India projected to drive global oil demand growth: International Energy Agency report
Goa: In a groundbreaking revelation, the International Energy Agency (IEA) unveiled its latest report, “Indian Oil Market Outlook to 2030,” during the second edition of India Energy Week 2024 in Goa.
The report forecasts that India will emerge as the largest source of global oil demand growth between now and 2030, signaling a significant shift in the dynamics of the global oil market.
According to the IEA report, India’s pivotal role in driving global oil demand growth is underpinned by various factors, including urbanisation, industrialisation, and the burgeoning prosperity of the middle class.
The country’s robust economic growth, coupled with demographic trends and rising aspirations for mobility and tourism, are expected to fuel the expansion of oil demand in India over the next decade.
The report projects that India’s oil demand is set to increase by almost 1.2 million barrels per day (mb/d), accounting for more than one-third of the projected 3.2 mb/d global gains by 2030.
This surge in demand will propel India’s total oil consumption to 6.6 mb/d by 2030, solidifying its position as a key player in the global oil market.
Diesel/gasoil is identified as the primary driver of India’s oil demand growth, accounting for nearly half of the nation’s demand increase and more than one-sixth of total global oil demand growth through 2030.
Additionally, jet-kerosene demand is poised for strong growth, albeit from a relatively low base, while gasoline demand will witness moderate growth due to the electrification of India’s vehicle fleet.
The report also highlights the significant role of liquefied petroleum gas (LPG) in India’s oil demand growth, particularly driven by investments in the petrochemical industry and clean cooking initiatives.
India’s remarkable progress in expanding access to clean cooking programs, particularly in rural areas, has resulted in a nearly three-fold increase in LPG imports over the past decade.
The government’s continued efforts in this direction are expected to sustain demand growth for LPG through 2030.
In response to the escalating oil demand, Indian oil companies are ramping up investments in the refining sector to meet domestic consumption needs.
The report reveals that over the next seven years, India is poised to add 1 mb/d of new refinery distillation capacity, surpassing any other country in the world outside of China.
Moreover, several large-scale refinery projects are being considered, potentially further augmenting India’s refining capacity.
Furthermore, the report emphasizes the role of electric vehicles (EVs) and energy efficiency improvements in mitigating oil demand growth.
It estimates that these measures will collectively avoid 480 kb/d of additional oil demand between 2023 and 2030.
Additionally, biofuels are expected to play a crucial role in India’s decarbonization efforts, with the country advancing its ethanol blending targets to accelerate the adoption of renewable fuels.
The release of the IEA report comes amidst the ongoing India Energy Week 2024, a premier energy exhibition and conference aimed at catalyzing India’s energy transition goals.
With participation from global energy stakeholders, policymakers, and industry leaders, the event serves as a platform to chart the future trajectory of India’s energy landscape.
