INDIAN OIL DEMAND UP 300,000
India is poised to replace China as the world's center of oil-demand growth, according to authors of a study published by the Oxford Institute for Energy Studies.
As growth of Chinese oil demand slows, India's is increasing, note Amrita Sen, chief oil analyst of Energy Aspects, and Anupama Sen, senior research fellow at the Oxford Institute.
And India's development has characteristics similar to those of China 10-15 years ago, the analysts say.
A demand surge comparable to China's of the early 2000s would strengthen an oil market now struggling with surplus.
Chinese oil-demand growth has retreated to below 300,000 b/d/year from an average exceeding 500,000 b/d/year in the 10 years prior to 2015. In response to governmental efforts to rebalance the economy, China's economic growth has slowed.
Indian oil demand, meanwhile, grew by 300,000 b/d last year after rising by 100,000-150,000 b/d/year in the previous decade.
"This jump in demand reflects a number of underlying dynamics at play, which indicate that India's oil demand may be on the verge of 'taking off,'" write the authors.
They add, "Indian oil demand is demonstrating trends that were visible in China around a decade or a decade and a half ago during the country's industrialization 'boom.'"
The pace of growth in Indian demand for oil products, especially gasoline, is rapidly approaching that of China just before that country's rapid expansion.
And India's car ownership as a function of population has reached the Chinese level of a decade ago while its per-capita income on a purchasing power parity basis has "breached the threshold beyond which motorization rapidly ensues."
Other demand boosts
Government policies also are boosting oil demand. Sen and Sen estimate that a push to increase manufacturing's share of India's gross domestic product to 25% by 2022 from 15% at present could add at least a third to the country's demand.
A further demand boost could come from a program to add 30 km/day to Indian roads. Environmental concerns, meanwhile, might produce efforts to restrain demand.
The authors suggest the demand spurt might reverse India's recently acquired status as a net exporter of oil products.
They also express a concern: "The question of whether India will manage to soar to a higher plane of development and consumption is contingent to a great extent upon its ability to carry out and sustain structural reforms to support economic growth."
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