Oil Import Dependence

India’s oil demand will rise 50% by 2030 as against a global expansion of 7%, the International Energy Agency (IEA) has forecast in its latest report.

India’s oil consumption is forecast to rise from 4.8 million barrels per day (mbd) in 2019 to 7.2 mbd in 2030 and 9.2 mbd in 2050, as per the IEA’s key scenario based on stated policies.

India’s Import Dependence

• Limited Domestic Resources: Unlike coal, India has limited domestic resources of oil, largely relying on imported crude to meet its needs. India has become the second‐largest net oil importer after China.
• Issue of Rising Imports: Crude oil is brought in by tanker from the Middle East, Latin America and Africa to Indian refineries along the western coast. India’s dependence on imported crude oil has been rising, and currently stands at around 75%.

Initiatives to address Import-dependence

• SPR: To address the risks that could arise from growing import dependence, the government has expanded its strategic petroleum reserve (SPR).
• Alternative Fuels: India has a long‐standing ambition to reduce oil import dependence, and the government announced in 2015 an ambition to reduce this dependence by 10 percentage points by 2022. This was to be achieved through a variety of policies, including policies to expand the use of alternative transport fuels such as bioethanol, biodiesel and CNG, and through the expansion of domestic oil production.
• Domestic Exploration: To encourage domestic exploration and production, the government adopted the Hydrocarbon Exploration and Licensing Policy (HELP) in 2016 to provide a level playing field for the exploration of all types of hydrocarbons under a revenue sharing model.

These policies have not so far succeeded in reducing India’s oil import dependence, which has continued to rise, broadly tracking the increase in demand, while domestic oil production has remained broadly flat since 2015, as it has for the past three decades.