India Emerges as Crucial Market for Global Oil & Gas Amidst China's Economic Slowdown: HSBC Analysis
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New Delhi, Dec 10 (NationPress) India is set to transform into a key hub for global oil and gas products as it increases its refinery, petrochemical, LNG regasification, and pipeline capabilities while the Chinese economy faces a downturn, according to a recent report from HSBC.
The analysis indicates that global oil prices are likely to stay low, which will be advantageous for India since the country relies on imports for over 80 percent of its crude oil needs. A reduction in global oil prices translates to significant savings on the import bill.
"For India's oil and gas production, we anticipate another year of slight growth, dependent on ONGC's capacity to maintain timely production and mitigate declines in nomination blocks. By CY25, we project a minimum of 25 percent growth in LNG regasification capacity, enhancing India's ability to absorb international LNG. In terms of refining, India is expected to boost its capacity by 9 percent, equating to an additional 0.5 million barrels per day," the HSBC report outlines.
The report also highlights that energy transitions in India are likely to accelerate. "We expect Indian oil and gas companies to initiate investments in energy transitions, focusing on renewables, preliminary green hydrogen blending, and preparations for green hydrogen investments. Additionally, we anticipate the commencement of refinery transformation projects directed towards petrochemicals," the report notes.
However, it also mentions that domestic demand for petroleum products is on a decline, particularly diesel, which is expected to continue decreasing as stricter emission regulations push vehicle manufacturers toward electric and gas-powered vehicles.
In its investment recommendations, the report rates GAIL as a 'Buy', citing the company’s potential to gain from enhanced gas infrastructure, stable LNG pricing, and new clientele.
"HPCL, BPCL, and IOCL are all rated 'Buy' due to their advantage from lower oil prices. We recommend 'Reduce' on ONGC due to the risk of falling oil prices and 'Hold' on PLNG based on investments in petrochemicals and competing regasification terminals," it adds.
The report forecasts that global oil prices will face downward pressure, but gas prices are expected to rise in the short term. According to HSBC's European oil research head, Kim Fustier, OPEC+ is managing through challenges, but for how long? The market for 2025 appears balanced, yet the outlook for 2026 deteriorates as surpluses grow with the return of volumes.
"We maintain our Brent oil price forecast at USD70/bbl. Conversely, our team now expects the LNG market to remain tight until 2027 with a potential supply glut only emerging in 2027," the report states.
Post-election US policy announcements under Donald Trump introduce uncertainty for these commodities in the long run, according to the report.
The HSBC analysis also predicts a slowdown in demand growth for transportation fuels (the highest-margin products) due to concerns regarding the Chinese economy and the rising adoption of electric vehicles (EVs). The petrochemical sector remains oversupplied, prompting refiners to shift their focus towards petrochemicals.
