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'India will soon have an integrated energy policy'

April 05, 2006 16:48 IST
Address by Murli Deora, Minister of Petroleum and Natural Gas, Government of India, on the occasion  of  Annual General Meeting of US Energy Association at Washington, DC on April 4, 2006.

It gives me great pleasure to be present here on the occasion of  the Annual General Meeting of  the US Energy Association and share my views with the distinguished audience on the energy security of India.

First let me congratulate USEA for its pioneering role and for carrying forward the mission of the World Energy Council to promote sustainable supply and use of energy for the greatest benefit of all.

Today let me share with you the energy security concerns of India to fuel its targeted economic growth with utmost regard to preserve the environment.

India, cradling a sixth of the world's population is its sixth largest consumer. The structural adjustments initiated in the country's policy making in the 1990s initiated a process of visible economic change in India. With the National Common Minimum Program and its various policies for stimulating and sustaining growth, India is poised to achieve a sustained GDP growth rate of 8 per cent this year and possibly even higher in future.

With this rapid pace of growth, India at 520 kg of oil equivalent consumes only a third of the world's average annual per capita energy. The country's total primary energy requirements, which are close to 360 million tons of oil equivalent per annum, are projected to go up to 1.6 billion tons of oil equivalent by 2030.

Nearly the entire need of our commercial energy is met by fossil fuels, namely coal and hydrocarbons. Oil and gas currently account for nearly 45 per cent of the primary commercial energy requirements of the country and their share is likely to remain high in future, with gas providing for a larger share.

Our focus to give top priority to our energy security concerns can be seen from a statement made recently by our  Prime Minister Dr Manmohan Singh before the Indian Parliament in the context of the historic agreement between India and the US on civil nuclear cooperation. He stated that:

"The search for an integrated policy with an appropriate mix of energy supplies is central to the achievement of our broader economic or social objectives. Energy is the lifeblood of our economy. Without sufficient and predictable access, our aspirations in the social sector cannot be realised.

"Inadequate power has a deleterious effect in building  modern infrastructure. It has a direct impact on the optimal usage of increasingly scarce water resources. Power shortage is thus not just a handicap in one sector but a drag on the entire economy.

"I believe the needs of the people of India must become the central agenda for international cooperation. It is precisely this approach that has guided our growing partnership with the United States".

We are in the process of drafting an integrated energy policy to provide a road map to augment and meet our growing energy need in an environmentally sustainable manner.

I will confine myself to oil and gas scenario which is my portfolio. It is projected that the demand for oil and gas in India, during 2005 to 2025, will grow steadily at a rate of 4.3 per cent and 7.3 per cent respectively. At current levels, domestic production meets only 25 per cent of the country's oil needs which are at around 2.6 million barrels per day.

This demand is expected to increase to 7.5 mbpd (million barrels per day) when India may need to import almost 85 per cent of its oil requirements unless new major exploratory successes are reported in our now unexplored basins. We expect the demand  for natural gas during the same period to increase from 150 million standard cubic meters per day to about 390 mscmd.

India has crafted a multi-pronged strategy to counter the challenge of fuelling India's economic growth. This strategy includes a conscious shift to promote larger public-private participation in oil and gas. Our policy has been carefully evolved to create a level playing field for all the participants in the sector.

With the recent passage of the Petroleum and Natural Gas Regulatory Board Bill in our Parliament, agencies to regulate and monitor the mid-stream and downstream sectors of oil and gas are being put in place. For the upstream, the director general of hydrocarbons fulfils the technical regulatory functions.

Our new exploration licensing policy has been successful in opening up new and hitherto unexplored sedimentary basins for exploration and has enabled us to add a sizeable quantum of oil and gas reserves. The global perception of India's hydrocarbon endowment is rapidly changing with more investments and modern technology pouring into India. Our policy dispensation today provides for unhindered flow of investment into the entire hydrocarbon value chain, including exploration and production, refining, pipeline infrastructure and marketing.

While the price of crude oil and petroleum products have been extremely volatile in the international markets, our policy has been calibrated with extreme care to enable the economically weaker sections access their basic energy requirements. This has been done through a carefully evolved equitable sharing of burden of high prices by all stakeholders, namely government, oil companies and consumers.

Energy efficiency and energy conservation are two vital areas of energy management. The energy intensity in the Indian economy has registered a considerable decline over the past 15 years or so making our industrial sector globally more competitive... we are not complacent. Newer and better ways of energy use are being continuously employed in our economic activity. This is particularly important in the context of globalisation.

Another important component of our oil and gas security is to acquire equity oil and gas assets outside India. Indian companies have succeeded in getting a significant foothold and are currently operating in 14 countries with a production of about 100,000 barrels per day of oil and oil equivalent gas in Sakhalin I, Sudan and Vietnam. Our emphasis is to further expand overseas activities and secure a significant portion of our domestic requirement through equity oil and gas route.

In addition to accelerating efforts at home and through international participation, India sees enhancement in its energy security through building energy corridors for supply of oil and gas across, and within its borders. 

Coming to the renewable sources of energy, India, as you are aware, is among the select list of countries with a large installed capacity of wind power. Environmental concerns demand that we enhance the share of renewable energy sources as expeditiously as possible.

Those of you who have been visiting Delhi and Mumbai over the past few years will be able to notice the considerable reduction in emissions in these metropolitan cities of late. We have achieved this through converting a large proportion of our fleet of vehicles from the emission-spewing gasoline and diesel to environmentally clean CNG (compressed natural gas). We are planning to expand CNG and piped natural gas facility to more cities and towns in the next few years, with the twin objectives of better environment and better economy.

It would be prudent for developing economies to start using new technologies for enhancing their energy security. This will not only enable efficient and more productive use of their resources but would also help the world in proving many technologies viable through higher and larger commercial usage.

Technologies in the field of gas hydrates, coal gasification, gas to liquids, coalbed methane, ultra deep exploration and production are lesser known in the developing world. Time has now come for the world to collectively share the responsibility for sustainable development and elevation in the quality of life of the masses.

India is exploring the possibility of meeting its energy requirements from various sources of energy -- through fossil fuels, thermal power, hydro-electric, nuclear power or renewables.  In this regard, US and India have initiated the Indo-US energy dialogue, which would provide a meaningful exchange of information and a forum to help us plan and implement our agenda for energy security.

The recent conclusion of agreement between US and India during the visit of the American President George W Bush on civil nuclear energy cooperation marks a turning point in the ever-increasing cooperation and mutual understanding between the two countries. 

India has always been engaged in peaceful nuclear energy programme to meet its growing energy demand.  This measure will help India add to its power generation capacity.  This cooperation in civil nuclear programme, I am sure, will expand to other areas too.

Our cooperation should cover the entire energy spectrum from oil and gas to clean coal, coalbed methane, gas hydrates, wind and solar power. India has already agreed to participate in the FutureGen programme for zero emission thermal power plants and integrated ocean drilling programme for gas hydrates.

I would urge that India and the US partner and initiate an institutional process of ensuring global energy security and lay the foundation of a new beginning to realise the vision of a secure, sustainable, equitable, efficient and productive global energy market.

USEA and Indian institutions could cooperate and share knowledge, information and expertise in the energy sector. An effective arrangement could be worked out within the framework of the Indo-US energy dialogue to achieve this and to strive towards the laudable goals of ensuring for our citizens access to energy in an economical and an environmentally sustainable manner in years to come.

I once again thank the USEA for giving me an opportunity to share this platform and wish them all success in promoting the vision of WEC (World Energy Council) on energy.

Murli Deora