India's oil impact 'to match China'

OIL DEMAND: India's appetite for oil is likely to soar once its large-scale infrastructure projects get underway. (Getty Images)

India has the potential to become "the next China", with the subcontinent likely to have a much larger impact on driving oil demand and prices over the medium to long term, PFC Energy said on Sunday.

The energy consultancy said in a report once the world emerges from the global recession India was likely to push forward with its plans for large-scale infrastructure projects, which have been delayed due to the current economic downturn.

The growth generated by these massive projects - which include transportation, power, manufacturing, housing and rural development - will lead to a huge surge in energy consumption, PFC said.

"[This] would result in a much more significant call on global oil supplies," said Raja Kiwan, analyst at PFC.

India currently ranks sixth in the world among oil consuming countries, but its consumption is only one tenth of that of the United States and one third that of China, PFC said.

The firm said that India’s increased appetite for oil was a factor that helped drive oil to recent record highs, but added that the country's recent global impact on oil prices has been widely exaggerated.

Similarly, it said that fears that the country's slowdown is continuing to push prices down from its July peak, when they reached close to $150 a barrel, also reflect an exaggerated view.

Crude oil traded below $46 a barrel on Friday, while Goldman Sachs warned falling demand could drive prices down to $30 in the first quarter of 2009.

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