India, China to Become Top Oil Guzzlers by 2023: Report

India and China are becoming the largest importers of oil and are likely to overtake the United States by 2020, according to the International Energy Agency (IEA).

Economic growth in Asia will propel demand for oil to 104.7 mb/d by 2023, an increase of 6.9 mb/d. According to IEA’s new report titled Oil 2018, “global oil trade routes are moving East, as China and India replace the United States as top oil importers.” Oil imports in Asia are expected to grow by 3.5 million barrels a day through 2023.

By 2023, the United States will be prepared to export 5 million barrels a day. The western nation will also supply most of the oil to the world for the next five years. Apart from the United States, Canada, Brazil and Norway will supply oil till 2020.

“Upstream investment shows little sign of recovering from its plunge in 2015-2016, which raises concerns about whether adequate supply will be available to offset natural field declines and meet robust demand growth after 2020,” IEA executive director Fatih Birol said in the report.

“Unless there is a change to the fundamentals, the effective global spare capacity cushion will fall to only 2.2 per cent of demand by 2023, the lowest number since 2007,” the IEA stated.

Investment in the industry has been steadily declining since 2015. While investment decreased by 25 per cent in 2015 and 2016, in 2017 it was flat. The fall in investment, coupled with drop in oil prices, also demolished benchmark crude futures from $100 in 2014 to $30 in 2016.

The market has recovered mostly since the OPEC cartel partnered with Russia and other producer nations to cut output in 2017. According to the report, the Middle East will continue to be Asia’s biggest supplier even as it is increasing domestic refinery.

India also bought a stake in Abu Dhabi’s oil resources for the first time in February 2018.

The Memorandum of Understandings (MoU) was signed between ONGC Videsh, Bharat PetroResources, Indian Oil and the Abu Dhabi National Oil Co (Adnoc) on Feb. 10 for the acquisition of 10 per cent participating interest in Abu Dhabi’s offshore Lower Zakum Concessions. The concession will be for 40 years from 2018 to 2057, and 60 per cent of the participating interest will be retained by ADNOC and remaining 30 per cent will be awarded to other international oil companies, a statement issued by the Indian embassy in Abu Dhabi said at the time.