New Delhi [India], December 29 : India is ending 2024 with its oil demand growth rate surpassing neighbouring China's, a trend expected to spill over to the next year, according to S&P Global Commodity Insights. India has become one of the fastest-growing fuel consumption centres.
As per the global commodities information services provider, the increasing fuel consumption is prompting India's refiners to accelerate expansion plans and widen crude sourcing.
Oil players are increasingly turning their focus to India amid expectations of its peak demand scenario coming much later than that of China's, according to the latest commentary on India's oil sector by S&P Global Commodity Insights.
"India will be the leading driver, along with Southeast Asia and other parts of South Asia, of the region's future oil demand growth," said Kang Wu, global head of macro and oil demand research at S&P Global Commodity Insights.
"In 2025, India is forecast to deliver a relatively faster growth in oil demand of 3.2 per cent, compared with China's 1.7 per cent," Wu added.
In the first 10 months of 2024, China's oil demand rose 148,000 barrels per day or 0.9 per cent year-over-year, lagging India's 180,000 barrels per day or 3.2 per cent year-over-year growth, S&P Global Commodity Insights data showed.
In that context, it is believed that India will see significant refining capacity growth in 2025.
As India's refining capacity is set to rise, refiners and policymakers are intensifying efforts to diversify the crude import basket to reduce overdependence on a few supplying countries or regions.
"Recent diplomatic visits will help bring in crude oil from Africa and Latin America, but the growth in absolute volume would depend on the overall crude market," said Abhishek Ranjan, South Asia oil research lead at S&P Global Commodity Insights.
India imports oil and gas from various geographical regions including countries from the Middle East, Africa, Europe, North America, South America and South-East Asia.
Earlier this month, in a separate report, S&P Global Commodity Insights had noted that India's latest move to broaden the scope of its exploration policy beyond petroleum and natural gas while lately abolishing a windfall tax on domestically produced crude oil will likely draw in private and foreign entities to the upstream energy sector.
Rajya Sabha recently passed a Bill seeking to amend the Oil Fields (Regulation and Development) Act of 1948 by expanding its scope to include shale oil, shale gas and coal bed methane, in addition to oil and gas.
India depends on imports for over 80 per cent of its crude oil requirement. Various steps have been taken by the government to increase the production of domestic crude oil and bring down imports.
India in recent years has undertaken a series of upstream reforms, such as greater marketing freedom to producers.
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