Energy Scenario in India: Insufficiency of domestic energy resources
Energy has been universally recognized as one of the most important
inputs for economic growth and human development. There is a strong
two-way relationship between economic development and energy
consumption.
India is well-endowed with both exhaustible and renewable energy
resources. Coal, oil, and natural gas are the three primary commercial
energy sources. Despite increasing dependence on commercial fuels, a
sizeable quantum of energy requirements (40% of total energy
requirement), especially in the rural household sector, is met by
non-commercial and traditional energy sources, which include wood, crop
residue, biomass and animal waste, including human and draught animal
power.
The Indian energy sector has lately witnessed a rapid growth. Areas
like the resource exploration and exploitation, capacity additions, and
energy sector reforms have been revolutionized. However, resource
augmentation and growth in energy supply have failed to meet the ever
increasing demands exerted by the multiplying population, rapid
urbanization and progressing economy. An average Indian uses around
584.94 kg of energy, while in U.S.A., the corresponding figure is 7,778
kg of energy per capita. The World average of energy consumption is
close to 1818 kg.
Driven by the rising population, expanding economy and a quest for
improved quality of life, total primary energy consumption is going to
almost double to 912 Kg over this decade.
India thus faces formidable hurdles in meeting its current and future
energy needs, if it wants to maintain its current 8 percent per year
economic growth rate.
More than half of India’s electricity is generated by burning
poor-quality domestic coal, which is expected to exhaust in about 40
years.
India’s dependence on imported oil, which currently stands at 60 percent, is expected to grow to 90 percent by 2030.
Equity Oil and Gas from abroad
In view of an unfavourable demand-supply balance of hydrocarbons in
India, acquiring equity oil and gas assets overseas is one of the
important components of enhancing energy security. The government is
encouraging national oil companies to aggressively pursue equity oil and
gas opportunities overseas. Total availability of oil and gas through
these overseas contracts is equivalent to around 10.5 per cent of
domestic production.
The acquisition of overseas oil and gas has been primarily
spearheaded by ONGC Videsh Limited (OVL), the wholly owned subsidiary of
the ONGC. Apart from OVL (40 Projects in 15 Countries), the other oil
public-sector units (PSUs), namely Indian Oil Corporation Limited (IOCL)
(9 Projects in 6 Countries), Oil India Limited (OIL) (12 Projects in 8
Countries), Bharat Petroleum Corporation Limited (BPCL) (12 Projects in 7
Countries), GAIL India Limited (4 Projects in 2 Countries), and
Hindustan Petroleum Corporation Limited (HPCL) (2 Projects in 2
Countries), have acquired overseas exploration acreages. Among other
government companies, the Gujarat State Petroleum Corporation (GSPC), a
Government of Gujarat enterprise, has also acquired overseas
hydrocarbon-bearing assets.
The total investment by oil PSUs (OVL, OIL, GAIL, IOCL, BPCL &
HPCL) overseas is more than Rs. 64,832 crore, which includes two
pipeline projects in Sudan and Myanmar.
OVL's total oil and gas production from its overseas assets in Sudan,
Vietnam, Venezuela, Russia, Syria, Colombia, and Brazil during
2010-11was about 9.45 million metric tonnes of oil equivalent (MMTOE) .
In 2011, the consortium of OVL (OVL-25per cent) and KazMunaiGas (KMG-
75per cent) has acquired stake in Satpayev block, Kazakhstan.
The production from the OVL assets abroad in Sudan, Sudan south,
Vietnam, Venezuela, Russia, Syria, Colombia, and Brazil was about 6.76
MMTOE during April-December 2011 as against 7.06 MMTOE in the
corresponding period of the previous year.
The reason for the shortfall is mainly geopolitical upheavals in Sudan and Syria.
Import of Liquefied Natural Gas (LNG)
To cater to the country's growing gas demand, Petronet LNG Limited
(PLL) is constantly engaged with various LNG producers/suppliers as well
as upcoming conventional and non-conventional LNG projects especially
in Western Australia. During 2010-11, PLL imported 8.64 million metric
tonnes (MMT) of LNG at its Dahej Terminal. Total LNG imports during
April-December 2011 were to the tune of 8.17 MMT against the total
import of 8.95 MMT during 2010-11.
In 2011, PLL has also entered into an MoU with Gazprom Marketing and
Trading Singapore Pte. Ltd. (affiliate of OAO Gazprom, Russia) for
sourcing up to 2.5 million metric tonnes per annum (MMTPA) of LNG on
long-term basis and pursuing discussions on a sale and purchase
agreement.
Possibilities are also being explored for availability of any
diversion of gas available in the US market on account of shale gas
finds. PLL is developing another green-field project of 5.0 MMTPA
capacity at Kochi in the State of Kerala. The construction is going on
full swing and the terminal is scheduled to be commissioned by the last
quarter of 2012. PLL is planning to expand its Dahej terminal capacity
from 10 MMTPA to 15 MMTPA. In addition to this, it is exploring the
possibility of setting up an LNG terminal on the east coast of India and
has shortlisted certain ports. A preliminary market demand assessment
study has been carried out and preparation of a Detailed Feasibility
Report has been initiated.
India’s overseas explorations: Emerging Issues
India's oil and gas explorations in South China Sea
Oil exploration activities by India's ONGC Videsh in the waters off
Vietnam had recently irked China and the two countries had differences
over the issue. South China Sea, which Beijing claims almost in its
entirety, is thought to be rich in oil and gas and is one of the world's
most important shipping routes. Recently, Beijing warned that it did
not want foreign companies engage in activities in the disputed waters,
saying such acts undermine its sovereignty.
India has already said that exploration of oil and gas in the South
China Sea is purely a commercial activity and the dispute should be
sorted out under the international laws and practices.
Energy relations with countries in South Asia, the CIS countries and Europe
For India, access to elusive Central Asian energy reserves and
countering the expanding presence of China in Central Asia (Kazakhstan
and Turkmenistan) could be factors stimulating Indian interest in
Turkmenistan. Turkmenistan has already finalized the Gas Sale Purchase
Agreement (GSPA) with all the participating countries for the $7.6
billion TAPI gas pipeline that will pave the way for the supply of 3.2
billion cubic feet of natural gas per day from South Yolotan /Osman and
adjacent gas fields to South Asian states through the pipeline.
For Turkmenistan’s part, enhancing ties with a growing economic power
like India and the need to find alternative markets for its gas could
be the main-driver for strengthening relations between the two
countries. There is declining gas consumption in Russia, and an
abundance of natural gas across the rest of Europe due to the
availability of competitively-priced LNG.
For India too, the TAPI project could serve as the strategic link it
has long sought within Central Asia, which it sees as its strategic
neighborhood, and South Asia. The project could lead to, or even
expand, existing trade, electricity and transit networks across Eurasia
and allow Turkmenistan and India to diversify their trade and energy
relations with countries in South Asia, the CIS countries and Europe.
India’s energy partnerships with African Countries
Among African Countries, South Sudan has the largest oil reserve
after Angola. It walked away with 75% of the oil fields of the undivided
country after South Sudan was carved out last year. However, in the
absence of any processing infrastructure, its authorities are seeking
help from OVL to build pipelines, oil stores and refineries.
Responding to the ongoing conflict between Sudan and South Sudan,
India has appointed a special envoy to broker peace between the two
countries that holds the key to India's pursuit of oil and other
hydrocarbon resources in Africa including ONGC Videsh Limited's (OVL)
investments of close to $3 billion into the undivided country.
Concluding remarks
With the Indian economy poised for a robust growth in the next few
years, energy security has become the focal point of policy formulation.
From domestic finds in oil and gas to acquiring hydrocarbon assets
abroad, dealing with foreign investors and negotiating transnational
pipelines — all these issues have emerged as key points in India's quest
to secure its energy future.
In light of this, India should engage in aggressive oil diplomacy.
What we also need is a national energy policy and national energy
security adviser to secure our future. We need an explorer-friendly
exploration policy if domestic natural gas output is to surge. There is
very active energy diplomacy called for.