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Informist, Thursday, May 22, 2025

 

--Moody's: India's oil demand to grow faster than China's over next decade

--Moody's: India's natural gas demand growth to be slightly higher than China

--Moody's: India's oil import reliance to rise if unable to stem output fall

 

MUMBAI – China and India are among the biggest consumers and importers of oil and gas, with the former driving oil demand growth over the last decade. However, India is set to take the lead in demand growth over the next decade, Moody's Ratings said in a report Thursday. The rating agency believes demand for oil and gas will grow faster in India than in China, as the latter's economic growth slows and the penetration of new energy vehicles in the country accelerates.

 

Consumption of crude oil in China will peak in the next three to five years, while in India, annual growth of 3-5% is expected in the same period. Both the countries rely heavily on oil and gas imports but China's reliance on oil imports will fall, reflecting slower growth in demand and increased domestic production. India's reliance on imports will rise if it is unable to stem a production decline, the rating agency said. India's crude oil production will fall while demand for oil will rise by 1.2 million barrels per day from 2023 to 2030, suggesting that the country's reliance on imports will increase further, barring significant government action to ramp up domestic supply, Moody's said, citing the International Energy Agency.

 

 

Oil demand in China will grow marginally to peak at around 800 million tonnes per annum by 2030. Refining capacity in the country is also near the state-mandated cap of 1 billion tonnes, which limits the potential for growth of crude oil demand. On the other hand, India aims to increase its refining capacity 20% to 309.5 million tonnes per annum by 2030 from 256.8 million tonnes per annum as of Apr. 1, 2024.

 

The growth in demand for natural gas in India will be slightly higher than China's, the global ratings agency said. India aims to increase the share of natural gas in its energy mix to 15% by 2030 from around 6% now. "The expansion of industrial sectors such as fertilisers and petrochemicals, which use gas as feedstock, along with higher consumption of natural gas in urban and semi-urban areas, will support demand growth of 4-7% per year in India through 2030," Moody's said.

 

The use of compressed natural gas and piped natural gas in cities, for both transportation and household energy needs, has been on the rise. But the hurdles to further growth include gas connectivity in the country, as well as affordability, given the presence of cheaper alternatives like renewables, it said.

 

India's oil and gas production fell over the last decade while domestic demand continued to rise; hence, the country's reliance on crude imports rose. However, self-sufficiency for gas has improved, partly driven by lower gas consumption growth because of high prices. "The sharp rise in liquefied natural gas (LNG) prices during fiscal year 2022–23 led to a reduction in India's gas consumption, which in turn caused the country's reliance on gas imports to fall below 45%," Moody's said. Gas demand in India will rise by 37 billion cubic metres per year from 2023 to 2030, while production will increase by less than 5 billion cubic metres during the same period, it said, citing IEA. 

 

The rating agency believes China's national oil companies will maintain stronger business profiles than their peers in India, reflecting their significantly larger scale and deeper integration across the oil and gas value chain. Additionally, Chinese national oil companies demonstrate greater operational strength, as shown by their success in increasing oil and gas production.

 

"We expect credit metrics for Chinese NOCs (national oil companies) will remain stronger than those for their peers in India. Free cash flow for most Indian NOCs (national oil companies) will likely continue to be negative in the next 12-18 months, as they invest to meet their growth ambitions," Moody's said.  End

 

Reported by Ashutosh Pati

Edited by Avishek Dutta

 

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