India expects to boost its refining capacity by around one-fifth to have 6.19 million barrels per day (bpd) of crude processing capacity by 2028, according to its junior petroleum minister.
The rise in refining capacity will be needed to meet growing domestic fuel demand, Reuters quoted on Monday junior petroleum minister Suresh Gopi as saying in a written reply to lawmakers. Separately, Gopi said that the country’s strategic petroleum reserve can cover India’s crude oil consumption for 9.5 days.
India, the world’s third-largest crude oil importer, is expected to replace China in the coming years to become the biggest driver of global oil demand growth.
India’s economy has grown at a robust pace over the past year. Meanwhile, growth in other major economies—including China—has sputtered. High GDP growth, industrialization, urbanization, and a rising number of middle class in India are all expected to shift the key oil demand growth driver from China onto India.
Therefore, before the end of this decade, India is set to become the single biggest driver of global oil demand, replacing China, analysts and forecasters say.
India will be the driver of oil demand growth through 2045, expected to add 6.6 million bpd to oil demand over the forecast period, OPEC said in its latest annual outlook.
India’s fuel demand rose by nearly 5% in the 2023/2024 fiscal year ended March 2024.
Going forward, the relationship between GDP growth and oil demand in India will continue to remain strong and positive over the next decade, the Economist Intelligence Unit (EIU) said in an update earlier this year.
“A growing population, higher purchasing powers and rapid economic growth will result in greater penetration of passenger cars, freight transportation and air-travel,” EIU said.
The analysts at the EIU expect China’s oil consumption to peak by 2030, due to “decelerating economic growth and rapid electrification of its transportation sector.”
By Charles Kennedy for Oilprice.com
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