In a year when the prevailing narrative has been projecting doom and gloom for the oil industry, petroleum products in India have recorded an impressive 105.2% growth in June this year vis-à-vis the same month last year. At Gandhar Oil Refinery, growth of our range of specialty oils and lubricants too are surging and are well poised to cater to India’s consumption boom. Fuelling this boom are recent ambitious announcements for the oil and gas sector by the Government of India. These include installation of 175 gigawatt capacity of renewable energy by 2022, achievement of the mission of 100 smart cities, reduction by 10% of oil and gas import by 2022, and provision of clean cooking fuels.
The International Energy Agency (IEA) has projected the biggest increase in energy demand in the world to come from India over the next 20 years. In its report published in February 2021, IEA says India is at the threshold of “a very dynamic period in its energy development”. Over the coming years, millions of Indian households are set to buy new appliances, air conditioning units and vehicles. “To meet growth in electricity demand over the next twenty years, India will need to add a power system the size of the European Union to what it has now,” the report added.
Solar power is set for explosive growth in India, driven by India’s policy ambitions to reach 450 gigawatts of renewable capacity by 2030 and the extraordinary cost-competitiveness of solar. This potentially dramatic turnaround could match coal’s share in the Indian power generation mix within two decades. At present, solar accounts for less than 4% of India’s power generation, and coal is close to 70%. By 2040 or earlier, they are likely to converge in the low 30%s. Investment opportunities are also in the upstream sector, gas pipeline, city gas distribution (CGD) network, LNG terminal, development of underground coal gasification, coal to liquids, petrochemical and refinery.
At Gandhar we are expanding our offering and working towards becoming a major player in specialty oils, namely, white oils for cosmetics/ pharmaceutical/ plastics applications; industrial oils including heat transfer fluids and hydraulic oils; a premium range of automotive, rubber processing and transformer oils. Additionally, we have also extended our reach in emerging markets in the Middle East and North Africa. With the opening of a production facility in Sharjah, we have not only stepped up our production but have also continued to fulfill export orders without disruption during the pandemic. Because of this impetus and an increase in volume of industrial orders since last September we ended the last financial year with our best numbers in terms of revenue and profitability.
The macro numbers speak for themselves and only strengthen the buoyant consumption story. Here are some to take note of:
- India is the third-largest consumer of fuel in the world but will soon reach the top as the per capita consumption in the country is on the rise.
- India is currently using only 6% of the world’s primary energy and the per capita consumption of energy is still one-third of the global average.
- India is the second-largest refiner in Asia after China. It is emerging as a refinery hub with refining capacity exceeding demand.
- The demand for energy is expected to grow at a compound annual growth rate (CAGR) of 4.2% from 2017-2040.
- By 2023-24, India is going to be blending 20% ethanol in our petrol products. Government is promoting use of ethanol produced from biomass of sugarcane and other agricultural produce under EBP Programme.
- The total consumption of energy resources in 2019-20 has increased as compared to 2018-19 for natural gas (5.51%) and electricity from hydro, nuclear and other renewable sources from utilities (6.74%).
- India is an exporter of Petroleum Products. The export of petroleum products has increased from 59.08 MT during 2010-11 to 65.69 MT during 2019-20.
We are excited both by India’s prospects in the energy sector and by Gandhar’s roadmap that will enable us in the coming years to reach our brand potential in specialty oils.