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Oil diplomacy beyond Tehran

In its requirement for petroleum, India ranks sixth in the world. It produces 32 million tonne (mt) of crude oil but imports 70 per cent of its requirement of 113 mt. The International Energy Agency estimates that by 2020 India will be the world?s fourth largest energy consumer behind the US, China and Japan.

india Updated: Feb 19, 2006 23:13 IST

In its requirement for petroleum, India ranks sixth in the world. It produces 32 million tonne (mt) of crude oil but imports 70 per cent of its requirement of 113 mt. The International Energy Agency estimates that by 2020 India will be the world’s fourth largest energy consumer behind the US, China and Japan.

How is this energy demand going to be met? India produces 70 per cent of its power using its enormous coal reserves, mostly through outdated technology. The 14 nuclear reactors currently in operation produce 2.5 per cent of its total power and non-conventional sources add up to another 15 per cent.

Unarguably, hydrocarbons, particularly the natural gas, will be a crucial source of energy for India. A World Bank report says land-based pipelines are four times cheaper than any other option. However, our tense relations with energy transit countries like Pakistan (through Baluchistan) for the Iran pipeline and Bangladesh for the Myanmar pipeline hamper its energy security.

In an interview to Washington Post last July, Prime Minister Manmohan Singh expressed his apprehension considering current uncertainties involving Iran, “ I don’t know if any international consortium of bankers would probably underwrite this.” Obviously, fearing US sanctions, bankers are not exactly queuing up.

Although India’s position against Iran’s nuclear programme is likely to strain relations, India is already trying to offset the damage by sourcing its requirements to Sudan and Nigeria in Africa and Venezuela and Brazil in Latin America. Currently, India imports only 7 per cent of its oil from Iran. It has invested $750 million in Sudan for oil exploration and signed a long-term deal to purchase 44 million barrels of crude oil per year with Nigeria. India’s overseas oilfield investments are projected to reach $3 billion in a couple of years and the figure is likely to increase manifold in the next decade.

Globally, nuclear energy is now seen as an essential ingredient to any country’s energy portfolio. A World Energy Efficiency Association report says the use of nuclear technology to generate electricity can be cost effective in the long run. The joint statement that India and US signed in July last year is already seen as a step in that direction. India believes that its nuclear energy sector could get the required boost if the Bush administration is able to fulfill its commitments. India is likely to get global access to nuclear fuel and superior reactor technology under the arrangement.

India’s nine new reactors, with a total capacity of 4,460 MWe, are under different stages of construction and are expected to commence commercial operations within 2008. The government plans to augment nuclear capacity of about 10,000 MWe by 2012 and 20,000 MWe by 2020. The Department of Atomic Energy expects that this will augment nuclear energy production to 20 per cent of our total installed power capacity.

In the long run, India has to reduce its dependence on imports by developing clean coal technology. The country is the third largest coal producer and holds seven per cent of global reserves. The government is also promoting renewable sources of energy such as ethanol made from sugarcane and bio-diesel extracted from Jetropha, Karanja and Mahua seeds. India is emerging as a producer of solar, wind and hydroelectric power but these sectors need both more commitment and bigger investments.

First Published: Feb 06, 2006 01:11 IST