India has surpassed China to become the largest contributor to incremental oil consumption in 2016, accounting for 21.8 per cent of it, according to BP Statistics. In addition, industrial fuels contributed more to this growth than vehicular fuels, reflecting the shift to more efficient pet coke and away from coal and improving economic activity.
India’s oil consumption grew 8.3 per cent to 212.7 million tonnes in 2016 compared with global growth of 1.5 per cent, making it the third-largest oil consuming nation in the world after overtaking Japan in the previous year, accounting for nearly 4.8 per cent of total consumption.
Between 2005 and 2015, India’s oil consumption grew 4.9 per cent while global growth was 1 per cent. “India could very well be the biggest contributor of incremental oil demand growth for the next few years, led by its strong economic growth”, said Vandana Hari of Vandainsight in Singapore.
The composition of Indian growth is unique as it’s due to 8-22 per cent growth in liquefied petroleum gas (LPG), aviation turbine fuel (ATF), petroleum coke and fuel oil unlike gasoline and diesel being key growth drivers in other countries.
In the long term, the increasing focus on renewable energy may play a critical role in deciding India’s dependence on conventional fuel. “Linearity with GDP growth and oil consumption may not continue given the Indian government’s focus on electric vehicles,” said Hari.