Rising dependence on imported oil is a cause for concern
Figure 1: India's rising dependence on oil imports
*FY11: numbers are provisional
Source: Petroleum Planning & Analysis Cell, EY analysis
This report explores crucial issues pertaining to energy security in India and suggests the objective of charting a roadmap for the future.
India's fragile energy security is under severe pressure from its rising dependence on imported oil, regulatory uncertainty and opaque natural gas pricing policies, small pool of skilled manpower and poorly developed upstream infrastructure and dependence on fossil fuels as the dominant source of energy in the near future.
To meet the growing energy demand over the next few years, India will have to enhance its energy security by procuring energy supplies at affordable prices. While the country has surplus refining capacity and is an exporter of petroleum products, major investments will have to be made in the domestic upstream industry and to acquire hydrocarbon reserves abroad.
In India currently, a move towards a diversified fuel basket, together with a focus on efficient exploration and consumption of energy resources, is needed. Additionally, key areas of action are:
- Accelerated development of energy infrastructure
- Human resource development
- Technological upgrade
A more conducive policy environment coupled with an effective regulatory regime is, without doubt, the basis for accelerated growth of domestic energy resources. Energy security needs integrated action by all stakeholders.
India’s rising dependence on oil imports
Coal, oil and natural gas are the most important sources of primary energy in India. Inadequate domestic supplies of these hydrocarbons are forcing the country to increase its import bill.
The supply of natural gas as well, which was expected to alleviate our energy security from the new domestic fields, remains well below projections. Of late, driven by accelerated capacity addition in power generation and decline in domestic coal production, India's imports of coal have risen.
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