 "India will be world's biggest oil demand growth driver through 2030: IEA")
In the next seven years, India is poised to become the primary source of global oil demand growth, even as its domestic production is projected to decrease by 22 per cent, according to the latest projections by the International Energy Agency (IEA).
These divergent trends are anticipated to have major implications for the country, with India already emerging as the second-largest importer of crude globally. This was highlighted by IEA officials at India Energy Week 2024.
While growth in developed economies and China is initially expected to slow and then reverse, a scarcity of new discoveries in recent years will contribute to India's domestic oil production diminishing to 540 thousand barrels per day (b/d) by 2030, down from 700 thousand b/d currently, as stated in an IEW report released here. “India is on track to register an increase of almost 1.2 million b/d, accounting for more than one-third of the projected 3.2 mb/d global gains, reaching 6.6 mb/d by 2030,” the report noted. As of 2023, India’s crude imports have reached 4.6 million b/d, marking a 36 per cent increase over a decade.
Despite being a relatively small oil producer with limited potential for near-term growth, India’s domestic production accounted for just 13 per cent of the country’s supply needs in 2023, with domestic oil production averaging around 700 thousand b/d.
“Despite renewed efforts by the government to attract foreign upstream investment, domestic crude oil production is anticipated to continue its decline over the medium term,” the report added.
However, the adoption of new electric vehicles and improvements in energy efficiency are expected to prevent 480 thousand b/d of additional demand in the 2023-2030 period.
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Refining capacity
A significant development for India is the increase in refining capacity, as domestic oil companies are heavily investing to accommodate the surge in domestic oil demand.
Over the next seven years, an additional 1 mb/d of new refinery distillation capacity is anticipated – surpassing any other country outside of China. “Several other major projects are currently under review, which may increase capacity beyond the 6.8 million b/d expected so far,” stated the IEW report.
However, this expansion in refining capacity is set to further increase crude oil imports to 5.8 mb/d by 2030, posing significant implications for India’s supply security, as noted by the IEA.
The agency also emphasised the necessity for India to enhance its capacity to respond to potential oil supply disruptions by strengthening its Strategic Petroleum Reserve (SPR) programmes and improving oil industry preparedness.
According to IEA, current crude stock holding levels are equivalent to 66 days of net-import cover, with SPR stocks of 26 million barrels.
What the report says…
- 22% drop in domestic production
- 540,000 bpd production limit, down from 700,000 bpd, at present
- 36% increase in crude imports in a decade
- 13% of domestic production demand met
- 480,000 bpd will be avoided due to EV influx
- 1 mn bpd to be new refinery distillation capacity