While global oil demand is predicted to decline in 2024, a bright spot emerges in the East. India, one of the largest buyers of Nigeria’s crude oil, is expected to see rising demand, driven by its growing population and economy.
This raises a crucial question for Nigeria, Africa’s biggest oil producer: is it ready to seize this opportunity?
According to a new report from the International Energy Agency, India’s oil demand is expected to grow by 1.2 million barrels a day through 2030, which would make up roughly a third of the projected total over the period. The country was already the world’s second-largest crude oil net importer in 2023.
“India will become the largest source of global oil demand growth between now and 2030, while growth in developed economies and China initially slows and then subsequently goes into reverse in our outlook,” the IEA report said.
That shift is expected to arrive as India’s economy keeps growing, along with its population and demographics.
The country’s massive industrial expansion is also a harbinger of soaring oil demand — through 2030, the sector is expected to account for about half the rise of India’s oil demand and over a sixth of total global oil demand growth.
Meanwhile, China’s economy has been going the other way. Beijing’s blemished post-Covid growth and a fracturing property sector have tanked its stock market. Foreign investors have also fled the market.
But beyond economic muscle, India’s oil demand growth is also a symptom of the global energy crisis, the IEA noted, which has forced countries around the world to prioritize energy security.
That concern is a big one for India, a country highly dependent on oil imports. It only produces 13 percent of its supply needs.
Delhi has been pouring money into its refining sector in anticipation of that surging demand. The country is expected to add about 1 million barrels a day of new refinery distillation capacity by 2030, more than any other country besides China.
India was already the world’s second-largest crude oil net importer in 2023, having boosted imports by 36 percent over the past decade to 4.6 million bpd to meet rising refinery intake. Increased refining processing will lift crude oil imports further to 5.8 million bpd by 2030, with major implications for India’s supply security.
“The energy crisis and recent surge in long-haul crude sources, notably from Russia, has also added further impetus to sustaining the country’s oil resilience in case of market disruptions.
“India needs to enhance its capacity to respond to possible oil supply disruptions by implementing and strengthening its strategic petroleum reserve program and improving oil industry readiness,” the report said.
This development is significant for Africa’s biggest economy because India represents the largest importer of Nigeria’s crude oil, earning the sub-Saharan country about N13.9 trillion since 2015, according to data gathered by BusinessDay.
Experts believe that for Nigeria to capitalize on this opportunity, it needs to invest heavily in infrastructure upgrades, tackle oil theft, and grow its oil production to pre-2015 levels.
Data from the National Bureau of Statistics showed the Netherlands bought Nigerian crude oil worth N2.5 trillion in the first nine months of 2023, while India’s imports from Africa’s top producer were valued at N1.6 trillion.
Indonesia and France occupied second and third positions as they purchased Nigerian crude worth N1.72 trillion and N1.65 trillion respectively as of September 2023.
Analysts attributed these developments to sanctions over the Ukraine conflict, which have driven India’s refiners to snap up discounted Russian oil, leading to a decline in demand for Nigeria’s crude oil.