No Fossil Fuels as Usual

Source: Indian Express

Synopsis: The article suggests redefining the supply-side priorities of the Ministry of Petroleum and Natural Gas in the face of the imperatives of atmanirbharta.

Introduction:

• The spread and speed of the destruction caused by climate change in recent weeks present a policy dilemma.
• Indian economy is dependent on fossil fuels, and there is no discernible end in sight to this dependence.
• India imports approximately 85 percent of its crude oil requirements and is exposed to the volatility of the international oil market.

Key suggestions for Ministry of Petroleum and Natural Gas?

• Government should scale back its emphasis on domestic exploration of oil.
  • Resources earmarked for exploration can be deployed more productively elsewhere.
  • A review of the public sector’s exploration and production (EP) track record suggests that whilst India may well be sitting on substantial hydrocarbon reserves, but these reserves are not easy to locate and.
  • They are difficult to develop and produce on a commercial basis.
  • The fundamental point is that EP in India is a high-risk activity.
  • This risk is even greater today because of the longer-term structural softness of the petroleum market.
• Second, ONGC should shed a part of its equity in Mumbai High to get the best technology service, partner.
  • ONGC allocates increasing resources to improving the productivity of its producing fields.
  • The average oil recovery rate in India was around 28 percent.
  • That is, for every 100 molecules discovered, only 28 were monetised.
  • The global average of around 45 percent for fields of comparable geology.
  • There is still a wide gap, the application of enhanced oil recovery (EOR) technology offers a relatively low-risk avenue for increasing domestic production.
• Third, need to build contingency safeguards. Since, the Middle East, predominantly Saudi Arabia, Iraq, and Iran faces deep political and social fault lines and there is no knowing when our supply lines might get ruptured.
  • India holds currently strategic reserves equivalent to 12 days of imports.
  • China, the EU, South Korea, and Japan hold between 70-100 days of reserves.
• Fourth, restructure and reorganise the public sector petroleum companies.
  • These companies should be encouraged to look beyond hydrocarbons to build an “energy” enterprise.
  • It will help cut back the “avoidable” costs of intra public sector competition.
  • It will provide a focused platform for balancing the shorter-term need to provide secure and affordable hydrocarbons with the medium and longer-term imperative of developing clean energy.

The petroleum minister should not see his responsibility through the siloed prism of oil and natural gas.