New Delhi

Ageing oil fields, western company exits and investments increasingly geared towards natural gas are impacting oil production in Asia Pacific with no major projects in the queue to turn around faltering production in India, the International Energy Agency (IEA) said on Wednesday.

The IEA in its latest oil report pointed out that non-OPEC+ Asia Pacific oil production continues to falter with China being the only exception due to high reinvestment rates and a strong government mandate to increase output in the short-term.

The other medium-sized producers such as India, Indonesia and Thailand continue on managed declines with no major projects in the queue to turn around faltering production, it added.

Also read: Transporting crude oil from Russia to India offers huge margins

“Indian output will get a small uplift in 2024 as the 50,000 barrels per day (b/d) offshore Krishna Godavari Basin Cluster-2 project ramps up and the onshore Rajasthan Basin posts a modest increase. From 710,000 b/d in 2024, output falls to 570,000 b/d in 2030,” the IEA has projected.

Regional volumes have fallen by 700,000 b/d over the last decade and are poised to decline by a further 13 per cent, or 870,000 b/d, by 2030, it added.

Fuel demand

Even as India’s attempts to enhance crude oil production have not been on expected lines, demand for diesel and petrol in the world’s third largest energy consumer is expected to be the highest globally.

India’s demand is forecast to grow by more than any country other than China between 2023 and 2030, the IEA has projected adding that, unusually, in a global context, an increase of more than 1.3 million b/d will be dominated by rising demand for road transport fuels, with a comparatively small role for petrochemical feedstocks and underlying growth comfortably outpacing deployment of clean energy technologies.

“In the second half of this decade, India will become by far the most important contributor to overall growth. Gains of 900,000 b/d between 2025 and 2030 will be well ahead of China’s 570,000 b/d and three-quarters of net global gains over the final five years of our forecast,” it added.

Road diesel, the most used product in India and closely linked to industry and commerce, will account for 520,000 b/d of 2023-2030 growth (38 per cent of the total).

Also read: Slowing diesel consumption spells good news 

“Similarly, gasoline will register a rise of 270,000 b/d (20 per cent of the total) as car ownership becomes more widespread. This is far more than in any other country in our projections,” the agency said.

The IEA attributed the projected growth in auto fuels to India’s expanding industrial sector and rising vehicle ownership.

“India is set to be the world’s fastest growing major economy for the third year running in 2024. Manufacturing and industrial activity has been especially strong and a massive domestic consumer market, labour force and supportive demographics should see this continue. The nation’s population, which recently overtook China’s to become the world’s largest, is projected to increase by 6 per cent during our forecast period, and higher average incomes will further support mobility demand,” it added.

Refining capacity

Growing domestic demand and export prospects is also aiding India in expanding its refining capacity.

The IEA pointed out India witnessed a remarkable surge in its refining capacity over the past few decades, with close to 3 million b/d in growth from 2006 to 2023. With a total refining capacity of 5.8 million b/d, India has firmly established itself as the fourth largest refiner worldwide.

“Recent expansions have been the result of investments in refining infrastructure as well as refiners’ strategic pivot towards integrating petrochemicals. Currently, India has 23 operating refineries, with plans for further expansions, including one new greenfield project and multiple modernisation projects expected to add 1 million b/d of distillation capacity by 2030,” it added.