India to emerge as epicentre of global oil demand growth: IEA

New Delhi, Nov 12 (PTI) India, the world's third largest oil importing and consuming nation, will be the new epicentre of oil demand growth over the next decade, the International Energy Agency (IEA) said on Wednesday.

Among emerging markets and developing economies, energy demand in India grows the fastest, increasing by 3 per cent each year on average to 2035.

In its latest Global Energy Outlook, the Paris-based agency said India will account for the largest increase in global oil consumption through 2035, driven by rapid economic expansion, industrialisation and rising vehicle ownership.

The country's growing appetite for energy will outpace that of China and Southeast Asia combined, underscoring its pivotal role in shaping global oil markets.

"Oil remains the dominant fuel to 2050 in the CPS (current policies scenario). China accounted for more than 75 per cent of oil demand growth over the past ten years, but this picture is changing, and India becomes the new epicentre of growth in oil demand," IEA said.

"India leads global oil demand growth over the next ten years, with almost half of the additional barrels produced globally to 2035 heading in its direction." Its oil use increases from 5.5 million barrels per day (mbpd) in 2024 to 8 mbpd in 2035 as a result of rapid growth in car ownership, increasing demand for plastics, chemicals and aviation, and a rise in the use of Liquefied Petroleum Gas (LPG) for cooking.

"Oil demand in India increases by 2 mbpd to 2035 - the largest increase in any country - and continues to rise through to 2050. The next largest increases to 2035 are in Africa (1.2 mbpd), and Southeast Asia (1 mbpd)," it said.

With limited domestic production, India's dependence on imports to meet this rising demand will only increase.

IEA projected that import dependency in India rises from 87 per cent in 2024 to 92 per cent in 2035, despite government efforts to promote domestic production.

While India is import dependent for crude oil - the raw material that is processed in refineries and turned into fuels like petrol and diesel - it is not just self-sufficient in refining capacity but also has exportable surplus.

Around 9 mbpd of new refining capacity comes online globally between 2024 and 2035. With around 5 mbpd in closures over this period, net refining throughput increases by 4 mbpd. Asia sees a net increase of around 3 mb/d in refining capacity between 2024 and 2035, led by increases in India.

"Since 2022, India has emerged as a global swing supplier, refining volumes of Russian crude oil exports that previously flowed to Europe. India's refining capacity grows from 6 mbpd in 2024 by 1.5 mbpd to 2035 which solidifies its role as a key exporter of transport fuel," it said.

India's demand for natural gas, which is used to generate electricity, produce fertiliser, fuel automobiles as CNG and used in household kitchens for cooking, nearly doubles to 2035 to reach 140 billion cubic meters (bcm) led by growth in its city-gas distribution sector. Most of this will be met through imports of the fuel in its liquid form (liquefied natural gas or LNG).

"In 2035, India imports 50 bcm of LNG, up from 35 bcm today," IEA said. India also sees demand for electricity rise rapidly, reaching around 5,000 TWh by 2050 on the back of sustained growth of over 4 per cent per year between 2024 and 2050.

LNG imports almost triple between 2024 and 2035.

Stating that coal production declines in all major producing countries except India to 2035, IEA said coal production in the country increases by around 50 million tonnes of coal equivalent (Mtce) to 2035 as it pursues its long-term strategy of reducing coal imports and enhancing energy security. Coal production reached almost 600 Mtce in 2024, an increase of nearly 100 Mtce since 2022.

This falls short of the increase of around 75 Mtce in its demand for coal over the period, but it helps to limit growth in coal imports.

In 2024, Coal India Ltd obtained environmental clearance for the Gevra mine to expand production to 70 million tonnes per year, which would make it the largest coal mine in Asia. It also announced the launch of 36 new mines over the next five years.

Overall, India is seen as the biggest driver of growth in global energy - oil, gas, coal, electricity and renewables put together - demand. According to IEA, India has become the world's largest driver of energy demand growth, with consumption projected to rise by over 15 exajoules (EJ) by 2035 - nearly matching the combined increase of China and Southeast Asia.

The IEA said India's energy demand overall is expected to rise sharply as its GDP grows at an average of over 6 per cent annually, with transport and industry leading the surge in fuel use.

India, which has pledged net zero emissions by 2070, is targeting 100 GW of nuclear capacity by 2047 and plans to launch a carbon market in 2026. Ethanol blending in petrol has already reached 20 per cent, helping curb oil imports.

Solar and wind are the fastest-growing energy sources, projected to make up nearly 20 per cent of the energy mix by 2050.

Industrial and transport sectors will drive most of the demand increase, with carbon dioxide emissions expected to peak around 2040 at roughly 3.4 gigatonnes annually.

In a major milestone, India achieved its 50 per cent non-fossil power capacity target five years ahead of schedule, in 2025.

The share of renewables in installed capacity is set to touch 60 per cent by 2030 and 70 per cent by 2035, accounting for over 95 per cent of new capacity additions.

Solar PV alone has attracted USD 113 billion in investment over the past decade, outpacing fossil power investments. PTI ANZ ANZ DR DR