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India’s consumption of petroleum products hit a new record in financial year 2022-23, underscoring robust demand for transportation fuels and some other refined products, shows an analysis of data released by the Petroleum Planning & Analysis Cell (PPAC) of the oil ministry.
For the year ended March, consumption of major fuels–diesel, petrol, and liquefied petroleum gas (LPG)–broke all previous records. Petroleum product consumption is considered a measure for crude oil demand, alongside being a proxy for tracking industrial activity and domestic consumption trends.
India consumed a total of 222.30 million tonnes of petroleum products in 2022-23, 10.2 per cent higher year on year (YoY). An analysis of historical data shows that the previous consumption record for petroleum products was 214.13 million tonnes in 2019-20. Demand took a hit in 2020-21 due to the pandemic, and posted a modest recovery in 2021-22. In 2022-23, demand for most products breached pre-COVID highs as various sectors of the economy made a full recovery from the pandemic’s impact. As per PPAC’s projections released late February, the country’s petroleum product consumption will touch a new high of 233.81 million tonnes in 2023-24.
India consumed 85.90 million tonnes of diesel 2022-23. Diesel is the most-consumed fuel in India, accounting for close to 40 per cent of the country’s overall consumption of petroleum products, followed by petrol at around 16 per cent. The country’s consumption of petrol in 2022-23 was 34.98 million tonnes, up 13.4 per cent YoY. India’s LPG consumption in 2022-23, although just 0.9 per cent higher YoY, also hit a new consumption record at 28.50 million tonnes.
As per PPAC’s projections for 2023-24, diesel consumption is expected to rise to 90.56 million tonnes. Petrol consumption is seen at 37.80 million tonnes. Higher demand for these two fuels reflects robustness in the transportation and some industrial segments. LPG consumption is seen rising to 29.12 million tonnes in the current financial year.
PPAC’s data bank has consumption data from fiscal year 1998-99. Given consumption levels at the time, it is safe to assume that prior to 1998, consumption of petroleum products did not exceed the levels seen in recent years.
The consumption trends in March also broke several previous records. At 20.50 million tonnes, overall petroleum product consumption in March was the highest-ever in a single month. The same was true in case of diesel and petrol. India consumed 7.80 million tonnes of diesel and 3.11 million tonnes of petrol in March. On a YoY basis, the country’s overall petroleum product consumption in March was about 5 per cent higher.
India is the world’s third largest consumer of crude oil and depends on imports to meet over 85 per cent of its requirement. The country currently has a refining capacity of around 250 million tonnes per annum (MTPA), and plans are afoot to scale it up to around 450 MTPA over the next few years as India’s oil demand is expected to be on the ascent for the foreseeable future.
As per a projection by the International Energy Agency, India’s oil demand could rise from 4.7 million barrels per day (bpd) in 2021 to 6.7 million bpd by 2030 and 7.4 million bpd by 2040.
