Indian oil-demand growth hits the road
Economic expansion and more drivers mean the country needs much more fuel
The International Energy Agency (IEA) expects India to drive global oil-demand growth between now and 2040, accounting for around a quarter of total consumption by then. The pace will accelerate next year, driven by surging passenger-vehicle sales and government initiatives to encourage use of cleaner cooking fuels.
The country's total crude demand will rise by 400,000 barrels a day next year, reaching 4.8m b/d, according to consultancy Energy Aspects. This year, growth is expected to come in at 300,000 b/d. India consumed 4.1m b/d in 2015. The IEA is slightly less bullish, expecting around a 300,000 b/d rise both this and next year.
Between April and August this year Indian oil-product consumption grew by 9.3% (around 6.9m tonnes), compared to the same period last year. Rising demand is likely to increase India's crude-import bill by around 5%, reaching $67bn in the 2016-2017 fiscal year-a marginal rise on the $64bn spent in 2015-16. In August, passenger-vehicle sales were up almost 17% compared with a year earlier, increasing gasoline demand by a quarter over the same time period.
Energy Aspects expects Indian gasoline demand to rise by over 9% next year, reaching an average of around 0.61m b/d. That's a 56,000 b/d rise from this year.
Diesel demand is also growing, but at a slower pace. This is mainly because of a 26% rise in sales of two-wheeled vehicles, which are usually gasoline-fueled or occasionally powered by liquefied petroleum gas (LPG). Indian diesel demand rose counter-seasonally by 170,000 b/d in August, reaching 1.49m b/d. That's a 13% rise from year-earlier levels. Next year the Energy Aspects expects Indian combined distillate demand, for diesel and gasoil, to rise by around 5%, from 2016's level, reaching an average of 1.68m b/d.
There were also particularly strong gains in LPG demand, which surged by a staggering 115,000 b/d in August, from a year earlier, the IEA said. Indian LPG demand reached an all-time high of 8.6m tonnes in 2015 and is on track to hit more than 9.3m tonnes in 2016, according to investment bank Arctic Securities. The country's LPG demand has quadrupled since 2009 and growth is likely to remain strong over the next few years.
New heights: India's oil-product demand (m b/d). Source: Energy Aspects