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India will be forced to start importing oil products if it doesn’t find a solution to a looming refining capacity shortage, the director for refineries of the India Oil Corporation said this weekend.
The local refineries are straining to satisfy the ever-growing fuel demand of Asia’s second-largest economy even though their current capacity of 4.62 million barrels per day is planned to be raised to over 6 million bpd by 2030. Even so, Sanjiv Singh said, this may not be enough to meet the future demand for oil products.
Over the last financial year, oil product consumption in India rose by 11 percent, reaching 3.67 million bpd. Refineries’ output, at the same time, has grown only by 4.5 percent. The country, which is still a net oil product exporter, has been consuming more and more of its oil product output domestically in the last couple years, the Economic Times notes. In fiscal 2015, India exported 32.3 million tons of refined products, compared with 42.6 million tons a year earlier. This is a stable trend, according to Singh.
India recorded GDP growth of 7.9 percent in the first three months of 2016, exceeding China (6.7 percent), even though the figure fell short of analyst expectations for 7.5 percent, according to a Reuters poll. The growth rate for fiscal 2015/16, which ended on March 31, was 7.6 percent, which compares with 7.2 percent for fiscal 2014/15.
India is pegged as the leading driver of global oil demand growth in the medium term, thanks to PM Modi’s initiative ''Make in India'', aimed at turning the country into a new global manufacturing hub at a time when China is slowly shifting away from manufacturing and into services. This transformation will require huge amounts of fuel, hence the spiking demand that refineries are already finding hard to satisfy.
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.