March 2, 2024

India’s crude imports reached 4.6 million b/d in 2023, increasing 36 per cent in a decade | Photo: Bloomberg

India will in seven years become the largest source of global oil demand growth as its domestic production shrinks 22 per cent, said the International Energy Agency (IEA) on Wednesday.

The two trends have major implications as India is already the world’s second largest net importer, said the agency in a report released at the India Energy Week in Goa.

A dearth of new discoveries will lead to India’s domestic oil production shrinking to 540 thousand barrels per day (b/d) by 2030, down from 700 thousand b/d now, said the report. ‘India is on track to post an increase [in demand] of almost 1.2 million barrels per day (b/d), accounting for more than one-third of the projected 3.2 mb/d global gains, to reach 6.6 mb/d by 2030.”

India’s crude imports reached 4.6 million b/d in 2023, increasing 36 per cent in a decade.

India’s domestic production meets just 13 per cent of its needs. In 2023, domestic oil production averaged around 700 thousand b/d.

“Despite renewed efforts by the government to attract foreign upstream investment, domestic crude oil production is expected to see continued declines over the medium term,” the report said. Electric vehicles and advances in energy efficiency will result in the country avoiding 480 thousand b/d of extra demand in 2023-2030.

Refining capacity

India’s refining capacity will improve as oil companies are “investing heavily” to meet demand. In the next seven years, India will add 1 mb/d of new refinery distillation capacity, more than any other country after China. “Several other large projects are currently under consideration that may lift capacity beyond the 6.8 million b/d capacity that we expect so far,” the IEW report said.

The projection has a catch: Improved refining processing will increase crude oil imports to 5.8 mb/d by 2030, with major implications for India’s security of supply, said the IEA.

India must strengthen its strategic petroleum reserve (SPR) programmes and improve the oil industry’s readiness so that it can respond to supply disruptions. Based on IEA’s methodology, current crude stock holding levels equate to 66 days of net-import cover, with SPR stocks of 26 million barrels, or about seven days worth of national demand.

First Published: Feb 07 2024 | 3:03 PM IST