India is on course to be the largest source of global oil demand growth by 2030, fuelled by industrial expansion and the rising emergence of a wealthier middle-class keen on mobility and tourism, the International Energy Agency said in a report on February 7.
The country will post an increase of almost 1.2 million barrels per day (mb/d), accounting for more than a third of the projected 3.2 mb/d global gains, to reach 6.6 mb/d by 2030, according to the IEA report.
Boosted by robust domestic demand, the agency noted that India's jet-kerosene (kerosene-level jet fuel) demand is poised to grow strongly, at 5.9 percent per year on average, while gasoline will grow by 0.7 percent on the average on the back of electrification efforts.
The report comes a day after Prime Minister Narendra Modi said India was heavily investing in the energy sector, emphasizing that the sector would get highest infrastructural push.
The faster pace of oil consumption reflects the emergence of a burgeoning middle class, characterised by higher living standards and changing spending habits, IEA said, adding that as consumers become wealthier, they are more inclined to purchase energy-intensive big-ticket items such as cars and domestic appliances.
India is set to maintain its position as a key exporter of transportation fuels
to markets in Asia and the Atlantic Basin, the agency noted and forecast new refining capacity to boost product supplies to global markets to 1.4 mb/d through mid-decade before edging lower to 1.2 mb/d by 2030 if the domestic demand holds steady.
So far, India's oil marketing companies (OMCs) benefitted from discounted Russian crude and significant inventory gains, offsetting the impact of unchanged retail prices of petrol and diesel. "Over the next seven years, 1 mb/d of new refinery distillation capacity will be added – more than any other country in the world outside of China," IEA added.
Oil demand strengthened by road transport
According to the report, road transport leads the oil demand growth of the world's third-largest oil importer. The agency noted car ownerships in in India is limited and low in international terms but the size of the Indian car fleet is poised to grow more than 40 percent by 2030.
Commenting on the growing popularity of electric vehicles (EVs) among Indian consumers, IEA said it estimates that electrification will displace more than 200 kb/d of oil consumption by 2030, with about 70%
coming from lower gasoline use.
About 3.5 million EVs were registered in India by the end of 2023,
according to data from the Ministry of Road Transport and Highways.
Meanwhile, IEA said that India’s total aviation activity and jet fuel requirements were roughly equal to those of France, leaving substantial potential for growth.
Indian oil production on decline
According to the report, output recorded in 2023 came at just under
700 kb/d, of which crude oil production was 600 kb/d, as compared to the peak of over 900 kb/d in 2011.
"The more supportive policy and investment regime, combined with favourable geology in recently opened and under explored areas, offers potential opportunities to bring on new supplies," IEA said.
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