India’s oil & gas import bill likely to double in 15 years: PPAC

Renewable energy will have the largest growth percentage at 11.5% of the nation's primary energy demand, which is expected to nearly quadruple to 38.5 million barrels of oil equivalent per day (mboe/d) by 2045. Nonetheless, the Petroleum Planning and Analysis Cell (PPAC) report predicts that the share of power derived from oil and coal will continue to lead at 30.1% and 33.2%, respectively.

“While demand for all energy sources will increase during this period, oil will account for the largest part of the growth as the country’s demand for oil products will more than double from 5.1 mboe/d in 2022 to 11.6 mboe/d in 2045,” the report said.

The country’s oil consumption is likely to jump to 305 million tonnes of oil equivalent (Mtoe) in 2030 from 210 Mtoe in 2020, as per S&P Global Commodity Insights. Gas consumption will register a rise to 70 Mtoe in the same period against 53 Mtoe in 2020. As domestic supplies remain limited, the country’s oil imports will exceed 90% of demand by 2030 at 280 Mtoe and gas imports are projected to surpass 60% of supplies at 44 Mtoe, as per the PPAC data. 

India already spends more than $160 billion of foreign exchange every year on energy imports, according to government statistics. “The import bill is likely to double in the next 15 years without steps to reduce this import dependence. Higher imports will put a further burden on government finances,” the report said. Crude oil and products import bill till December of FY24 stands at $115.69 billion, as per the PPAC data.

Moreover, the renewed interest in the country’s exploration and production field from international oil and gas companies is likely to have only a limited impact as these companies are seen reducing their investments in the oil and gas sector while transitioning to green energy. With limited investments and no major discoveries, the oil and gas sector remains under the shadow. 

As per the report, average recovery factors in the country are 20-30% compared with the global average of 35-40%. “The application of new technologies, including digital tech, machine learning and data analytics, provides a further impetus to focus on improving recovery factors.” 

The recovery factor is a measure of how large a proportion of resources originally in place can be recovered.

Domestic oil and gas companies can partner with strategic international investors that want to access the country’s growing domestic energy market, which will give further impetus to the domestic oil and gas sector, the report said. 

“Greater ownership of foreign oil/gas supplies will ensure domestic energy security and help in managing price volatility.

Furthermore, the report has projected energy consumption of the country through coal-based sources at 12.8 mboe/d in 2045. 

The country’s coal demand is expected to increase but register a slower growth rate after the first part of the outlook period at just 1.9%. The reason for coal’s slowing pace is the faster deployment of other energy resources, especially gas, nuclear and other renewables, said the report. The imports of coal will continue to remain at around 25% with more domestic capacity coming online.

The contribution of renewables (solar and wind) to the primary energy requirements is estimated to increase from 0.3 mboe/d in 2022 to almost 4 mboe/d in 2045.

The government has increased efforts to raise the share of natural gas in the energy mix to 15% from the current 6% by 2030. However, the share is seen to rise by about just 10.6% by 2045. Nuclear power, too, is likely to more than triple between 2022 and 2045 from 0.3 mboe/d to 1.3 mboe/d. 

The country presently has around 6 GW of nuclear capacity under construction which once online will almost double the country’s installed capacity.