Globally, crude continues to be largest provider of primary energy. The overall primary energy consumption in India measured in million tonnes oil equivalent (mtoe) has grown by 5.9% CAGR to 700mtoe over 2005-15. China's overall energy consumption grew by 5.3% to reach 3014mtoe, while US and Japan's energy consumption contracted by 0.3% and 1.5% respectively. Though India has moved to the third position, this growth presents a problem of energy security, as India continues to import bulk of its crude needs. With domestic gas production is also dwindling, the gas requirements have also been met from imported re-gasified liquefied natural gas. While a growing population will lead to higher energy consumption, India needs to look at lowering its overall energy consumption by bringing in greater efficiency in the usage of end fuels, namely coal (through better boiler efficiency, scrapping old plants, greater focus on renewable energy generation and demand side energy management), petrol and diesel (higher efficiency in vehicles and higher usage of solar power electric vehicles and strengthening of public transport system).
During CY15 India's crude oil consumption grew by 8.1% to 4.2mbpd compared to a contraction of 3.7% registered by Japan. Over the last ten years (2005-2015) Japan registered a CAGR of negative 2.5% compared to 4.8% for India during the same period in crude oil consumption.
The growth in crude oil consumption in India has been driven by the strong demand for the end product in the country, with demand growing by 11.2% in FY16 with a strong growth recorded by petrol, diesel, LPG, and Naptha sales at 14.3%, 7.5%, 8.8% and 22.5% respectively. The demand for petrol has been driven by strong passenger vehicle sales, while diesel demand is driven by strong commercial vehicle sales and the rise of taxi aggregator apps which has resulted in an increase in the overall diesel run passenger vehicles on the road. Also the resumption of mining activities has pushed up demand to some extent. The consumption of LPG and Naptha was driven by the switchover by the industrial consumers from natural gas, due to the cost advantages of both these fuels compared to natural gas.
The decline in the crude consumption by Japan has been on account of a drop in Japanese population, switch to more fuel efficient cars, new cars being electric-gasoline hybrids, a slowing Japanese economy and the closure of oil fired power stations. Moreover, the demand for fuels like petrol and diesel is projected to fall by 1.3% annually up till FY20 as per Japan's Ministry of Economy, Trade and Industry. Therefore, Japan is unlikely to show a pick-up in oil consumption over the next two to three years.
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