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London — Indian oil demand is still a while away from reaching pre-pandemic levels, Minister of Petroleum & Natural Gas and Minister of Steel Dharmendra Pradhan said Oct. 13, admitting that some energy projects are also facing delays.

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Speaking at the Energy Intelligence Forum, Pradhan acknowledged that managing the impact of the coronavirus on both India's energy demand and investment has been a huge challenge but he said the country was moving in the "right direction."

"Energy demand will be normal within the next few quarters. Things are on the right track," he said,

Indian oil demand fell dramatically from April to August as a result of the coronavirus-induced lockdowns, but as lockdowns eased, demand remained very weak due to a heavy monsoon and surging coronavirus infections.

Pradhan said the slowdown in oil and energy demand caused by the coronavirus meant there were "some hiccups" but he is confident the government would "not deviate in its energy investment plans."

India's oil products demand is, however, gradually rebounding especially for gasoline.

Gasoline consumption hit a seven-month high in September as commercial and industrial activity picked up, recent data from the country's Petroleum Planning and Analysis Cell showed.

BPCL stake sale

The government's plans to sell stakes in its state-run downstream major Bharat Petroleum Corp. Ltd., or BPCL, have hit a road bump.

Pradhan said the government was "treading cautiously" on the sale of BPCL but said the divestment was still on the cards.

"But we all will appreciate, looking into the net worth and into the size, the government is treading very cautiously on how to offload [the stakes] through a proper process," he said.

The extension deadline for submission of bids for a 52.98% stake sale in BPCL have already been extended four times, and the closing date is now until Nov. 16, giving time to potential bidders due to the coronavirus.

The Indian government aims to mop up 57% of its divestment target in 2020-21 (April-March) from the proceeds of state-run companies including BPCL.

"We are committed to offload our state-owned oil companies," the minister said. "We want to take a more professional approach. Government has no business to be in the business."

BPCL will give the buyer access to around 14% of India's oil refining capacity of 5.2 million b/d and about 25% of the fuel market share in the world's third-largest oil consumer market after China and the US.

The sale was expected to generate a lot of interest as domestic refiners are not eligible to participate and also the participating bidders must have a minimum net worth of $10 billion.

Global oil giants such as Saudi Aramco, ADNOC, Rosneft and Exxon Mobil are expected to participate in the bidding process.

Refining ambitions

India maintains lofty ambitions to boost its total refining capacity by 40% in the next decade as oil demand is set to grow sharply.

Pradhan said the ministry wants to add a minimum of 100 million mt by 2030 from its current refining capacity of 250 million mt.

Central to that will be the 1.2 million b/d Ratnagiri refinery project on the country's Konkan coast, which is being built a joint venture consisting of Saudi Aramco, ADNOC and Indian state-owned refiners IOC, HPCL and BPCL.

Pradhan admitted that this project was facing some "local issues" but he hopes to sort these out very soon with the Maharashtra state government.

"There is no rethinking of the scope or size or partners of the planned projects and we hope to achieve it in the scheduled time," he said.

Construction at the site was expected to start this year but there have been issues relating to land acquisition which has stalled the project.

The refinery is expected to be commissioned in 2025, according to sources.

Energy transition

India will gradually move to using more clean energy sources but Pradhan admitted that the country would continue to depend heavily on fossils fuels for the years to come.

India is poised to see the largest growth in energy demand from now to 2040, according to the IEA's latest long-term oil market forecast,

He said this is because the country still relies largely on oil and gas for transportation fuels and this is unlikely to change drastically for a while.

India is poised to see the largest growth in energy demand from now to 2040, according to the International Energy Agency's latest long-term oil market forecast.

India is also aggressively pushing for renewable energy, but the South Asian giant's energy structure is unlikely to see a major shift soon.

The government has ambitious plans on clean energy but decarbonizing and desubsidizing fossil fuels remains a key policy.