India's dependence on import of Crude oil, LNG and Coal is increasing says Petroleum Minister

Speaking on the occasion on Petrotech 2014, Petroleum Minister Dr M Veerappa Moily emphasised that there are tremendous opportunities in the Indian oil and gas sector. He called for faster, transparent and fair decision making which could take India towards realising its goal of achieving self-sufficiency in petroleum product supply as envisioned by him by the year 2030. Referrring to the conference, Dr Moily stressed that energy requirement of emerging economies is growing at a rapid pace and must be met in order to satisfy socio-economic and lifestyle aspirations of a large part of the world’s population living in this part of the world.

Petroleum Minister Dr. Moily stressed on the following points in his speech at the occasion:

1. “Uncertainty in the Energy and Financial Markets is causing large ripples worldwide in both the sectors. The energy requirement of emerging economies is growing at a rapid pace and must be met in order to satisfy socio-economic and lifestyle aspirations of a large part of the world’s population living in this part of the world.  In this context the 11thInternational Oil and Gas Conference - Petrotech-2014 – which has its theme as Vision 2030: Emerging Global Energy Basket – Challenges & Opportunities’ would set the stage for exchange of ideas and chalking out the strategic goals for Energy Vision 2030.
2. The global population is likely to increase by another 1.4 billion people over the next 20 years.  This will have attendant consequences for the growth in energy demand, which is expected to grow by 1.6% per annum from now till 2030.
3. Most of the Asian Economies are deficient in energy resources, especially of Oil and Gas. This is particularly true for China and India, which have a growing demand for energy commensurate with expanding domestic economic activity. The proved reserves of Oil in Asia Pacific are just around three percent of the world total.  The gas reserves in Asia Pacific are 8.2% of the world reserves.  Moreover, the countries having major resource in Asia Pacific are already facing rising domestic demand. In this paradigm of resource scarcity, characterized in Asia Pacific, all stakeholders need to collaborate to maximize their collective resources, wisdom and bargaining position. In view of resource constraints there is an increasing need for leveraging the advancement in technology, improved efficiency of operations and adopting market pricing to curb wasteful consumption.
4. Currently, India is the world’s 4th largest importer of oil after US, China and Japan. By 2025, it is expected to become the world’s 3rd largest oil importer. As the Indian economy moves towards a cleaner energy mix, a number of attractive growth opportunities are emerging in and around the entire energy value chain. At the same time, however, the Indian energy sector is going through a critical phase and is facing several challenges. The industry and the country at large would need to address key issues like volatile global oil prices, alternate energy developments, achievement of efficiency across the hydrocarbon value chain, and so on. Globalisation has meant that our energy markets are more and more linked to global markets.  Our dependence on import of Crude oil, LNG and coal is increasing. According to International Energy Agency forecasts, India’s oil imports will increase by more than 4% per annum. Unless there are significant domestic oil and gas finds, it is estimated that the country’s dependence on imported crude oil may increase from roughly 75 % now to about 90% in 2030. This is expected to put a major strain on the state exchequer. Such a huge increase in energy import dependency calls for substantial focus on boosting domestic production of oil and gas as well as international security of supplies.  It is imperative for us to continue on the path of our energy reforms to facilitate investments for augmenting domestic energy supply.
5. In the recent past the emerging markets felt the pain of weak and reduced demand from the developed markets.  Though the economies of the emerging markets demonstrated tremendous resilience, the growth rates took a hit.  With the global economy showing signs of recovery, we in India need to unleash the entire latent potential to get back on an 8% plus growth trajectory that can be sustained over the long run.  There is need to accelerate the reform process in the energy sector so as to make private investment attractive in the oil and gas sector of our country.
6. India’s oil and gas sector is replete with opportunities. There are opportunities for foreign and Indian investments and technology partnerships in the upstream sector in India.  At the same time, opportunities exist for tie ups with Indian companies vying for equity stakes in oil and gas assets abroad and strategic stakes in unconventional acreages in order to acquire technology and expertise.
7. According to the International Energy Agency, India will need investment worth nearly US$ 600 billion over the period 2011-2030 across various segments of its hydrocarbon value chain to increase its energy supply and augment the enabling infrastructure. This provides ample investment and business opportunities for companies engaged in the oil & gas value chain.
8. However, investments of such magnitude can only be attracted if there is a conducive policy environment in the oil and gas sector.  Ever since assumption of charge of the Minister, Petroleum & Natural Gas, it has been my constant endeavour to unleash the reform process and to remove all bottlenecks that have somehow managed to thwart the growth of the domestic oil and gas sector.  Simple, transparent and stable policy regime is a pre-requisite for attracting any major investment.  I firmly believe that the domestic oil and gas production in the country can be significantly boosted if all stakeholders work in tandem and the market forces are allowed a free interplay.
9. I would particularly like to highlight the recent decision of the Government to hike the price of domestic gas.  Let me assure you that this move was initiated with the sole intention of enhancing the energy security of the country; an aspect which is central to all our endeavours for a higher growth trajectory. There are reserves of gas scattered across the country that can only become viable if an appropriate price is offered to the producing company.  The declining gas production and our increasing dependence on costly, imported RLNG has left no other option but to put together our entire might at enhancing and supporting sustained and higher production of hydrocarbons.  Though the changes initiated now will show results after 2-3 years, any delay in taking bold and pro-active decisions at this critical stage is going to seriously jeopardize our national interest.
10. The oil industry across the world has come to accept that the days of cheap oil or easy oil are over.  As we intensify our efforts to tap finite hydrocarbons, our search will take us to very difficult and technologically challenging frontiers such as ultra-deep water basins, the frozen Arctic, etc. The saviour, as always, will be technology.  In recent times, many new and innovative geophysical technologies, drilling equipment’s and services have come up with an answer to counter this challenge.
11. Let me assure you that our government and oil companies, both in the public and private sectors,  are taking measures to increase domestic production of oil and gas, diversification into unconventional sources, accelerating hydrocarbon assets acquisition abroad, alleviating energy poverty and promoting conservation of petroleum products for sustainable growth.
12. Finally, an area that will need more focused attention is petroleum conservation. After all, energy security is not just about acquiring energy assets abroad; it is also about simple behavioural changes at home which can lead to substantial energy savings.  Small and simple steps such as turning off the ignition of our vehicles at traffic lights can generate huge savings for the consumers and for the country as a whole.  In the days ahead, energy efficiency, energy diversification and energy conservation are going to be the watchwords and we need to gear up to these tasks ahead."