India will be forced to start importing oil products if it does not find a solution to a looming refining capacity shortage, the director for refineries of the India Oil Corporation said.
The local refineries are straining to satisfy the ever-growing fuel demand of Asia’s second-largest economy even though their current capacity of 4.62 million barrels per day is planned to be raised to over 6 million bpd by 2030.
Even so, Sanjiv Singh said, this may not be enough to meet the future demand for oil products, Oil Price reported. Over the last financial year, oil product consumption in India rose by 11%, reaching 3.67 million bpd. Refineries’ output, at the same time, has grown by 4.5%.
The country, which is still a net oil product exporter, has been consuming more and more of its oil product output domestically in the last few years. In the 2015 fiscal year, India exported 32.3 million tons of refined products, compared with 42.6 million tons a year earlier. This is a stable trend, according to Singh.
India recorded GDP growth of 7.9% in the first three months of 2016, exceeding China (6.7%), even though the figure fell short of analyst expectations for 7.5%, according to a Reuters poll. The growth rate for fiscal 2015/16, which ended in March, was 7.6%, which compares with 7.2% for fiscal 2014/15.
India is pegged as the leading driver of global oil demand growth in the medium term, thanks to Prime Minister Modi’s initiative ''Make in India'', aimed at turning the country into a new global manufacturing hub at a time when China is slowly shifting away from manufacturing and into services. This transformation will require huge amounts of fuel, hence the spiking demand that refineries are already finding hard to satisfy.
