Page 151 - CW E-Magazine (3-6-2025)

Hydrocarbons

OUTLOOK
India to surpass China in oil demand growth

over next decade: Moody’s

China drove global oil demand coverage. Moody’s saw investment focus Clean energy focus
growth over the last decade, but now vary, refl ecting national objectives. China’s oil demand is expected to
India is poised to take the lead in demand grow marginally to peak at around 800
growth over the next decade, according “Chinese NOCs continue to invest million tonnes per annum (mmtpa) by
to a latest report by Moody’s Ratings. heavily in exploration and development 2030. Apart from slower economic
China and India are No. 2 and No. 3 oil to enhance self-suffi ciency. Their growth, China’s oil demand growth is
consumers in the world, respectively. investments in the downstream refi ning also constrained by the country’s shift
But there are notable differences in and petrochemical sectors will gradu- toward cleaner energy. Fast adoption
demand growth in the two countries. ally decline over the next 3-5 years as of NEVs (New Energy Vehicles) and
most major projects have been com- the expansion of renewable energy will
“Demand growth and import reliance pleted. By contrast, NOCs in India will reduce China’s need for oil products
will be higher in India,” Moody’s said. still invest heavily to expand refi ning like diesel and gasoline. However, the
“Demand will grow faster in India than and petrochemical facilities over the country’s consumption of jet fuel and
in China over the next decade, as China’s next fi ve years to meet growing domes- naphtha will likely rise because of
economic growth slows and penetration tic demand,” it said. increasing air travel and petrochemical
of new energy vehicles accelerates.” production.
“Indian NOCs plan to boost do-
Consumption of crude oil in China mestic oil and gas production but exe- Refi ning capacity in China is also
will peak in the next 3-5 years, while in cution remains to be seen,” it added. near the state-mandated cap of 1-billion
India, Moody’s expect annual growth Government policies in China are tonnes. This limits the potential for
of 3-5 percent in the same period. Stat- more market-oriented, it said, adding demand growth of crude oil, which is the
ing that both countries rely heavily on that policies in both countries are feedstock for refi neries. By contrast,
oil and gas imports, the rating agency aimed at maintaining price stability and India aims to increase its refi ning capa-
said it expects China’s reliance on adequate supply. city by a fi fth to 309.5-mmtpa by 2030
oil imports to fall, refl ecting slower from 256.8-mmtpa as of April 1, 2024.
demand growth and increased domestic “The effect of policy is more pro- On gas demand, Moody’s said the pace
production. “India’s reliance on imports nounced on companies in India as of demand growth for natural gas in
will increase if it is unable to stem a pricing mechanisms have led to bigger India will be slightly higher than China’s.
production decline,” it said. swings in earnings and cash fl ows. Compared to thermal coal and diesel,
India relies more on taxes and dividends gas is a cleaner fuel and feedstock
Investments galore from its petroleum sector to support its and is thus commonly viewed as a key
Moody’s said China’s larger oil and fi scal budget than China,” it said. As transition fuel for a lower-carbon future.
gas consumption underpins the scale carbon regulation in India is still deve-
of its national oil companies (NOCs), loping, Indian NOCs face less immediate China currently imports more than
which will likely outpace their Indian pressure to invest in green technologies 70 percent of crude and 35-40 percent
peers in production growth over the compared to Chinese NOCs, which face of its natural gas requirements, with
next 3-5 years. Investments in com- stricter rules and the need to transition the rest supplied by domestic produc-
plex shale gas and offshore projects to green practices more quickly. tion. India imports close to 90 percent
bolster Chinese NOCs’ reserves and of its crude needs and about 50 percent
production, while Indian NOCs face Both countries rely heavily on oil of its gas needs. “The high level of
challenges from aging wells and slow and gas imports. But Moody’s expected import dependence has raised signifi cant
investment. Additionally, Chinese China’s reliance on oil imports will concerns about energy security in both
NOCs’ greater value chain integration fall, driven by slower demand growth countries. These concerns are parti-
mitigates earnings volatility, and they and its push for self-suffi ciency amid cularly acute for China, given rising
have lower leverage and higher interest geopolitical tensions. geopolitical risks,” Moody’s said.

Chemical Weekly June 3, 2025 151

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