Union Petroleum Secretary Pankaj Jain on Monday said that India witnessing a huge demand surge for fuel such as petrol and diesel. He further said that Indian refineries running at 100 percent-plus capacity.
"Against a 3.5 percent incremental increase in diesel demand, it’s up 7 percent now. For petrol, against 6-7 percent demand growth, it is up by over 13 percent now," he said.
However, as per the government's data released on Monday,
diesel consumption fell by 15 percent to 2.96 million tonnes during July 1-15, compared to the same period last year.
Petrol sales, on the other hand, declined by 10.5 percent to 1.25 million tonnes year-on-year (YoY) during July 1-15. Petrol sales also decreased by 10.8 per cent month-on-month.
Diesel consumption had earlier experienced a surge of 6.7 percent and 9.3 percent in April and May, respectively, driven by increased demand in the agriculture sector. However, the rising demand took a hit following the arrival of the monsoon in June.
Jain said that 60-70 percent of petrol consumption is by two-wheelers amid a drastic increase in vehicle sales in India. Jain also batted for easier availability of fuel to consumers, which he admitted is "challenging".
Echoing Union Minister for Road Transport & Highways
Nitin Gadkari's sentiments , he said that it is impossible to completely get rid of fossil fuels despite the government having invested over $3.5 billion in energy transition. "Conventional fossil fuels are not going to fall off the cliff."
Gadkari, in a conversation with CNN-News18, said that despite the promotion of alternative fuels and technologies such as Electric Vehicles (EV), Ethanol, Methanol, Biodiesel, LNG, CNG, and Hydrogen — it is difficult to eradicate the use of fossil fuels such as Diesel and Petrol.
According to the International Energy Agency (IEA), India is expected to surpass China in terms of oil demand growth by 2027, becoming the primary driver of global growth.
The IEA also noted that upstream investments in the oil industry are rebounding from the lows caused by the pandemic. While capacity building led by the United States is slowing down, it is still keeping up with demand. In contrast, Middle Eastern countries are increasing their oil production as the growth rate in the US slows, resulting in an increase in their market share. Refinery capacity is also growing again after a period of closures.
The IEA highlighted the growing importance of Chinese exports to meet global gas oil demand, as China surpassed the US in refining capacity last year. Additionally, there is a growing surplus of gasoline, which is partly offset by a deficit in naphtha due to the rising share of petrochemicals in the industry. These trends indicate significant shifts in the global oil market and underline the changing dynamics of oil demand, production, and refining capacities among major players.
The International Energy Agency (IEA) said that the oil market has been relatively stable in terms of pricing despite efforts by Russia to reduce exports and Saudi Arabia to cut production.
The IEA does not anticipate substantial production increases from other oil producers. However, the market is expected to tighten in the second half of the year unless there is a significant slowdown in crude oil demand. As a result, there may be increased volatility in crude oil prices and upward pressure on them. Additionally, the IEA recognizes India as a significant player in the global energy markets.
