crude oil Current Affairs - 2020

IEA launches India’s Energy Policy Report

On January 10, 2020, the International Energy Agency (IEA) launched India’s Energy Policy Report. The report insisted that India should adopt its think tank NITI Aayog’s National Energy Policy. IEA released its “India Report 2020”, in collaboration with NITI Aayog.

Key Findings of the report

  • The oil demand of India will overtake China by mid-2020. It will make India more vulnerable to supply disruption in the middle east. According to the report, oil demand of India will reach 6 million barrels per day by 2024. It was 4.4 million barrels per day in 2017.
  • The report also said that India is the third largest consumer of oil after China and United States. Also, India imports 80% of its oil needs. Of this, 65% are from middle east through Strait of Hormuz.
  • India is the fourth largest oil refiner in the world. The products mainly include diesel and gasoline. The report said that India’s plan of increasing its refining capacity to 8 million barrels per day by 2025 will make India an attractive market for investment in the refinery sector.

Strategic Petroleum Reserves

The agency releases strategic petroleum reserves of developed countries. It insisted that India has to expand its fuel reserves.

The Indian Strategic Petroleum Reserves Limited maintains emergency fuel store of 5.33 metric tonnoes. This will fulfil the demand of the country for 10 days. There are three such oil storage reserves located at PAdur, Mangalore and Vizag. In 2017-18 budget, it was announced that India is to build 2 more reserves at Chandikhole and Bikaner respectively.

Growth of eight core sectors slows to 2.1% in July 2019

According to official data released by Government, Growth of eight core industries (Index of Eight Core Industries) dropped to 2.1% in July 2019. It was mainly due to contraction in coal, crude oil, natural gas and refinery products. These eight sectors had expanded by 7.3% in July 2018. Moreover, it has declined by 6.2% during April to July, 2019-20 over the corresponding period of previous year.

Sector wise breakaway (July 2019)

Index of Eight Core Industries

It is monthly production index, which is also considered as lead indicator of the monthly industrial performance. It contains production and growth figures of eight core industries viz. steel, electricity, crude oil, refinery products, coal, cement, natural gas and fertilizers. It is compiled by Central Statistic Organisation (CSO) under Union Ministry of Commerce and Industry based on monthly production information received from source agencies. These core industries are considered as main or key industries of the economy and serve as backbone of all other industries

Weightage: Petroleum Refinery production (weight: 28.04%), Electricity generation (19.85%), Steel production (17.92%), Coal production (10.33%), Crude Oil production (8.98%), Natural Gas production (6.88%), Cement production (5.37%), Fertilizers production (2.63%

Relation with index of industrial production (IIP):  These eight core sectors constitute 40.27% of IIP.

Economic Slowdown

The data concerned with slowdown in growth of eight core sector comes days after India’s GDP growth rate slowed to 6-year low of 5% for first quarter of FY 2019-20. It was down from 5.8% in fourth quarter of FY 2018-19. In first quarter of the previous financial year, GDP growth was 8.2%. This effectively means that India’s growth rate has fallen by 3% in barely a year’s time. This is fourth successive decline in GDP, from 8% in 1st quarter of FY19 to 5% in this quarter. It is also the slowest growth since Q1 in 2013.