The rapid take-up of electric vehicles in India’s fledgling market has prompted a major rethink about the country’s long-term fuel needs as refiners in Asia’s third-largest economy hasten their shift away from oil production.
India, one of the world’s fastest growing oil markets, has lagged major economic peers in Europe and Asia in the adoption of EVs but sales are now picking up and investment in the production of new autos and energy infrastructure is accelerating.
The faster-than-anticipated industry growth means India’s gasoline consumption will peak sooner than previously thought, some analysts and industry participants say, forcing top oil firms to expedite transition plans to alternative business lines, notably increased petrochemical manufacturing. Currently, around 90% of Indian petrochemical demand is met by China, he said, so a shift by Indian refiners towards domestic chemical needs could dramatically change supply dynamics.
Indian refiners are investing billions of dollars to raise petrochemical capacity. Indian Oil Corp, the country’s top refiner, is raising petrochemical capacity at its Panipat refinery by 13% and building new plants linked to its Paradip and Gujarat refineries.
Reliance Industries, operator of the world’s biggest refining complex, plans to invest 750 billion rupees ($9.38 billion) to expand its chemical business, while Essar Group plans to set up a 400 billion rupee petrochemical complex in east India.
Nayara Energy expects 15 to 20 new integrated petrochemical plants will start in the next decade. China currently dominates global EV production and domestic adoption of new energy vehicles is well advanced. The China Passenger Car Association expects sales of new energy cars, mainly EVs, to hit 8.5 million units this year, or 36% of all new sales.
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