In the next five years, Asia is expected to contribute about 90% of the world’s growing oil demand. Hence, a number of partnerships are being established in the region; with the latest being between India and Malaysia.
Malaysia’s state-owned Petronas and Indian Oil Corp (IOC) are partnering up to build liquefied natural gas (LNG) terminals and expand fuel retailing together with gas distribution. The joint venture will be called IndianOil Petronas Private Ltd (IPP) in which both state-owned companies will own a 50% stake each.
The entry of Petronas in the Indian market is expected to spur greater competition with national players. At present, national refiners in India dominates the market, with international oil major such as Royal Dutch Shell also playing a significant role in India’s retail market.
IOC will invest $13.49 billion over the next five years to raise its refining capacity by 25 million tones a year, according to Shrikant Madhav, the company’s chairman.
IOC is currently India’s biggest refiner, operating a total of 11 refineries which is essential in converting crude oil into fuel.
Even though India’s oil demand fell for the first time in over a decade in 2020, the outlook for 2021 is hopeful, as restrictions ease and energy demand looks set to surpass pre-pandemic levels.
Then, there’s the fact that India relies heavily on oil and gas for its energy needs. While countries across Europe and North America are gradually looking to move away from fossil fuels, India plans to continue developing its oil and gas industry as long as the need is there.
As India’s huge population and energy demand continues to grow, it is expected that the oil product demand growth in the country could see an average of over 200,000 bpd in the coming years.
That being said, we can’t completely overlook the role of alternative energy production in the Indian market. Petronas long term aim is not only to take a stake in India’s ever-expanding oil industry but also to establish its reputation as a clean energy developer.
And this makes sense as IOC recently announced plans to expand operations to include petrochemicals, electric mobility, and hydrogen. Establishing regional partnerships with companies like Petronas helps IOC to develop more rapidly in the clean energy field.
At present, Petronas are already operating within India’s renewable energy space having acquired Amplus Energy Solutions in 2019, calling the operations M+ by Petronas. With this, Petronas are operating in the solar energy markets of Malaysia, India, and Dubai.
For IOC though, teaming up with regional players to develop the country’s oil and gas industry while also developing India’s clean energy capacity, will not only see the increasing demand for traditional energy being met but will also help to develop India’s reputation as a major international energy force over the next decade.