By RAKESH SHARMA
NEW DELHI -- Indias oil product demand will slow in the second half of the year due to increased global economic turmoil, though it will rebound in 2013 thanks to 7% projected economic growth, the International Energy Agency said Friday.
The EIA's monthly forecast is broadly in line with domestic projections. Summer energy demand recently peaked, and it will likely fall off over the next few months, barring unforeseen contingencies.
The government has announced plans for $1 trillion in infrastructure investments over the next five years as it builds roads, railways, airports and power plants.
Indias oil ministry has forecast demand for oil products in the financial year that began April 1 to rise 6.1% to 157.07 million metric tons, the fastest pace in the past four years, helped by government spending on the country's woefully inadequate infrastructure.
India has an installed refining capacity of 4.26 million bpd and is a net exporter of oil products, relying on imports to meet about four-fifth of its crude-oil needs.
In its monthly report, the IEA said Indias demand for oil products was at 3.8 million bpd in June up 7.2% compared with a year earlier, a sharp acceleration compared with average growth of less than 3% in the previous six months.
Diesel consumption jumped by 14% on year in June, at 1.5 million bpd, as farmers increased their reliance on water pumps to irrigate their crops due to reduced monsoon rainfall and city dwellers used increased power to operate air conditioning to beat the summer heat.
Coal and natural gas shortages have hurt power generation in the country, leading to frequent blackouts and forcing household and industrial consumers to rely on diesel-powered generators.
The IEA said July's electricity blackouts - especially the collapse of three grids that affected hundreds of millions in northern India - will likely provide further short-term support for diesel demand as a major stop-gap power source.
Dow Jones Newswires