India’s fuel demand growth seen shrinking to 1.5% by 2030 on a clean energy drive

Seems to be over for the price of petrol and diesel in India, it was considered to be the world’s fastest-growing fuel market. The officials over the government’s clean energy drive are required to cut the growth of fuel demand in the country to the rate of 1.5% from nearly 6% by fiscal 2030, by making a redundancy in India’s projected refining capacity expansion worth an estimated 1.8 lakh crore.

India’s shrinking fuel and its demand for incremental fuel are known expected to rise by 1.7 million barrels/day to 7.6 million barrels/day by fiscal 2030 from 6 million barrels/day in fiscal 2020, driven by growth in naphtha and petrochemicals capacities.

The annual growth shows that daily consumption of diesel, the most-consumed fuel, falls down to 3% by 2030 thereafter maintaining an actual growth rate of 5% till 2025. The dropping level in the growth rate in the sales of petrol will be properly, halving to 1% by 2030 from 2% between 2022 and 2025.

Yet refiners are expected to add ~38 million metric tonnes per annum of capacity (~16% over the existing base) by fiscal 2025, investing over Rs 1.5 lakh crore. Aso this plan over the current basis are developed in a way that, all these facilities would be capable of producing both, transportation fuel and petrochemicals.

The expected rate of Consumption of petrochemicals in their growth is at a healthy 8-10% in India. Per-capita consumption of polymers is expected to double to 19-20 kg by fiscal 2030. The dropping down or slowing demand for transportation fuel would result in the share of petrochemicals in petroleum products rising to 18% by fiscal 2030 which is compared with previous data from the year 2020. This stable growth of demand for petrochemicals will partly offset the decline in India’s crude oil demand growth to 3.9% this decade from 4.8% in the last.

This actual flexibility of diversification would develop in such a way that hit the road with stability to refiner margins. Their profitability and those of oil marketing companies (OMCs) have been on the mend with reaching their boundaries margins and gradually rebounding to pre-pandemic levels.

Therefore, the demand for fuel in the market if stains to fall down or its growth of demand steeps for petrol and diesel, the credit profiles of refiners and OMCs have estimated the structure in such a way it will remain stable over the near-to-medium term, indicating a CRISIL Rating and its research analysis of public sector refineries and OMCs, which have 68% share of refining capacity and 92% share of oil marketing in the country.