhesive industry
    Middle distillates
    Aviation turbine fuel (ATF) Aircraft fuel
    Superior Kerosene oil (SKO) cooking and lighting fuel
    High speed diesel(HSD) Fuel for transport( railways and road),agricultural uses and capitve power generation
    Light diesel oil (LDO) fuel for agricultural pumpsets,small industrial use and start-up fuel for power generation
    Mineral turpentine fuel ( MTO) Paints, and dry cleaning industry
    Heavy distillates
    Low sulphur heavy stock(LSHS) Secondary fuel for thermal power plants, feedstock for industrial units and fertilizer plants.
    Bitumen Surfacing of roads
    Lubes and greese Lubricants for automotive and industrial applications.
    Linear alkyl benzene (LAB) Detergent industry
    Suplur Chemical industry
    Benzene Synthetic rubber, detergents and polyester units
    Toulene Pharmaceuticals, pesticides,etc

    Individual product profile of major products:

    LPG: LPG is largely used as a domestic cooking fuel with domestic segment accounting for more than 75% of the total demand of LPG. The penetration levels of LPG has improved significantly over the past 5-7 years on the back of improved availability of LPG in the country (due to increase in the domestic refining capacity, along with reduction of custom duties on LPG), also a steep fall in waiting period for allocation of LPG connection plus a quick periodic replacement has helped increase the consumption of LPG in the country. With penetration in urban areas fast approaching saturation, the government along with OMCs (oil marketing companies) is trying to improve penetration in rural areas. Efforts such as launch of a 5 kg cylinder along with common kitchen facilities are being undertaken to improve rural penetration.

    CAGR of sales of various distillates and petroleum products...
    Products 5th plan
    6th plan
    7th plan
    8th plan
    9th plan
    10th plan
    Light distillates 5.6 7.2 8.3 7.5 15.3 N.A.
    Motor spirits (0.1) 6.9 10.9 6.8 7.2 7.3
    LPG 8.7 18.4 18.9 10.0 12.6 8.2
    Naphtha 10.4 5.3 1.4 6.4 20.1 (3.5)
    Middle distillates 6.7 6.6 7.7 7.4 1.0 N.A.
    ATF 8.2 3.2 5.8 6.7 0.9 3.2
    SKO 3.7 9.0 6.7 3.9 0.5 -
    HSD 9.8 6.9 8.6 9.1 0.9 5.6
    LDO (1.0) (1.1) 4.4 (3.5) 5.4 -
    Heavy distillates 1.5 2.0 4.0 4.6 4.4 N.A.
    Lubes (2.3) 3.2 6.9 1.7 2.3 4.7
    Bitumen (2.4) (2.6) 12.6 5.9 2.6 N.A.
    Total sales 4.8 5.4 6.9 6.8 4.9 3.7
    Source: Petroleum planning and analysis cell

    Motor spirit: Motors spirit or popularly known as petrol is fuel for passenger cars, two-wheelers, and 3 wheelers. Sale of petrol has hovered at around 8% of the total demand for petroleum products in the country. Sale of petrol has traced the growth in number of vehicles in the country. With rising disposable income and a projected increase in number of vehicle, the sales of petrol is expected to register a healthy CAGR of 7% to 8% over the medium to long term.

    Superior kerosene oil: SKO is largely used as a fuel for domestic purpose in the rural areas. SKO is also used for the production of LAB and n-paraffin. While per capita consumption of SKO is set to decline, the absolute consumption for the purpose of domestic use is expected to remain static for quite some time to come. However, the overall consumption trend is significantly affected by the illegal use of SKO for the purpose of adulteration.

    High-speed diesel: Diesel demand is directly related with the growth in the overall economic development of the country. Transport and agriculture sectors account for a bulk of the diesel consumption in the country. The demand is set to be robust going forward on the back of improved economic performance of the country.

    Conclusion: As seen from the growth pattern, all the petroleum products have registered robust growth rates in the recent past. However, these growth rates would not have been possible without government intervention from time to time. Recognizing the importance of these products to the overall economic development of the country, government has time and again stepped in to place the burden of higher prices upon the oil companies. While steep taxes are levied on these products, bringing the same down is not the option the government often considers as this would considerably reduce their tax mop-ups and place a burden on the national exchequer. Thus, while bringing sanity to high prices is beyond the government's reach, it has to ensure that it does not lead to derailment of the domestic economy. This will surely test its mettle in the near future if prices do not cool off from current levels.



    Equitymaster requests your view! Post a comment on "Petroleum products: Overview and growth profile". Click here!


    More Views on News

    GAIL: A Good Show (Quarterly Results Update - Detailed)

    Mar 27, 2017

    GAIL (India) Ltd has announced results for the quarter ended December 2016. reported 9.4% year on year (YoY) decline in sales, while bottom-line grew 45.4% YoY.

    ONGC: Higher Realisations on Crude Support Performance (Quarterly Results Update - Detailed)

    Mar 17, 2017

    ONGC has announced results for the quarter ended December 2016. The company has reported 9.2 % year on year (YoY) growth in sales, while bottom-line grew 197% YoY.

    Oil India Ltd: A weak quarter (Quarterly Results Update - Detailed)

    Jan 24, 2017

    Oil India Limited announced results for the quarter ended September 2016. The company has reported an 6.5% and 7.8% Year on Year (YoY) decline in sales and net profit respectively during the quarter.

    GAIL: A Robust Quarter (Quarterly Results Update - Detailed)

    Dec 3, 2016

    GAIL (India) Ltd has announced results for the quarter ended September 2016. The company has reported 16 % year on year (YoY) decline in sales, while bottom-line grew 180% YoY.

    ONGC: Lower Write-offs Support Performance (Quarterly Results Update - Detailed)

    Nov 3, 2016

    ONGC has announced results for the quarter ended September 2016. The company has reported 10.3 % year on year (YoY) decline in sales, while bottom-line grew 6.3% YoY.

    More Views on News

    Most Popular

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    The Most Profitable Investment in the History of the World(Vivek Kaul's Diary)

    Aug 8, 2017

    'Yes, it looks like a bubble. And, yes, it's like buying a lottery ticket. But there's something happening that has never happened before. It's an evolutionary leap in money itself.'

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 21, 2017 (Close)