Will India Become the Epicentre of Global Oil Demand Over the Next Decade?
India is poised to become the largest contributor to global oil demand growth over the next decade, driven primarily by rising petrochemical consumption, GDP growth, and urbanization. While global oil demand is expected to peak by 2030, India's consumption will continue its robust expansion, making it a critical market. The country faces feedstock constraints but is investing heavily in new capacities and integrated complexes, supported by policy. Green hydrogen is emerging as a strategic game-changer for decarbonization and energy security, though its large-scale adoption requires significant investment and policy support.
The article asserts that India is set to become the epicentre of global oil demand growth in the coming decade, contrasting with a global trend of stagnating traditional fuel demand. This surge in India's oil consumption is primarily attributed to the robust growth in its petrochemical sector, fueled by increasing GDP, rapid urbanization, and significantly low per capita polymer consumption compared to global peers. Petrochemicals, used in plastics, synthetic materials, and construction, are identified as the principal drivers of oil and gas demand growth, especially in emerging markets like India.Despite this strong demand, India faces structural challenges, including a heavy reliance on naphtha and imported LPG for feedstock, exposing it to global price volatility. To address this, the country is focusing on shifting naphtha from fuel use to petrochemical feedstock and investing in new capacities and higher integration between refining and chemical complexes. Government policies play a crucial role, with strategic investments in PCPIRs, brownfield expansions by national oil companies, and favorable FDI rules.Moreover, the article highlights green hydrogen as a potential strategic game-changer for India. The National Green Hydrogen Mission aims to decarbonize hard-to-abate sectors like steel and fertilizers, reduce energy security risks, and position India as a potential exporter of clean energy. While global oil demand is projected to peak around 2030, India's demand is expected to grow strongly beyond this period, reaching 7.4 to 8 mbpd by 2035. However, this growth could be tempered by the adoption of cleaner fuels, electric vehicles, and renewables, demonstrating India's pragmatic yet gradual energy transition approach focused on security, economic growth, and affordability.
