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India oil demand could lead to long-term trade with Europe , says WoodMac

Road improvements and traffic are among factors expected to cause a surge in oil demand.
Photographer: Sanjit Das/

A surge in oil demand in India could lead to long-term trade with Europe, according to analysts WoodMackenzie.

The country is expected to become the largest in the world for oil demand, overtaking China by 2024.

It will account for a third of global demand growth by 2035, surging to an additional 3.5million barrels per day due to an extra need for mobility, an expanding middle class and rising income levels.

However, the country’s refinery capacity addition to 2035 is only 400,000 barrels per day so supply will fail to keep up with demand growth.

In April, Saudi Aramco announced plans to build a 1.2billion barrel per day refinery around 215miles south of Mumbai.

Even with this added capacity though, it will still not be enough according to WoodMac, which could lead to gas imports from the US and Europe.

However, a long-haul trade will take time to establish “with concerns around security of supply”.

The likelihood of India producing extra refineries will depend on a range of factors such as infrastructure projects and improvements to fuel efficiency.

Research director Sushant Gupta said: “From a balanced position today, Indian public sector undertakings (PSUs) or refineries owned by national oil companies will become short on transport fuels at least until the 1.2 million b/d mega refinery, a proposed joint venture among Indian PSUs, Saudi Aramco and ADNOC, comes online.

“So how much and how soon is the new refinery capacity needed in India? This depends on two main factors. First, the pace of oil demand growth and second whether private refiners would divert their large export volumes to the domestic market.

“We think the most likely situation is that India would need between 3.2 million b/d and 4.7 million b/d of new capacity out to 2035 to remain self-sufficient in transport fuels. So we are talking about a future capacity which is 1.7 to 2.0 times the current. This is clearly an uphill task, unless domestic refiners can commit to their planned capacity additions.”

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