India's oil needs may rise 4.6% this year: IEA

The country's demand for oil products may rise 4.6 per cent this year as an expanding economy boosts vehicle sales, the International Energy Agency said.

Growth in the South Asian nation's oil demand will slow to 2.3 per cent in 2008 as natural gas replaces naphtha in electricity generation, the advisor to 26 petroleum-consuming nations said today in its Monthly Oil Report. India's gasoline demand rose 9.2 per cent in August from a year earlier, it said.

India's central bank expects Asia's fourth-biggest economy to expand 8.5 per cent in the year to March 31, after growing 9.4 per cent in the previous year. Automobile companies including General Motors, Honda Motor and Volkswagen plan to spend at least $6.6 billion on new factories in India.

"For most of this year, gasoline sales have risen at double-digit rates as a result of buoyant economic growth, which in turn has stimulated the rapid expansion of the country's vehicle fleet,'' the report said. "Gasoline demand continues to roar ahead.''

Vehicle sales for 8 of the past 10 years and reached a record 1.38 million in the year ended March 31. Seven people in 1,000 own a car in the country, compared with 450 per 1,000 in the US and 500 for every 1,000 in Western Europe.

India is the world's second-biggest motorcycle market. China is the largest.

Demand for oil products in Asia Pacific has been revised downwards to an average of 8.3 million barrels a day this year, IEA said in the report. Consumption of oil products will "rebound" to 8.5 million barrels a day in 2008, it said.

Australia's total oil product demand rose 1.2 per cent in August "driven by transportation fuel on the back of strong economic growth,'' the IEA said. In the January to August period, the country's consumption increased an average of 2 per cent from a year ago and diesel rose 6.7 per cent.