India will expand its crude oil refining capability by 80 per cent to 450 million tonnes within the next five years as it is set to double its energy consumption over the long run, Prime Minister Narendra Modi stated on Monday.
The Prime Minister, addressing the fourth India Energy Forum on ‘India’s Energy Future in a world of Change’ organised by CERA Week said “We plan to grow our refining capacities from about 250 to 400 million metric tonnes per annum by 2025.”
As per data keeper Petroleum Planning and Evaluation Cell (PPAC) of the oil ministry, India’s refining capacity is currently 249.9 million tonnes; however, capability utilisation was increased at 254.four million tonnes in 2019-20. During 2019-20 alone, India consumed 214.1 million tonnes of refined merchandise domestically and exported the surplus.
Due to the on-going COVID-19 crisis, most of the industries had to suffer diminished demand, which lead to a global economic pressure as well. The Crude oil industry was not an exception. China, the largest energy consumer globally, accounted for more than 80 per cent of world oil demand growth last year. However, the repercussions of the virus spreading worldwide, especially in China, had significant implications for global energy and oil markets.
The global crude oil market faced excess supply of oil while the market suffered a dip in demand as the world had to go under stringent lockdown as a consequent of the pandemic.
The American traded oil contract WTI futures closed at 39.85 dollar per barrel. On week on week, the West Texas Intermediate futures dropped by 2.5 per cent.
The London traded oil contract; Brent crude plunged under 20 dollar a barrel by April 21 because of sluggish demand and oversupply from over 51.9 dollar per barrel on March 2. On Sunday, they settled at 41.77 dollar losing over 2.5 per cent; however, by Monday it again fell to 40.55 dollar a barrel dropping 2.92 per cent further from the previous day.
Highlighting the spread of Covid-19 pandemic and its adverse impact on global energy demand, PM Modi stated that leading international bodies project that there will be a decrease in global energy demand over the next few years. However, he added that “these agencies predict India to emerge as a leading energy consumer.”
PM Modi at the conference projected India to emerge as a leading energy consumer, stating that “India’s power future is bright and safe,” and nation plans to double its energy consumption over the long term.
The virtual conference was attended by US energy secretary Dan Brouillette, Saudi Arabia energy minister Prince Abdul-Aziz, petroleum minister Dharmendra Pradhan and IHS Markit Vice Chairman Daniel Yergin.
Speaking at the conference, the petroleum minister stated India is the third-largest consumer of energy (after the US and China) in the world and nation’s energy requirements in the coming years are bound to grow as per capita energy consumption is still far below the global average.
He further affirmed that to meet national energy needs based on the Energy Vision as laid out by PM Modi covering energy access, energy efficiency, energy sustainability, energy security and energy justice.
Amid the pandemic, the world’s- largest economy the US, reporting the highest number of cases recently; the global economy had been seeing only downs this year. International experts project a further dip in the crude oil market as supply still surges, and the buying pressure is beyond the brim.
Amidst such prevailing conditions, the question of the hour is whether the increase in capacity benefit India in the long run.