Piped gas demand rises as India’s LPG sales fall; petrol, diesel consumption jumps in July

Piped Gas Demand Rises as India Shifts Fuel Sources

Theindiapostdaily.com – Piped gas demand rises as India witnesses a significant transformation in its energy consumption patterns. India’s demand for piped natural gas (PNG) continued to strengthen in July as more commercial and industrial consumers shifted away from liquefied petroleum gas (LPG), contributing to a sharp decline in LPG sales. At the same time, petrol and diesel consumption at the country’s three state-owned fuel retailers recorded strong year-on-year growth, driven by delayed monsoon rains that boosted irrigation demand and sustained road transport activity.

Combined petrol sales by Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) rose 9.7 per cent to 3.45 million tonnes in July, compared with 3.14 million tonnes in the same month last year. The July petrol volume was also 15.1 per cent higher than the 2.99 million tonnes sold in July 2024 and 36.1 per cent above the level recorded in July 2023. However, on a sequential basis, petrol consumption slipped 1.1 per cent from 3.48 million tonnes in June.

Diesel Consumption Surges Amid Agricultural Needs

Diesel sales, widely regarded as a key indicator of economic activity, climbed 10.7 per cent year-on-year to 7.12 million tonnes from 6.43 million tonnes in July last year. As the country’s most-consumed fuel, diesel is extensively used in freight transportation, agricultural machinery and irrigation pumps. The delayed arrival of the monsoon led farmers to rely more heavily on diesel-powered pumps during the peak sowing season, boosting fuel demand.

Diesel consumption in July was 11.5 per cent higher than the corresponding month of 2024 and 12.7 per cent above the level recorded in July 2023. Compared with June, however, sales declined 9.2 per cent from 7.85 million tonnes. Fuel demand typically softens during the monsoon season as rainfall reduces the need for irrigation and limits road travel. This year, however, the late onset of rains resulted in increased diesel consumption for agricultural activities. The month-on-month decline was largely attributed to seasonal factors, as June generally sees stronger fuel demand due to increased holiday travel during school and college vacations.

Aviation turbine fuel (ATF) sales also posted modest growth, rising 2.9 per cent to 659,900 tonnes in July. The volume was 2.3 per cent higher than the 641,300 tonnes consumed in July 2024 and 16.5 per cent above the 566,600 tonnes recorded in July 2023. On a monthly basis, ATF sales eased 4.6 per cent from 691,700 tonnes in June.

In contrast, liquefied petroleum gas (LPG) consumption continued to weaken, falling 17.4 per cent to 2.37 million tonnes during the month. Industry officials attributed the decline primarily to a shift by some consumers from LPG to piped natural gas (PNG) following supply disruptions triggered by the West Asia crisis. LPG demand has been under pressure since the regional conflict disrupted supplies, prompting restrictions on consumption in sectors such as hotels and restaurants.

Although those curbs were lifted last month and sales recovered 8.6 per cent month-on-month to 2.18 million tonnes in June, overall consumption remained below year-earlier levels as several industrial and commercial users continued to rely on piped natural gas instead of LPG.

July LPG sales were 13.3 per cent lower than the 2.73 million tonnes recorded in July 2024 and 1.1 per cent below the 2.39 million tonnes consumed in July 2023, reflecting the continued shift in fuel usage across commercial and industrial segments.

FAQ: Understanding India’s Fuel Market Trends

Why is piped gas demand rising in India? Piped gas demand rises as India experiences a structural shift in energy consumption. Commercial and industrial consumers are increasingly choosing PNG over LPG due to supply disruptions in the Middle East and cost advantages of piped natural gas infrastructure.

What caused the decline in LPG sales? LPG sales fell 17.4 per cent in July primarily because consumers switched to piped natural gas following West Asia crisis-related supply disruptions. Previous consumption restrictions in hotels and restaurants also contributed to the decline.

How did weather affect diesel consumption? The delayed monsoon rains forced farmers to rely more heavily on diesel-powered irrigation pumps during the critical sowing season, driving diesel consumption up 10.7 per cent year-on-year to 7.12 million tonnes.

What do petrol and diesel trends indicate about the economy? Strong petrol and diesel growth suggests robust economic activity, with petrol rising 9.7 per cent and diesel climbing 10.7 per cent compared to July last year, reflecting both consumer spending and industrial/agricultural demand.