India’s oil products demand to grow by an average of around 250,000 barrels per day every year over the next decade: S&P Global Platts

S&P Global Platts Analytics expects India’s oil products demand to grow by an average of around 250,000 barrels per day (bpd) every year over the next decade, supported by population growth and a steady rise in disposable personal incomes.

The International Energy Agency recently said that India could witness the biggest increase in energy demand in the world over the next 20 years, with the potential for oil consumption rising as high as 4 million bpd to 8.7 million bpd by 2040. The Agency also said that a stronger push for electrification, efficiency and fuel switching could limit oil demand growth to under 1 million b/d over the same period.

Indian policy makers have said that the country’s oil demand is expected to double by 2040 and it will look to boost refining capacity from the current 250 million mt/year to 450 million mt/year.

The sharp growth in energy demand anticipated over the next decade will make it imperative for India to ensure that oil and coal supplies grow accordingly, as renewable energy on its own may not be able to cater to the entire incremental demand, creating challenges in lowering emissions at the desired pace.

Petroleum liquids account for 25% of India’s energy basket, and coal as much as 45%. “Global energy outlooks by agencies across the board, post and prior to the pandemic have pointed out that India would be the leading energy and oil demand growth driver over the long term. And none of these have been changed by the pandemic. There is a need to bridge the energy access deficit in the country,” Indian Oil Corp. chairman Shrikant Madhav Vaidya told Platts recently.

A key challenge for India is the fact that 70% of its CO2 emissions come from burning coal, predominantly in the power sector. Platts Analytics Global Integrated Energy model expects India’s annual electricity demand growth to average 4.4% over 2020-2030. The country’s coal power capacity, presently at 203 GW, is projected to grow to 220-230 GW by 2025 or sooner with the commissioning of under-construction plants being offset by end-of-life closures. The growth in coal consumption is meant to meet rising demands from industries, a per capita rise in energy consumption and increased connectivity of villages to the grid, industry sources said.

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