Crude oil demand to grow 5% annually till 2020

India is trying to cut its oil import by 10 per cent but a report has said the demand was expected to grow at a compound annual growth rate of five per cent a year till 2020.

The report by S&P Global Platts, released on Thursday, has forecast eight per cent annual gross domestic product (GDP) growth over the next few years.

Oil products’ demand would grow seven to nine per cent annually in the next five to 10 years, said the report. While gas demand was likely to grow seven per cent by 2020, power demand would zoom at an astronomical 44 per cent from 2016 levels. “To secure long-term energy and resource needs, India will need partners, it will need reliable supply chains and foreign investment,” said Sambit Mohanty, senior editor (Asia Pacific) at S&P Global Platts.

A major highlight of this growth would be the utilisation of liquefied natural gas terminal capacity, which is expected to grow from 16 million tonnes (mt) to 30 mt by 2022. A switch in power sector policy has suggested India’s coal-for-power generation expansion might start to come down after 2022, leaving some assets stranded. Meanwhile, short-term steel demand would grow at 4.5-5.5 per cent, accelerating to 6-6.5 per cent by 2020-21, said the report.

India’s domestic gas production was 31.14 billion cubic meters in 2015-16, down 40 per cent from a peak of 51.23 BCM in 2010-11. The report said domestic gas production could rebound and grow at four per cent to 103 million standard cubic meters a day (mmscmd) by 2020-21, fuelled by new pricing policy for deepwater and ultra-deepwater blocks and freedom in gas marketing and pricing for new production.

The report said there was little chance that domestic production of many primary and secondary commodities would keep pace with demand growth.

“The demand potential has already led major international companies, such as Shell, BP, Rosneft, Trafigura and Saudi Aramco, to either consider expansion or explore joint venture opportunities to establish presence in the country,” it added.