India's energy demand is beginning to improve as businesses reopen, the country's oil minister, Dharmendra Pradhan said this week at the ADPIEC conference in Abu Dhabi.
"India's energy sector has shown remarkable resilience and our energy demand has almost recovered back to the pre-Covid levels, particularly for petroleum products, due to [the] rejuvenation of economic activities," Pradhan said, as quoted by The National.
A couple of weeks ago, the chairman of India Oil Corp. said that demand for fuels, hence for crude oil, was improving thanks to strong car sales.
"Gasoline has already crossed the pre-COVID-19 levels, and diesel too is edging towards pre-COVID-19 levels. The festive season would give a further boost to the demand," Shrikant Madhav Vaidya said at the India Energy Forum in late October.
India, along with China, is expected to be the main driver of oil demand in the coming years. The country is the world's third-largest oil consumer in the world, trailing only the United States and China.
Recently, New Delhi invited foreign companies to invest in an expansion of its strategic petroleum reserve capacity as it seeks to boost its energy security by storing more oil locally.
"I invite global energy players to come and invest in this project," Pradhan said at ADIPEC, referring to India's ongoing construction of additional commercial and strategic petroleum storage.
"Taking advantage of the low crude oil prices in international market, India purchased 16.71 million barrels (mbbl) of crude in April - May, 2020 and filled all the three Strategic Petroleum Reserves created at Vishakhapatnam, Mangalore and Padur," Pradhan said.
At the same time, the government is seeking to boost domestic production of oil by encouraging foreign investments in the sector.
"There are tremendous opportunities in the energy sector in India. India now allows 100 per cent foreign direct investment in exploration and production," Pradhan said at ADIPEC. "We have created a friendly tax regime for sovereign wealth and pension funds. These reforms are translating into increased FDI growth in the sector."
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More
Comments
The fact that India’s energy demand has almost recovered back to the pre-COVID levels will invigorate the global oil and gas markets helping to deplete global oil and gas inventories and push prices upwards.
Coming after the announcement that an effective anti-COVID vaccine has been developed and the election of Joe Biden it will cheer global oil and gas markets which have been bereft of good news for a quite a while.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London