Big producers in the Organization of the Petroleum Exporting Countries (OPEC) are gearing up to enter the Indian market by building more refineries, in an attempt to capture a bigger slice of what is said to be the second best-growing energy market in Asia after China.
Yet the move comes at a time when the Asian country is trying to deploy more electric cars on its roads by 2030, in an attempt to catch up with China and other leading consumers who are trying to limit or ban the sale of regular cars by the middle of the century.
Gulf oil producers such as Saudi Arabia plan to form a joint venture with Indian refiners by next year, while Kuwait has been in talks with Indian refiners for years over a possible venture. Others like the UAE, Iraq, and Iran are luring Indian refiners to get more contracts as they have complex refineries to process sour and heavy or light crude grades that these countries can pump.
Competition for the Indian market is intensifying and the government knows this. In May, Minister for Petroleum and Natural Gas Dharmendra Pradhan told a press conference in Vienna that the market is awash with oil and this is the time for consumers to bargain. “Consumer is king,” he said.
Saudi Arabia is competing with Iraq to be India’s top oil supplier, with Iraq displacing it for a fifth month in a row in August, data compiled by Reuters showed.
Competition is also coming from outside of OPEC. Indian Oil Corporation Ltd., the country’s top refiner, received India’s first shipment of US crude last week and other refiners are now looking to get more crude from America.
To boost its position in the Indian market, Saudi Aramco on Oct. 8 launched a new office in New Delhi and its CEO Amin Nasser attended a conference where he announced that his company will form a joint venture by 2018.
Aramco wants to buy a stake in the planned 1.2 million barrels per day (bpd) refinery on India’s west coast, India’s oil minister said in June.
The short- and medium-term outlook for the Indian oil market is still looking good. “The size of India’s market is huge. The growth in India last year is 8 percent compared to 1.5 percent globally in energy,” Nasser told the India Energy Forum by IHS CERA in New Delhi. “We need to be here.”
The long-term, however, remains risky. Indian Transport Minister Nitin Gadkari said two weeks ago that the Cabinet would soon take a call on the National Institution for Transforming India’s suggestion to stop the registration of fossil-fuel vehicles by 2030, the Hindustan Times reported on Oct. 3.
“The idea is that by 2030, not a single petrol or diesel car should be sold in India,” Gadkari was reported as saying.
Around 736,000 electric cars were sold in 2016 and the number is expected to cross 150 million by 2030, with China and India leading the pack, according to the International Energy Agency’s outlook for 2017, projecting an annual growth of 15.6 percent until 2030.
India is still hoping to bring in more investments in refining, however, and Gulf states are willing to come. India’s Oil Minister Pradhan, who inaugurated Aramco’s India unit on Oct. 8, was quoted by the media as saying that Aramco is interested in investing in refinery projects in the Asian country and “very soon they will come
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