Samudra Manthan, petroleum and India's energy security policy | Number Theory

The first part will discuss the trade aspect of India’s petroleum economy, while the second will address the larger energy-security picture

On July 31, the Union Cabinet approved the National Offshore Exploration Scheme (Samudra Manthan), a central sector scheme of the Ministry of Petroleum and Natural Gas, with an outlay of ₹84,084 crore over the next five years. The scheme aims to increase India’s petroleum production by unlocking its “vast offshore hydrocarbon potential”. Broad components of the scheme are seismic data acquisition, processing and interpretation, accelerating offshore exploration, creating common offshore infrastructure and deploying modern technology, and developing and strengthening

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  India’s oil trade deficit has lost its importance in the overall trade deficit

  Centre for Monitoring Indian Economy (CMIE) data provides a breakdown of India’s petroleum-oil-lubricants (POL) and non-POL merchandise trade deficits. As a share of GDP — an absolute comparison is not meaningful because the economy has grown in size — the non-POL deficit has become more significant during India’s post-reform period.
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  But import dependence in quantitative terms has increased

  What makes oil an important and critical commodity is not just its price. Securing its physical availability can also become a challenge because of extra-economic factors. Developments in the past few years — first the Russia-Ukraine war in 2022 and, now, the ongoing West Asia war, which has disrupted traffic through the Strait of Hormuz and petroleum supplies passing through it — are painful reminders of this reality. Securing actual barrels is where India’s energy import dependence has increased, whether viewed from the demand side or the supply side. CMIE data shows that crude oil imports, as a share of total availability in India – availability being production plus net imports—are about 90%, according to the latest available data. This number has been increasing consistently for a long time. There has also been an increase from the supply side. India’s imports, as a share of global crude oil production, are also significantly higher now.
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  While domestic crude oil production has actually fallen

  Data clearly shows this. According to CMIE data, crude oil production in India increased between 1970 and 1990. This was followed by a stall and then a fall in production. While India can never hope to completely overcome its import dependence for petroleum, it should not give up on import substitution either. This is why efforts to boost domestic petroleum production are an important component of safeguarding India’s energy security.
• The numbers and arguments presented here underline the logic behind the Samudra Manthan Scheme but represent only a partial picture of any strategy to safeguard India’s energy security. Making the strategy more holistic requires incorporating India’s overall energy requirements and their future drivers. The second part of this series will attempt to do exactly this.