With India playing an increasingly important role in the global oil market, concerns are growing that its refining capacity may exceed demand. This could force it to export surplus oil products and dampen an already soft global market. India is expected to overtake Japan as the world’s third-thirstiest gulper of oil. And there seems to be significant potential for demand to surge, considering there are still only 21 passenger cars per 1,000 people in the country. In China, the ratio is 87-to-1,000.
Many in the oil industry expect the world’s second-most-populous nation to drive the global oil demand from 2020. India’s crude imports have largely continued to grow in recent years. According to the BP Statistical Review of World Energy, the country in 2015 imported 195.1 million tons, up roughly 60% from 2008.
Demand is estimated to grow about 4% annually until 2020, when the country is expected to need 900,000 barrels per day more than it did in 2014. That would represent 15% of the 6.1 million barrels per day in global growth during the same period, according to OPEC’s medium-term estimates in 2015. A sign of promise in India’s oil market came on Oct. 15, when a group of companies including Russia’s state-owned Rosneft announced a plan to acquire Essar Oil, a major Indian oil refiner and retailer.
The expected demand growth is also prompting Indian refiners to expand capacity. State-owned Indian Oil has announced a plan to double its refining capacity in the next 14 years, according to Ito Mashino of Japan Oil, Gas and Metals National Corp., or Jogmec. “Many oil producers have announced expansion strategies, such as bolstering and updating equipment on the back of the growing demand for oil products,” said Mashino at the Japanese government affiliated corporation.
Hindustan Petroleum and Bharat Petroleum also plan to build large refineries, sources say. “Refining margins remain wide now that crude oil prices have fallen,” Mashino said, referring to the difference between the prices of oil products and the cost of the crude they are made from. “Refiners are having a field day.” Sylvester Williams Womens JerseyShare This