'India will overtake China in oil demand next decade', Moody's predicts greater dependence on imports

Though it was the responsibility of China to spur the growth in world oil demand over the past decade, it will remain the responsibility of India in the decade to come. While China is the world's number two oil user and India is number three, the growth in their demands differs significantly.

Moody's Ratings said, 'Demand growth and import dependence will be higher in India. Demand in India will grow faster than China in the next decade as China's economic growth is slowing down and the entry of new energy vehicles is accelerating.'

Crude oil consumption in China will peak in the next three to five years, while in India Moody's expects annual growth of three to five per cent in the same period. The rating agency said both countries are heavily dependent on oil and gas imports, but China's dependence on oil imports is expected to decline due to sluggish demand growth and rising domestic production.

Moody's said, "If India is unable to stop the decline in domestic crude oil production, its dependence on imports will increase." According to it, China's massive oil and gas consumption underlines the scale of its national oil companies (NOCs), which will likely overtake their Indian counterparts in production growth in the next three to five years.

Indian oil companies face challenges from old oil wells and slow investment. Apart from this, Moody's has also mentioned the difference in investment objectives of oil companies of the two countries.

It said that Indian NOCs are planning to boost domestic oil and gas production, but this is yet to be implemented. Apart from this, there is also more pressure on Indian companies to invest in green technology.