India is now positioned to overtake China as the primary driver of global oil demand growth over the coming ten years. China and India are the world’s second and third-largest oil consumers, respectively. However, the two nations’ rates of demand growth differ substantially. The next three to five years will see a peak in China’s use of crude oil, the basic ingredient used to make fuels like gasoline and diesel.
According to the rating agency, China’s dependence on oil imports is expected to decrease due to slower demand growth and higher domestic production, even though both nations rely significantly on gas and oil imports.
The development of China’s national oil companies (NOCs) is supported by its higher consumption of gas and oil, and over the next three to five years, their output growth is probably going to surpass that of their Indian counterparts.
While Indian NOCs struggle with old wells and sluggish investment, Chinese NOCs benefit from investments in offshore projects and complex shale gas, which boost their reserves and production. Chinese NOCs also have lower leverage and higher interest coverage, and their increased value chain integration reduces profits volatility. Investment priorities varied, according to Moody’s, reflecting national goals.
To increase self-sufficiency, Chinese NOCs keep making significant investments in research and development. Since the majority of significant projects have been finished, their investments in the petrochemical and downstream refining industries will progressively decrease over the next three to five years. China’s demand for oil products like gasoline and diesel will decline as a result of the rapid adoption of NEVs (New Energy Vehicles) and the growth of renewable energy. However, due to increased air travel and petrochemical output, the nation’s use of jet fuel
and naphtha is expected to increase.
China’s refining capacity is also close to the 1 billion-ton limit set by the government. This restricts the possibility of an increase in the demand for crude oil, which serves as refineries feedstock. India, on the other hand, wants to raise its refining capacity from 256.8 mmtpa as of April 1, 2024, to 309.5 mmtpa by 2030, a five percent increase. India’s demand for transportation fuels will rise as a result of the country’s increasing industrialization and economic growth as well as significant government investments in infrastructure that will improve accessibility and
mobility.
By 2030, India wants to increase the proportion of natural gas in its energy mix from roughly 6% to 15%. Through 2030, India’s demand is expected to expand by 4 – 7% year due to the expansion of gas-using industrial sectors like petrochemicals and fertilizers, as well as increased natural gas consumption in urban and semi-urban areas.