Centre aims to boost refining capacity as fuel demand continues to rise

As the domestic consumption of fuel rises, the government is reassessing India's future oil needs. According to a report in The Economic Times (ET), the oil ministry has been asked by the government to prepare a report on the country's future fuel demand and refining capacity needs. 

The expectation that oil demand would fall and give way to alternatives has not played out well. Thus, the demand is expected to rise in the years to come, the report added. In the four months of the current year, till July, the petrol and diesel demands have grown 23.4 per cent and 17.5 per cent, respectively.

According to the International Energy Agency, the global demand for fuel is expected to rise above the pre-pandemic levels in 2023. 

Also Read | India's oil demand to rise by 7.7% in 2022, fastest growing in world: OPEC

In India, the demand for petrol is 11 per cent higher than the pre-pandemic level. For diesel, the demand is only 2 per cent lower than the pre-pandemic level. India is a net exporter of fuel, but rising demand has pushed up imports. 

The report quoted an official as saying that the country did not face any fuel shortage even when the supply was restricted and fuel prices high because of the state control of the refineries. However, the current capacity of 251 million tonnes per annum is not enough to meet the demand in future. 

In a report in 2018, the government projected the refining capacity in India to rise to 259 million tonnes in 2020 and to 415 million tonnes in 2025. 

Two refineries in Barmer were delayed due to the Covid-19 pandemic. The official further added that there was a need to increase the refining capacity in the eastern part of India. The country currently has the fourth-largest refining capacity in the world behind the US, China and Russia.