India Ratings and Research (Ind-Ra) has published the September 2021 edition of its credit news digest on India’s oil and gas sector. The report highlights the trends in the sector, with a focus on domestic production, import, consumption, refining and gross under-recovery, regulatory changes and recent rating actions.

Ind-Ra believes that natural gas (NG) prices globally have been on an increasing trend since the start of FY22, led by an elongated winter season till March 2021, creating an imbalance in the supply and demand of NG, and resulting in lower levels of storage for summers. High competition for LNG cargoes, low storage availability, and continued supply-side constraints are few more key reasons for the same. Additionally, demand from China, which has outpaced Japan as the highest gas importing nation, and Europe has surpassed the supply, leading to stocks dwindling to low levels.

The increase in gas prices globally was reflected in a 62% yoy rise in the domestic natural gas price to USD2.9 per million British thermal units (mmBtu) during 2HFY22 under the domestic gas price regime. Ind-Ra believes due to the ongoing high prices, domestic gas prices for the next control period could increase further. The gas price increase has already been reflected in the hike in both CNG and PNG rates across entities and an increase in the industrial CNG rates. The high prices will also impact the profitability of the gas-based power plants, whose viability remains highly contingent upon gas prices. Furthermore, there would be an impact on fertiliser companies.


In September 2021, NG consumption increased 18.6% yoy with city gas distribution (CGD) volumes increasing 31.3% yoy to 34.32mmscmd, while demand from the fertiliser sector declined 2.5% yoy. The continued high demand from the CGD sector, despite price increases, is led by the high fuel competitiveness to alternatives, which also remained priced at high levels during the period. The increase in demand was supported by a 26.5% yoy increase in NG production while imports declined 13.2% yoy.

In September 2021, Brent crude oil price averaged USD84/bbl, up 108.9% yoy and up 12.7% mom. Average Brent crude oil price from April-October 2021 increased 98.7% yoy to USD72.97/bbl.

Source: Petroleum Planning & Analysis Cell and Ministry of Petroleum and Natural Gas

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