India’s thirst for oil will rise more than any other country through 2030: IEA

NEW DELHI: India’s thirst for oil will rise increase than any other country at a million barrels per day (bpd) over the next five years, making it the main driver of global demand growth, the International Energy Agency said in its forecast to 2030 released on Tuesday.India currently consumes under 5 million bpd, 85% of which is met through imports. Higher dependence will weigh on the country’s energy security at a time when, as the IEA report says, the global oil market is in turmoil due to regional military conflicts, trade tensions and resetting of supply trajectory following the OPEC+ decision to unwind production curbs.“India’s stellar expansionary trajectory will continue unabated, with GDP growth averaging 6.4% over the forecast period.

This is the highest by far of any major economy,” says the report. It identifies “structural advantages such as an expanding middle class with growing spending power and young population dynamics” as the main propellers of oil demand.“Additionally, improved infrastructure will help to boost mobility and car ownership. Oil demand will grow at a relatively fast rate as changing spending patterns, urbanisation and industrialisation make India’s economy more energy intensive.”

For the record, the report gives a rider saying, “With conflicts in the Middle East region at risk of intensifying and trade negotiations ongoing, uncertainties surrounding our forecasts are substantial”.Aware of the situation, India has charted a multi-pronged course to reduce import dependence with focus on raising domestic production, tapping unconventional sources such as biogas and ethanol, speedy electrification of the mobility sector combined with a thrust on expanding renewable energy capacity.Transport fuels will lead the oil demand growth, says the report, describing it as a “global anomaly” in an oblique reference to expanding fleet of electric vehicles (EVs). Jet fuel demand will rise the fastest, “benefitting the most from population growth of 5% between 2025 and 2030 and rapidly expanding middle class keen to spend on luxury goods and services, including foreign travel.”Citing the current low car ownership, the report projects an upside for expansion in petrol demand.

“Our models assume a 40% increase in the size of the car fleet by 2030 – a rate of expansion that comfortably outstrips the impact of efficiencies and EVs, with growth in the latter category mainly in two- and three-wheelers”.For diesel, which accounts for a third of India’s total oil use, the report projects an aggregate gain of 380 kilo-barrels per day over the forecast period, “buoyed by secular trends such as urbanisation, industrialisation and the building out of the country’s infrastructure.”Demand for industrial-linked products will only marginally lag the growth rate for retail-oriented transport fuels, with annual increases in gasoil, naphtha and LPG/ethane of 3.3%, 2.0% and 2.5%, respectively. The report says government schemes such as ‘Ujjwala’ for expanding access to clean cooking fuel will boost LPG demand.