Oil consumption in India will stop rising in five years, BP has said in its influential annual energy outlook.
The oil and gas firm also predicted that the global demand for the commodity may never return to pre-Covid levels.
India’s oil demand is expected to start plateauing in 2025 after rising to 6 million barrels per day (mbd) from 5 mbd in 2018 under BP’s two scenarios named the ‘Rapid’ and ‘Net Zero’.
By 2050, the demand is forecast to contract to 5 mbd and 2 mbd, respectively under the two scenarios.
Under the third scenario, called the ‘Business-as-Usual’, Indian oil demand is forecast to continue to rise from 6 mbd in 2025 to 10 mbd in 2050. In all three scenarios, India stays the third-biggest oil consumer in 2025 and 2050, behind the US and China, as it is now.
Global oil consumption is forecast to fall to 94 mbd by 2025 under both ‘rapid’ and ‘net zero’ courses from 97 mbd in 2018. By 2050, the demand is predicted to contract to 47 mbd under ‘Rapid’ and 24 mbd under ‘Net Zero’. Under ‘Business-as-Usual’, the demand would be 98 mbd by 2025 and fall to 89 mbd by 2050.
Three scenarios have been built assuming varying levels of government policy measures for meeting climate targets. The ‘Rapid’ scenario assumes policies resulting in a sharp increase in carbon prices while the ‘Net Zero’ reinforces ‘Rapid’ with major shifts in societal behaviour.
“The demand for liquid fuels in ‘Rapid’ and ‘Net Zero’ never fully recovers from the fall caused by Covid-19, implying that oil demand peaked in 2019 in both scenarios,” BP said in its energy outlook. “The falling demand is concentrated in the developed world and China, with consumption in India, Other Asia and Africa broadly flat over the Outlook as a whole in ‘Rapid’”.
The expected decline in demand would also hurt refinery runs and companies’ plans to set up new refineries. “Refinery runs in ‘Rapid’ never fully recover to pre-Covid levels and fall by more than 45 mbd to less than half of their 2018 levels by 2050,” BP said in its outlook.
Under ‘Business-as-Usual’, refining runs are forecast to recover to close to pre-Covid levels over the next few years and remain there until the early 2030s.
“The excess refining capacity that emerges in both ‘Business-as-Usual’ and ‘Rapid’ leads to increasing competition and the eventual shutdown of the least competitive refineries,” the outlook said.
The refining capacity that will likely be the most resilient would be those that are aided by strong domestic demand, access to advantaged feedstock, high levels of upgrading, integration with petrochemicals and, in some regions, government support, as per the outlook.
Source: www.energynewsafrica.com