Oil and Gas Sector – HELP, Open Acreage Policy, etc.

India to be biggest driver of global oil demand beyond China by 2027: IEA


From UPSC perspective, the following things are important :

Prelims level: International Energy Agency (IEA)

Mains level: Read the attached story


  • India’s burgeoning economy is poised to become a significant player in global oil demand, with projections indicating that it will outpace China by 2027.
  • The International Energy Agency (IEA) forecasts robust growth in India’s oil demand, driven primarily by industrial expansion and increasing mobility.

About International Energy Agency (IEA)

Nature Autonomous inter-governmental organisation within the OECD framework
Mission Works with governments and industry to shape a secure and sustainable energy future for all
Establishment Founded in 1974 to ensure the security of oil supplies
Origin Created in response to the 1973-1974 oil crisis
Membership Consists of 31 member countries and eleven association countries
Criteria for Membership
  • Crude oil and/or product reserves equivalent to 90 days of the previous year’s net imports, accessible by the government
  • Demand restraint programme to reduce national oil consumption
  • Legislation and organisation for Co-ordinated Emergency Response Measures (CERM)
  • Legislation to ensure oil companies report information
  • Capability to contribute to IEA collective action
India’s Membership Joined as an Associate member in 2017
Key Reports Published World Energy Outlook,    World Energy Balances,    Energy Technology Perspectives,    World Energy Statistics,    Net Zero by 2050.

India’s Projected Growth in Oil Demand

  • Dominance in Oil Demand Growth: India is expected to surpass China as the biggest driver of global oil demand growth by 2027, according to the IEA.
  • Magnitude of Increase: The IEA projects an increase of nearly 1.2 million barrels per day (bpd) in India’s oil demand by 2023, contributing to over a third of the global demand growth by the end of the decade.
  • Key Drivers: Diesel consumption emerges as the primary driver of India’s oil demand growth, accounting for nearly half of the nation’s demand rise and a significant portion of global demand growth.
  • Sectoral Analysis: While jet-kerosene demand is expected to grow substantially, petrol demand is projected to increase moderately due to the electrification of India’s vehicle fleet.

Factors Influencing Demand Growth

  • Impact of EVs and Biofuels: Increased penetration of electric vehicles (EVs), energy efficiency measures, and growth in biofuels consumption are anticipated to mitigate around 500,000 bpd of additional oil demand by 2030.
  • Role of EVs: EV penetration alone is projected to displace 200,000 bpd of oil demand by 2030.

Why such a forecast for surge?

  • Rising Crude Oil Imports: India’s crude oil imports are expected to surge by over a fourth to 5.8 million bpd by 2030, driven by robust demand growth and declining domestic production.
  • Limited Domestic Production: Despite efforts to attract foreign investment, domestic crude oil production is projected to decline steadily, further increasing import dependence.
  • Strategic Petroleum Reserves (SPRs): India is enhancing its capacity to respond to oil supply disruptions through strategic petroleum reserves.
  • Importance of SPRs: These reserves help mitigate the impact of emergencies on energy supplies and ensure oil resilience in case of market disruptions.

Major Policy Initiatives for Oil Import Cut

  • Urja Sangam 2015: In March 2015, the PM inaugurated ‘Urja Sangam 2015,’ aiming to boost India’s energy security. Stakeholders were urged to increase domestic oil and gas production to reduce import dependence from 77% to 67% by 2022 and further to 50% by 2030.
  • Production Sharing Contract (PSC) Regime: The government introduced policies like PSC, Discovered Small Field Policy, Hydrocarbon Exploration and Licensing Policy (HELP), and New Exploration Licensing Policy (NELP) to incentivize domestic production.
  • Ethanol Blending Programme (EBP): India promotes the EBP to reduce crude oil imports, cut carbon emissions, and boost farmers’ incomes. The target for 20% ethanol blending in petrol (E20) was advanced to 2025 from 2030, expediting ethanol adoption as an alternative fuel.

Way Forward

  • Diversification Strategies: India must focus on diversifying its energy mix and promoting alternative fuels to reduce reliance on oil imports.
  • Investment in Renewable Energy: Accelerated investment in renewable energy sources such as solar and wind power can mitigate the growth in oil demand and enhance energy security.
  • Policy Initiatives: Robust policy measures are essential to incentivize energy efficiency, promote electric mobility, and encourage sustainable practices in the transport sector.

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