How will India keep up with Oil Demand?

24 June 2018

Lab Chat

With a population of 1.3 billion people, India is the second largest country on the planet. What’s more, it’s projected to overtake China in populace before 2022, resulting in a considerable strain on its energy infrastructure. The third biggest consumer of crude oil behind China and USA, India imports 82% of its oil from abroad.

The United Arab Emirates undertook the first stage of an historic project to help India achieve oil security last month, with the Abu Dhabi National Oil Company (Adnoc) shipping two million barrels to the country in May. Tasked with supplying a total of 5.86 million barrels to India, UAE will account for 8% of its overall imports.

Expanding demands

According to a report from the International Energy Agency (IEA), demand for energy sources in India is projected to skyrocket over the next two decades. Consumption of energy is expected to grow over 200% by 2040, more than any other country on the planet. Its consumption of oil in particular is also expected to swell more than anywhere else.

In order to meet this increasing demand, India has been looking to new sources all over the world. Last year, India turned to the United States, importing 1.6 million barrels of high sulphur crude and rising to 1.9 million barrels in total. Now, the Asian super country is turning to the Middle East via this new arrangement with Adnoc.

A helping hand from Abu Dhabi

New Delhi have sent a mandate to the country’s national emergency fuel store, Indian Strategic Petroleum Reserves Limited, to import 5.86 million barrels of crude oil from Adnoc and store it in Mangalore. The first shipment arrived last month and more is expected to follow in the near future.

“India looks towards the UAE as a preferred partner in further developing oil and gas infrastructure in the country,” said Dharmendra Pradhan, the country’s Minister for Petroleum and Natural Gas. “Ease of doing business, opening up of the Indian E&P sector due to policy reforms and a stable government makes India a profitable investment destination in the energy sector.”

Expanding horizons

The deal is just the first move in what promises to become a fruitful partnership between India and UAE. Adnoc has also announced plans to invest $45 billion into a refinery in the state of Maharashtra, expanding its capacity by 65% over the next seven years. Such a move would allow the complex to process 60,000 barrels a day by 2025.

“With this partnership, new market opportunities will open up for Adnoc, as we not only help to ensure the energy security of the UAE's largest trading partner, but also gain greater access to one of the fastest-growing markets for high-quality crude oil,” said Dr Sultan Ahmed Al Jaber, CEO of Adnoc. “Our increased presence in India will also catalyse demand for our own refined and petrochemical products.”

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