India’s oil demand to more than double to 11 million barrels by 2045: OPEC

India’s oil demand, which was battered by the COVID-19 pandemic, is expected to reach its pre-pandemic levels by 4.9 million barrels a day in 2021 before more than doubling to 11 million barrels by 2045, says OPEC. However, these projections are at odds with Prime Minister Narendra Modi’s aim to make India energy independent in the coming decades.

OPEC in its World Oil Outlook 2021 projects significant demand to come from the road transportation and aviation sectors. The transportation sector is forecast to be the major contributor to future incremental demand, adding 13 mb/d between 2020 and 2045. More than 90% of this increase is projected to come from road transportation and aviation sectors, each contributing around 6 mb/d, though a large part of these increases is due to the sharp demand decline in these two sectors in 2020.

It expects oil to make up 28.6% of India’s primary energy mix in 2045, making an increase of more than 3% compared to 2020, boosted by an expected addition of 200 million passenger cars and spelling a tepid pace for adoption of electric mobility. The rising oil demand will push up India’s dependence on imports in the face of stagnating oil and gas production.

Moreover, this will directly impact consumers by pushing up fuel prices when oil flares up such as in recent weeks when petrol and diesel prices have begun to crawl up as crude hit $80 a barrel in a volatile market. The report notes that the government focus on cleaner fuels and renewables will, however, reduce the share of coal in primary energy demand from 43.5% to 36.3% in 2045 but it will still be the top energy provider among all sources in 2045.

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OPEC says developments during the past year have made it clear that there are a number of uncertainties related to the main factors affecting future oil demand. In respect to the global economy, the risk for oil demand over the medium-term is skewed to the downside and primarily related to a potentially extended pandemic situation. Faster implementation of more stringent policies and penetration of energy efficient technologies could reduce future oil demand by more than 8 mb/d in 2045, compared to the Reference Case. Oil demand in the road transportation sector alone could be reduced by some 3 mb/d in 2045.