By 2024, India will surpass China to become the world's largest oil demand growth center

Global energy consultancy Wood Mackenzie said in a report that India will surpass China as the world's largest center for oil demand growth by 2024
.

By 2024, India will surpass China to become the world's largest oil demand growth center

"At a time when the world is focused on peak demand for oil, India seems to be bucking the trend
.
From 2017 to 2035, India's oil demand is expected to increase by 3.
5 million b/d, accounting for one-third
of global oil demand growth.
Demand in India is driven by rising income levels, an expanding middle class and a growing demand for mobility
, the report said.

However, India's refining capacity will not be able to keep pace with demand growth
, the report added.

"From the current state of equilibrium, refineries owned by Indian state-owned enterprises (PSUs) or state-owned oil companies will lack transportation fuels, at least until
the large-scale project with a capacity of 1.
2 million b/d jointly built by the Indian PSU, Saudi Aramco and Abu Dhabi National Oil comes online.
So how much new refinery capacity does India need? This depends on two main factors: first, the rate at which oil demand grows, and second, whether private refineries will divert large amounts of their exports to the domestic market
.
Sushant Gupta, head of research at Wood Mackenzie, noted
.

Gupta added that India needs to add between 3.
2 million and 4.
7 million barrels per day by 2035 to maintain self-sufficient transport fuel
.
The report notes that uncertainty about oil demand will be the biggest risk to new refinery projects in India, while factors such as GDP growth, road infrastructure development, electrification of the transport sector and improved fuel efficiency could have a very different impact
on oil demand.

"For example, a high-demand scenario and no increase in private refinery supply could lead to a significant undercapacity, while a low-demand scenario coupled with a shift of private refiners to domestic supply would lead to overcapacity
.
Another challenge is choosing the right refinery configuration
.
India's new capacity needs to focus on boosting gasoline production as the gasoline-to-diesel demand ratio is expected to rise
.
Current refinery output is highly dependent on diesel
.
The report said
.

In the long run, the world will face a global gasoline glut, and Indian refiners will have to seriously consider their new capacity project strategy, as a high gasoline production allocation could lead to lower standard returns for investors and could affect the pace
of future refinery capacity additions, the report said.

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