1. Demand Forecasting Of Major Petroleum Products For North Eastern
Region Of India For The Year 2020-21 & 2025-26
Arnab Chatterjee Page 1
Executive Summary
With increasing population and growing economy, India's energy demand is also increasing
rapidly. Though India's indigenous crude production is decreasing from past three years, the
petroleum product demand is met by importing more than 75% of the total crude from other
countries. If India does not find any source of crude oil in near future, the percentage of
import can be assumed to be the same or even more. The refining capacity is showing a
positive trend, with standing refining capacity of 215.066 MMTPA, which is expected to
increase up to 307.366 MMTPA in 2016-17, due to various expansion projects and upcoming
new refineries.NRL will be expanding its refining capacity from 3 MMTPA to 9 MMTPA,
which is just triple of the current refining capacity. Before the expansion takes place, it is
very important for any refinery to know the future demand of the petroleum products.
In this project, demand forecasting is done by using econometric model for MS & HSD, and
end-use method for LPG. For petroleum products it is socio-economic factors such as
population, state-gross domestic product etc., which affect the consumption of fuel. This
project intends to predict the future demand trend for MS, HSD and LPG for the period 2020-
21 and 2025-26 for each of the seven northeastern states. It has been done using a well
structured research methodology, extensive literature review and a detailed data analysis,
which are discussed in the chapters to follow. The obtained figures will help NRL to have an
idea about the future behavior of the petroleum product market for the whole NE region,
where NRL have a very strong network of distribution.
For MS and HSD, we first determine the dependent variable i.e consumption and the
independent variables: population and SGDP of each North-Easter states. Prior to projection,
historical trend of each of these variable are found out from various sources. Regression
analysis is done on these dependent and independent variables. A demand model is derived
from this analysis i.e State wise HSD/MS demand = Constant coefficient + Coefficient *
population + Coefficient * SGDP. Thus by placing respective projected population and
SGDP on demand model, demand projection is done. The total MS demand for NE region are
found to be 597 TMT and 768 TMT, and for HSD it is 1893 TMT and 2120 TMT
respectively for 2020-21 and 2025-26.
For LPG, we first derive the trend in the consumption pattern in the domestic sector from the
past 10 years in the rural and urban areas of each of the seven northeastern states. Using the
RGI 2006 report, we obtained the predicted population for the northeast region on the rural-

2. Demand Forecasting Of Major Petroleum Products For North Eastern
Region Of India For The Year 2020-21 & 2025-26
Arnab Chatterjee Page 2
urban divide basis. In the second step the total percentage of population using LPG as the
primary cooking fuel was found. Based on this the future penetration factor for LPG in the
rural and urban areas of the 7 states are calculated and the demand for LPG is derived. Due to
time constraint the LPG demand has been obtained only for the domestic sector of the region.
At present there are 4307578 LPG domestic consumers, with 438 distributer in the NE region. To
obtain a realistic figure, various assumptions were made which are stated in Chapter 5. As per
our study LPG demand in the domestic sector of northeastern states of India for the year
2020-21 & 2025-26 are 477 TMT & 587 TMT respectively.
Figure showing the comparison in the demand for MS,HSD & LPG for 2020-21 & 2025-26 .
The result obtained in the study are expected to help NRL to develop the infrastructure
required in the supply chain for the finished petroleum products and for production planning.
As the demand in the northeastern states are mainly met by the four refineries in the region
(Digboi, Guwahati, Bongaigaon & NRL), and after the success full completion of the
expansion project at NRL, there will be surplus petroleum product in the region, thus the
obtained result from this project will also help NRL as well as other refineries to find some
scope in the other markets for the near future.
0
500
1000
1500
2000
2500
MS (TMT) HSD (TMT) LPG (TMT)
2020-21
2025-26