Singapore: India’s crude oil demand is forecast to grow to 500 million tonnes per year by 2040, but persistent increases in oil prices might act as a dampener for the rate of growth, Partha Ghosh, an executive director at Indian Oil Corp said on Tuesday.
That would be equivalent to around 10 million barrels per day (bpd), up from about 4.7 million bpd in 2017.
Globally oil demand will increase by 15.8 million bpd from now until 2040, Ghosh said during the Asia Pacific Petroleum Conference (APPEC) in Singapore. India’s growth of 5.9 million bpd will make up about 24% of the overall gain, he said.
India’s refining capacity would increase to about 439 million tonnes per year by the financial year of 2030 as new and existing refineries continue enhancing their infrastructure, while domestic demand is forecast to increase to 356 million tonnes per year over the same period, Ghosh said.
Higher refining capacity will mean India could export more refined oil products to countries in the region.
“In the future, say about five to seven years down the line, when more refineries with bigger capacities come up, better (export) infrastructure will come along with that,” Ghosh, the executive director for optimisation at Indian Oil Corp, the country’s biggest refiner, said on the sidelines the conference.
“Then, it’ll be possible, even if the domestic demand does not grow because of high prices, refineries will be competitive enough to actually supply products to the entire region, be it East Africa or Asia.”
India’s strong economic growth and the demographic advantage of having a pool of young people will remain key drivers in its energy demand growth.
The rate of oil demand growth, however, will slow down by 2024 to 2025.
“While alternatives and energy efficiency is expected to reduce oil demand, the biggest dampening factor will come from a sustained increase in oil prices,” Ghosh said.
“India’s economy is very sensitive to oil prices. It’s said that a $10 per barrel increase reduces India’s GDP by 0.2 to 0.3 %.”
India is a major buyer of Iranian oil and is seeking a waiver on the sanctions the US is set to impose on the country in November.
However, Indian Oil will be able to manage even if it does not gain an exemption, Ghosh said.
“We’ll have to increase buying from other resources…. Indian refineries are quite versatile. They’re not dependent on any particular type of crude. So, it’s possible to manage with alternative sources,” he said.