IEA forecasts India’s oil demand to double by 2040
The International Energy Agency (IEA) has predicted India’s oil demand would go up twice to more than 9 million barrels a day by 2040, ramping up its dependence on imports to 90 percent. In 2019 it is just around four million barrels a day.
In 2018-19 the country imported 211.6 million tonnes (approximately 1.68 billion barrels) which met 84 percent of its demand. lion barrels a day.
The agency’s latest World Energy Outlook 2019-40 projects that a third of the growth in demand will come from trucks and 25 percent from passenger cars. The petrochemical sector’s share in the demand growth is expected to be about 15 percent.
The predicted rise comes despite the government’s aggressive drive to promote renewable energy and electric vehicle. India has committed to increase renewable’s share in its energy mix to 40 percent by 2030. The IEA has acknowledged in its World Energy Outlook that India has ‘the most ambitious NDC (Nationally Determined Commitment) compared to its fair share of global emissions to limit global warming to 1.5 degree Celsius”, and is investing ‘heavily’ in renewables to balance development with environment.
The forecast rise in oil imports is expected to exert tremendous pressure on government finances, which has sharply risen over the past four years. In 2018-19 India was the third largest importer of oil importer in the world, having spent an estimated Rs 8.81 lakh crore (US$130 billion) on import of 228.6 million tonnes of crude oil, up from US$87.8 billion in the previous fiscal year and US$64 billion in 2015-16.
On the global stage, the Outlook sees the oil trade becoming increasingly centred on Asia, with China soon overtaking the European Union as the world’s largest oil importer and holding that position to 2040, despite the flattening of its oil demand in the 2030s. But this also poses a challenge as the growing concentration of trade flows to Asia increases the amount of oil passing through major global chokepoints, with implications for global oil security.
The Outlook also sees the influence of traditional players on the oil market waning, with the US output pushing down the share of OPEC countries and Russia in total oil production. This share drops to 47% in 2030, from 55% in the mid-2000s, implying that efforts to manage conditions in the oil market could face strong headwinds. Pressures on the hydrocarbon revenues of some of the world’s major producers also underline the importance of their efforts to diversify their economies.
