The modelling exercise undertaken by the Petroleum Planning & Analysis Cell (PPAC), an agency under the union ministry of petroleum & natural gas will also help the world’s third largest oil buyer plan for its future refining capacity, said one of the people cited above.

India is a key Asian refining hub, with an installed capacity of about 254 million tonnes per annum (mtpa). With the fourth largest cumulative refining capacity in the world, the government plans to add around 56.6 mtpa of crude oil refining capacity till 2030, including both brownfield and greenfield expansion.

The exercise will give policymakers an idea of when India is likely hit the highest anticipated level of consumption, post which the yearly consumption is expected to plateau out and then decline.

“PPAC is working on it. The government’s approval would be required for releasing the estimates,” said the person mentioned above.

The person said peak oil in India is generally expected to be reached about five to six years after the global consumption peak is hit.

“It would depend on greater penetration of EVs. Oil consumption will continue to grow till EV adoption does not gain pace,” said the other person.

Queries mailed to the union ministry of petroleum and natural gas remained unanswered at press time.

The International Energy Agency last year said global oil consumption would reach its peak by 2030. The IEA had said the peak may be followed by “an undulating plateau lasting for many years”.

The exercise comes at a time of rising concern over climate change and global efforts to curb the use of petroleum products. Phasing out and eventually ending oil consumption is key to the global target of restricting global warming to 1.5 degrees Celsius above the pre-industrial average by 2030 and achieving net zero carbon emission by 2050.

India has set an ambitious net zero target of 2070. Even as India has its own initiatives to support the shift towards electric mobility and also bring in transition in industries, demand for petroleum products in the country is projected to remain robust in the coming years.

According to the IEA, India will surpass China as the largest driver of global oil consumption by 2027. 

“Underpinned by strong economic and demographic growth, the country is on track to post an increase in oil demand of almost 1.2 mb/d over the forecast period, accounting for more than one-third of the projected 3.2 mb/d global gains,” said its ‘India Oil Market Outlook 2023’ report.

The petroleum product demand, that includes petrol, diesel, liquefied petroleum gas (LPG), aviation turbine fuel (ATF) and naptha among others, touched a high of 222.3 million tonnes in FY23, and is expected to hit a new record of 232.56 mt this fiscal (FY24). According to estimates by the PPAC, in FY25, it will touch a new high of 238.95 mt.

A timeline from the Indian government would be a major indicator for global oil producers on the likely market scenario that they need to cater to in the coming years as India is the third largest buyer of oil, after the US and China. 

Further, the timeline would also be significant as India has been pressing the Organization of the Petroleum Exporting Countries (Opec) for taking into consideration the requirements of oil- consuming nations as it continues with its production cuts.

In contrast to IEA’s estimates, OPEC has been optimistic about growth in oil demand. Its World Oil Outlook released October last year said that global oil demand will expand annually by about 3 million barrels per day of oil equivalent until it reaches 116 million bpd by 2045, driven by population growth, particularly in the Middle East, Africa and Asia.

Prashant Vasisht, Senior Vice President and Co-Head, Corporate Ratings, ICRA said: “India is a large consumer accounting for about 4-5% of the global consumption. Accordingly, India along with China and other large economies would impact overall demand and demand growth and Opec would be watching out for demand growth of the country.”

“However even considering global peak oil demand there is still a long way to go, so capacity and production increases by Opec are being done. Additionally countries like Saudi Arabia are also looking at oil-to-chemicals projects to ensure crude oil demand.”

India imports about 85% of its energy imports. In FY23, total oil and petroleum product imports stood at 277.3 million tonnes and so far this fiscal (April-January), the imports stand at 256.4 million tonnes.

Noting that Opec estimates India’s oil demand to more than double by 2045, Sourav Mitra, senior practice leader and director – consulting, CRISIL Market Intelligence and Analytics, said that a large portion of India’s import is currently dependent on Opec.

“As such, India’s growth trajectory and late oil demand peak does carry the potential to incentivize production for these suppliers. Indian government, however, has constantly acknowledged the sovereignty of oil-producing nations to control pumping and exports, and have indicated diversifying its crude sources. These could potentially include nations like Guyana, Suriname and Namibia – all of which will be provided a boost to enhance production to supply to a positive-growth Indian market,” Mitra said.

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Published: 26 Mar 2024, 06:44 PM IST