India’s oil demand expected to rise to 8.7 million barrels per day (mb/d) by 2040 from 5 mb/d currently. Share of oil in India’s energy mix to reduce from 29% to 24% but oil will remain dominant fuel. Transportation and petrochemical sectors to drive growth
Demand Growth Drivers
As per IEA projections, India’s oil demand growth is estimated at 3.7% per year on average during 2019-2040 period. Absolute increase in oil demand from 2018-2040 forecast at 3.7 mb/d, the largest for any country. Current oil demand stands at 4.9 mb/d (2022). Expected to reach 5.7 mb/d by 2030 and 8.7 mb/d by 2040.
- Economic and Population Growth
- GDP growth rate projected at 6-7% per year over next 2 decades
- Working age population to increase by 150 million people by 2030
- Rising incomes and large young population to spur transport and petrochemical demand
- Transport Sector
- Vehicle sales growing at 12% per year recently, expected to moderate but remain robust
- Commercial vehicles and air travel leading growth
- Two-wheelers and cars to account for majority of vehicles on roads
- Petrochemicals
- Domestic demand growing faster than GDP
- Make in India, housing, infrastructure needs driving polymer demand
- Exports of petro chemical products also rising quickly
Domestic Production Outlook
Crude Oil
- Output continues to fall as old fields deplete
- Some new discoveries being developed e.g. KG-D6 block
- But production still seen declining from current 700,000 b/d to around 500,000 b/d by 2030
Refining Capacity
India currently 5th largest oil refiner globally with capacity of around 5 mb/d. Has high complexity allowing processing of cheaper heavy crude.
Domestic demand rising faster than refining capacity. But investments lined up will boost capacity well ahead of demand.
- Currently 5th largest refiner globally with capacity of 5 mb/d
- Additional 3 mb/d capacity coming up at coastal locations
- 2030 capacity projected at over 8 mb/d
- Exports of refined products, especially diesel, to rise substantially.
Import Dependency
With demand rising much faster than production, India’s import dependence has shot up from 74% in 2010 to 85% in 2019 per BP statistical review. As local crude output falls further, import dependency could rise to as high as 95% based on IEA projections.
- Net imports rising rapidly as demand outpaces production
- From 80% import dependency in 2015 to 90% in 2020
- Could rise to as high as 95% by 2030
- Vulnerability to supply disruptions and price shocks to increase
Top exporters to India
- Iraq
- Saudi Arabia
- UAE
- Kuwait
- Nigeria
- USA and shale oil growing in importance after removal of export restrictions in Dec 2015
Environmental Sustainability
India’s per capita emissions now only 40% of global average as per World Bank data. But emissions will rise as living standards improve with industrialization. Solar to grow from 3% of energy mix in 2015 to projected 11% by 2030 (IEA estimates). Wind projected at 6% share by 2030, up from 4% currently. Natural gas including CNG adoption in transport sector significant earlier but slowed recently with higher prices. Policy emphasis now on EVs for improved urban air quality and energy security.
- Per capita emissions very low vs global average
- But set to rise with industrialization and improving living standards
- Renewables contribution rising but from low base
- National solar and wind capacity targets raised repeatedly
- CNG adoption in transport significant but slowing
- Focus shifting to EVs but mass adoption after 2030
- Fuel economy policies being implemented
- Tax breaks for hybrid and electric cars
- Mandatory fuel efficiency labelling from 2023
Outlook Risks
Upside Risks
- Higher than expected economic and vehicle sales growth
Downside Risks
- Weaker economic growth
- Oversupply leading to lower oil prices
- Accelerated adoption of electric mobility
| Year | Parameter | Unit |
| 2015 | Total oil demand | Million tones |
| 2015 | As % of energy mix | Percent |
| 2030F | Total oil demand | Million tones |
| 2030F | As % of energy mix | Percent |