NEW DELHI: India will not be able to reach its target to reduce its oil imports dependence by 10 percent by 2022, S&P Global Platts analysts reckon.
India’s Prime Minister Narendra Modi has set a target to cut import dependence by 10 percent by 2022, amid increasing oil consumption. The imports reduction is expected to be achieved by boosting domestic oil production and increasing the share of natural gas and other energy sources in the energy mix.
Speaking to India’s BusinessLine, Sambit Mohanty, Senior Editor of S&P Global Platts, said:
“We don’t agree with the fact that India can sharply reduce [crude oil] imports. We still import more than 80 per cent of our crude oil needs. Given the fact that oil product demand is growing at nearly 8 to 9 per cent, we cannot see how we can substantially reduce imports of the feedstock.”
Mohanty is the lead author of an S&P Global Platts report on India published on Thursday that sees the country’s crude oil demand rising by just over 7 percent this year and at a compound average annual growth (CAGR) rate of 5 percent between 2015-2020, to 5.2 million bpd. Oil products demand is seen growing by 7-9 percent per year over the next 5-10 years.
“Security of energy supply will remain a critical issue,” the report says.
Platts believes that there is little prospect that domestic output of many commodities “will keep pace with demand growth. Import gaps are a certainty.”
India’s demand potential has prompted large international companies, including Shell, BP, Rosneft, Trafigura, and Saudi Aramco, to “either consider expansion or explore joint ventures opportunities to establish presence in the country,” Platts said in the report.
India’s oil consumption growth reached a record-level 11 percent last year as growing urban population with higher income fueled greater use of cars, trucks, and motorbikes. Demand for gasoline jumped 12 percent, and diesel demand grew 5.6 percent.