INDIAN SUBCONTINENT: INDIA, PAKISTAN, SRI LANKA
GP Global has been bolstering its Indian arm
MAKING PROGRESS The bunkering sector throughout the Indian sub-continent shows signs of progress, as John Rickards reports
H
opes are high for the Indian economy as China’s heads into slowdown or recession. With increased economic throughput comes greater vessel traffic and - assuming there are no hastily-implemented sales taxes seriously affecting costs - more potential for fuel sales to those vessels.
Good news for fuel suppliers, particularly if greater local refining follows demand for products; local availability has always been a consideration for suppliers.
So goes the standard theory, anyway. US-based research and consultancy group Wood Mackenzie appears to support this view. It released a forecast last year predicting that the country would account for a third of world oil demand growth by 2035, overtaking China as it rises by 3.5m barrels per day. At the same time, the country’s refining capacity is expected to only grow by 400,000 bpd by 2023, making increased oil and products imports seemingly unavoidable in the long term unless there’s a major switch to electric infrastructure. Such a switch seems unlikely at present.
Part of the drive for that degree of trade and demand could yet be the long-mooted and barely-touched International North-South Transport Corridor (INSTC). The project, not dissimilar to the China-Pakistan Economic Corridor except that the latter is actually in (expensive) development already, is a multimodal trade route megaproject linking Russia and Mumbai, via Azerbaijan and Iran, first put forward by Vladimir Putin in 2000. It was championed as a priority by the Russian government for a while, given a one-off dry-run to explore the likely choke points and areas needing the most investment a few years ago, and then quietly swept under the rug as Russia’s priorities shifted.
“We think the most likely situation is that India would need between 3.2 million and 4.7 million barrels per day of new capacity out to 2035 to remain self-sufficient in transport fuels. So we are talking about a future capacity which is 1.7 to 2.0 times the current. This is clearly an uphill task, unless domestic refiners can commit to their planned capacity additions,” Wood Mackenzie Research Director Sushant Gupta said.
However, things have begun to move again, particularly at the Indian end of the route. At the start of February, the Indian government (via the state-owned Container Corporation of India) signed an MoU with equally state-owned Russian Railways Logistics (RZD) to accelerate infrastructure development of the corridor and container traffic between the two countries: by rail through to Bandar Abbas, then ship to Mumbai.
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“Partnership with Concor opens strategic perspectives for RZD Holding, making it possible for the company to strengthen its positions on Eurasian market of multimodal logistics by developing new joint logistics products for international trade,” CEO of RZD Logistics Viacheslav Valentik said. “Turnover of goods between Russia and India is constantly growing and both countries are interested in developing modern logistics services, operating, in particular, along the North-South ITC – a promising project, which has already turned into one of the most important transport arteries of Eurasia and contributes to further collaboration between our countries.” While some Indian press reports suggest that India will be footing much of the bill, earlier measures in the same vein have seen a fifty-fifty split between Delhi and Moscow. Regardless, the announcement represents a marked increase in interest from the Indian government in the link and in wider cooperation with Russia as the country seeks to assert itself on the geopolitical stage as its economy grows and Chinese projects across southern Asia pick up steam. Russia, in turn, wants to extend economic influence elsewhere, particularly through Caspian region oil and gas exports, as a counter to Western sanctions that China with whom it is setting up a similar East-West corridor - has been unwilling to challenge. World Bunkering SUMMER 2019