India - Energy
India was the third-largest energy consumer in the world after China and the United States in 2021 (according to the BP Statistical Review of World Energy 2022) and the most populous country, with 1.4 billion people. India’s energy needs continue to grow as a result of population growth and modernization.
India’s government continues to face several challenges to meet the country’s growing energy demand, including securing affordable energy supplies and attracting investment for upstream projects and transmission infrastructure. The government has made considerable headway with energy reforms and continues to focus on greater energy security, infrastructure development, and market liberalization.
Primary energy consumption in India decreased nearly 6% in 2020 but returned to average levels in 2021, growing by 10%. In 2020, coal continued to supply most (44%) of India’s total energy consumption. Petroleum and other liquids accounted for 24% of total energy consumption, and traditional biomass and waste accounted for 21%. Other renewable fuel sources made up a small but growing portion of primary energy consumption (1%), although the capacity potential is significant for several of these resources, such as solar, wind, and hydroelectricity.
Use of traditional biomass and waste declined over the past several years as the availability of electricity connections has spread for the residential and commercial sectors. Although natural gas accounts for 6% of the country’s energy consumption, India plans to boost the natural gas market share to 15% by 2030 as part of the country’s plan to reduce air pollution and use cleaner-burning fuels
India’s total petroleum and other liquids production remained at about 1 million barrels per day (b/d) from 2010 to 2019. In 2020, production decreased to approximately 890,000 b/d and remained near that level in 2021. More than two-thirds of India’s total liquid fuels production is from crude oil and condensate. Production of these two fuels fell slightly by 16,000 barrels per day (b/d) in 2021 to 611,000 b/d. Almost half of India’s crude oil production is from offshore fields, although this share has dropped in the past several years as production from the large, aging Mumbai High field declined.
Demand for crude oil in 2021 increased by 5% to 4.7 million b/d as India’s economy returned to pre-pandemic activity levels. Demand for crude oil in 2021 was 270,000 b/d less than the high reached in 2019. India was the third-largest consumer of petroleum products after the United States and China in 2021. For most petroleum products, growth in 2021 consumption only partially offset the 2020 declines resulting from the response to the COVID-19 pandemic. In 2020, demand for petroleum products—primarily jet fuel (-48%), gasoline (-10%), and diesel (-14%)—decreased as an effect of the pandemic.
Diesel was the most-used oil product in India, accounting for 35% of petroleum product consumption in 2021, and it was used primarily for commercial transportation and, to a lesser degree, in the industrial and agricultural sectors. Gasoline consumption accounted for 16% of India’s total oil consumption.
As of 2021, India had 5.0 million b/d of nameplate refining capacity, making it the second-largest refiner in Asia after China. The country’s refining capacity utilization was almost 90% in 2020. The two largest refineries by crude oil capacity, located in the Jamnagar complex in Gujarat, are world-class export facilities and are owned by Reliance Industries. The Jamnagar refineries account for 27% of India’s current capacity. Several refiners have incrementally increased their crude oil processing capacity through small expansions at existing facilities. Bringing new facilities online, however, has been slow over the past few years, and no new projects are slated to come online until the mid-2020s. India’s state refiners are looking to invest $27 billion to increase refining capacity by 20% by 2025. This goal would raise capacity by approximately 1 million b/d to 6 million b/d.
India imports most of the crude oil it consumes and has been building a strategic petroleum reserve (SPR) to protect against supply disruptions and to add commercial storage to allow for seamless refinery operations. India completed its first phase of SPR construction at the end of 2018, which consists of facilities at three locations (Visakhapatnam, Mangalore, and Padur) with a total capacity of 39 million barrels. The government approved a second SPR phase in June 2018 and plans to construct another 48 million barrels of capacity at two new locations (Chandikhol and another one at Padur). These plans have been delayed until land acquisitions to build the facilities are completed.
India’s crude oil imports grew by almost 8% from 2020 to 4.2 million b/d in 2021. Iraq is India’s largest oil supplier, providing 24% of India’s crude oil imports. In total, approximately 61% of India’s imported crude oil was from the Middle East, mostly from Saudi Arabia and Iraq. India increased its crude oil imports (including condensates) from Iran in 2016 when the United States’ and Europe’s sanctions on Iran’s oil exports were lifted. In 2020 and 2021, India’s imports from Iran were zero, after the U.S. government re-imposed sanctions on Iran’s oil exports.
India imported 94,000 b/d from Russia in 2021. India’s imports of oil from Russia increased in 2022 because Russia discounted its oil to promote sales after its full-scale invasion of Ukraine. As a result of the lower cost, crude oil imports from Russia reached a high of 950,000 b/d in June of 2022.
India became a major buyer of Russian oil as Western countries shied away following Moscow's invasion of Ukraine. Indian government data show the country imported nearly 35 million tons of crude in 2022. That's more than seven times the previous year's amount. India bought around 400,000 tons in March 2022, right after the invasion. But the figure jumped to some 5.5 million tons in December 2022. Iraq and Saudi Arabia had been India's largest oil suppliers. But from September to December, Russia held the top position.
Western countries had strengthened sanctions on Russian oil to choke off a key source of revenue for Moscow. But China and India exploited the situation by buying Russian energy at a discount. India's foreign minister said the government should prioritize the domestic economy, arguing its consumers need the best possible access to the international market.
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