India’s oil demand growth is set to overtake China by mid-2020s: IEA

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News:The International Energy Agency(IEA) has released the India’s Energy Policy Report.

Facts:

About the report:

  • The report has been prepared by the International Energy Agency(IEA) in collaboration with NITI Aayog. 
  • The report aims to assist the government in meeting its energy policy objectives by setting out a range of recommendations in each area with a focus on energy system transformation, energy security and energy affordability. 

Key takeaways from the report:

Global Oil Consumption:

  • India ranks third in terms of global oil consumption after China and the United States.It ships over 80% of its oil needs of which 65% is from West Asia through the Strait of Hormuz.
  • The oil demand of India will overtake China by mid-2020.The Oil demand will reach 6 million barrels per day by 2024.It was 4.4 million barrels per day in 2017.
  • Hence,it will make India more vulnerable to supply disruption in the middle east. 

Refinery investments:

  • India is the fourth largest oil refiner in the world.The products mainly include diesel and gasoline.
  • The report said that India’s plan of increasing its refining capacity to 8 million barrels per day by 2025 will make India an attractive market for investment in the refinery sector.

Strategic reserves:

  • The IEA also coordinates release of strategic petroleum reserves(SPR) among developed countries in times of emergency.
  • The report has insisted that India should expand its strategic oil reserves.

Additional information:

About Strategic Oil reserves:

  • Strategic oil reserves are stockpiles of crude oil maintained by countries or private industries.They are meant to tackle emergency situations to counter short-term supply disruptions.
  • Under Phase I,India has built Strategic oil reserves at Mangalore (Karnataka), Visakhapatnam (Andhra Pradesh) and Padur (Karnataka).
  • These reserves can store 5.33 MT(million tonnes) of emergency storage to meet India’s oil needs for 9.5 days.
  • In Phase-II,India plans to build an additional 6.5 million tonne facilities at Chandikhol(Odisha) and Padur(Karnataka) which is expected to add the emergency cover against any oil supply disruption by another 11.5 days.