An International Energy Agency report has India exceeding China in future energy appetite

Booming India is set to overtake China as the largest source of energy demand growth but will continue to be far behind its economic competitor in car ownership. These were two of the findings of the first India-dedicated International Energy Agency Indian Oil Market 2030 report, launched yesterday in the Executive Sessions Theatre. It revealed a series of outlooks that confirmed India’s energy progress and possible journey to 2030.

Keisuke Sadamori, Director for Energy Markets & Security, IEA, said: “This report shows the role India plays in the supplying and balancing of global markets due to its refining sector and also India’s growing strength in biofuels. “Indian oil companies will add almost 1 million barrels per day of refining capacity over this 2022 to 2030 period…more than any other country in the world outside of China.

“New refining capacity will exceed domestic oil demand growth in the near term, so that results in additional products supplied to the global markets.” He added: “This shows that India’s oil demand will grow at a rapid pace…despite increased efforts to accelerate the clean energy transition. “And India, the fastest growing and most populous economy in the world, is set to overtake China in terms of annual oil demand growth.”

Running through the findings, Toril Bosoni, IEA’s Head of Markets, said that growth would come primarily from gasoil, counting for more than 50% of the gains and roughly 20% of global oil demand growth up to 2030. The over-riding line was that India’s role in global oil markets will rapidly increase towards 2030. The report found India remaining heavily dependent on crude oil and LNG imports with rising import dependency having major implications for the country’s security of supply. India is already the world’s second largest net importer of crude. It said Indian’s domestic crude oil production was expected to continue to decline despite efforts to boost investments - and that biofuels were key to accelerating energy transition decarbonisation of the transport sector.

Bosoni said, however: “Indian energy companies are targeting additional refining capacity that would ensure that India meets not only its domestic oil demand needs, but also maintain its positions as a key exporter of refined fuels. “Indian oil demand we project to increase by 1.2 million bpd over 2023 to 2030, to reach 6.6mbpd by the end of the decade.

“Industrial expansion means gasoil/diesel will be the strongest form of fuel… gasoil/diesel has a much higher share of all demand than in other countries.” Rising electric vehicle uptake, mostly for two or three wheelers, increased biofuels, and significant increases in efficiency would eat into this segment of oil demand by about 200,000 bpd, boosting India’s decarbonisation pathway. Energy efficiency, a pillar of the country’s strategy, was bringing vehicles 80% more efficient to market “having a significant impact and reducing demand growth”, although car ownership remains low compared with other nations - China last year had seven times as many vehicles on the road.

Bosoni said strong ethanol growth was accelerating transport decarbonisation while middle-distillate exports were set to peak mid-decade, but then slow down to 2030. Exports of light distillates should be sustained through to the decade end, however. “We also see stronger growth in LPG as petrochemical investments continue,” she added. “And further gains in clean cooking initiatives, set in motion by the government, will further boost LPG growth.”

P. Manoj Kumar, Director General, Petroleum Planning & Analysis Cell, Minister of Petroleum & Natural Gas, hailed the IEA report for focusing on India, which had previously been included more generically under “Asia”, unlike China. “In the last few years India has gained importance and is now everywhere in separates lines in reports,” he said. “What is more important is the IEA decided to release this special report on the Indian oil market, I believe this is the first time a country-specific report is coming…such big importance given to India.”