NEW DELHI: India's oil demand growth will overtake China by mid-2020s, the International Energy Agency (IEA) said on Friday asking the world's third-largest energy consumer to raise the capacity of strategic oil storages as insurance against disruptions.
IEA Executive Director Fatih Birol said India's current strategic oil storage of 10 days of its imports is not enough to protect it in "rainy days".
IEA projected India's oil demand to reach 6 million barrels per day (bpd) by 2024 from 4.4 million bpd in 2017. China's demand growth is likely to be slightly lower than that of India by the mid-2020s.
"India is the world's third-largest consumer of oil, the fourth-largest oil refiner and a net exporter of refined (petroleum) products. The rate of growth of India's oil consumption is expected to surpass that of China in the mid-2020s, making India a very attractive market for refinery investment," IEA said the 'India 2020 Energy Policy Review' released here.
Speaking to reporters after the release, Birol said India today is the third-largest oil market behind the US and China. Its "demand will go up significantly in the next years to come" on the back rise in oil consumption for mobility, as cooking fuel and in the petrochemical industry.
The IEA, which coordinates the release of strategic petroleum reserves (SPR) among developed countries in times of emergency, said it is important for India to expand its reserves.
"Therefore India's current (strategic) stock equivalent to 10 days of imports will need to increase in order to protect India in the rainy days in the oil market," he said.
India has built underground storages at Padur and Vishakapatnam in Andhra Pradesh and Mangalore and Padur in Karnataka to stock 5.33 million tonnes of crude oil. The storage capacity is equivalent to less than 10 days of India's oil imports.
In the second phase, similar storages are planned at Chandikhol in Odisha and Padur in Karnataka for another 6.5 million tonnes of oil.
"I think the current capacity is a good start but, looking at the growing demand, this has to increase," he said. "I do not want to give a specific number to India but I want to give specific advice, the advise is there is a need to increase capacity and increase it continuously."
He said India like other countries has economic priorities, but "has to prepare itself for rainy days, it is very important, especially in this world which is becoming a dangerous world and many of the oil-exporting countries and choke points are being discussed."
IEA member countries maintain 90 days of strategic stockpile, he said adding IEA was in discussion with the Indian government on how to improve the current stock capacity so that the country can become a full-time member of IEA.
India currently is an associate member.
"In the oil markets, if it is not rainy it is always cloudy," he said.
India imports more than 80 per cent of its oil needs, of which 65 per cent is from the Middle East through the Strait of Hormuz, the IEA said, adding that the country's oil refining capacity will rise to about 8 million bpd by 2025 from about 5 million bpd at present.