New Delhi, Dec 10 India is expected to be the key destination for global oil and gas products as the country adds refinery, petrochem, LNG regasification and pipeline capacity while the Chinese economy slows, according to an HSBC report released on Tuesday.
The report states that global oil prices are likely to remain weak. This would benefit India as the country imports over 80 per cent of its crude oil requirement and any decline in global oil prices leads to a huge saving in the import bill.
"For India's oil and production, we expect another year of marginal growth but it is all contingent on ONGC's ability to deliver on-schedule production and minimise the decline in nomination blocks. CY25 will also see at least 25 per cent growth in LNG regasification capacity which will further enhance India's capacity to absorb global LNG. On the refining side, India is expected to increase its capacity by 9 per cent, adding 0.5 million barrels per day,” the HSBC report states.
It further points out that energy transition in the country will pick up as well. "We also expect India’s oil and gas companies to start their investment phase in energy transition led by renewables, early stage green hydrogen blending and investment preparation for green hydrogen. We also expect the start of refinery transformation projects to orient towards petrochemicals," the report observes.
It also states that India's own petroleum product demand is slowing, especially on the diesel side, which is expected to continue to slow as stricter emission norms encourage vehicle manufacturers to focus on electric and gas-driven vehicles.
The report in its investment views rates GAIL as 'Buy' as the company should benefit from improved gas infrastructure, range-bound LNG pricing, and new customers.
“HPCL, BPCL, IOCL, all rated Buy, benefit from weak oil prices. We are 'Reduce' on ONGC on the risk of falling oil price and 'Hold' on PLNG on investment in petrochemical and competing regas terminals," the report adds.
According to the report, global oil prices will face downward pressure but gas prices are looking up near term. As per HSBC's European oil research head Kim Fustier, OPEC+ muddles through, but for how long? The 2025 market remains balanced but the outlook worsens for 2026 as surplus grows if volumes return.
“We maintain our Brent oil forecast for USD70/bbl. On the other hand, our team now expects the LNG market to remain tight till 2027 and an LNG supply glut only in 2027,” the report adds.
US policy announcements post the election of Donald Trump brings uncertainty to these commodities long term, the report added.
The HSBC report also expects transportation fuel (highest-margin product) demand growth to slow on worries in the Chinese economy and the gradually increasing penetration of EVs. Petrochemical remains oversupplied and refiners are further focussing on diverting their products towards petchems.
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