MC Interview | Companies are hiring more, investing in India’s energy sector: Oil Minister Hardeep Singh Puri

Puri said India does not need to offer additional subsidies to the biofuels industry

India’s growing energy demand amid weakness globally is driving investments – both local and international – in the country, Hardeep Singh Puri, minister of petroleum and natural gas, told Moneycontrol in an exclusive interview on February 8.

Talking at the sidelines of ‘India Energy Week 2024’ being held in Goa, the minister said the feedback from the India-US round table was that companies were hiring engineers in big numbers for executing projects.

Puri said India does not need to offer additional subsidies to the biofuels industry and hoped that higher demand will drive capacity expansion.

On hopes that there may be a cut in fuel retail prices, Puri said that the oil marketing companies may take a call when the “anxiety” reduces around disruptions impacting crude oil prices. Puri reiterated that India needs to make the blending of sustainable aviation fuel (SAF) with jet fuel mandatory.

Edited excerpts:

The International Energy Agency said in a report on February 7 that India will be the largest global oil demand growth driver through 2030…

The IEA report says Indian demand for energy will overtake China by 2027. I am not surprised by it, because that growth has to be seen from the point of view of the actual growth in India and the decline in other places at the same time.

I have to be careful with my words because I am a minister, but some of these high consumption economies, like the industrial democracies of Western Europe, are in a situation which could either be described as recessionary or flirting with recession.

If you have a growth of quarter-on-quarter of 1 percent-1.2 percent, you are not in recession. But if your growth rate declines, say by 0.8 percent in one quarter from the other, then it is a recession. So I am choosing my words carefully.

China’s energy demand growth plateaued some time ago. So when the IEA says we will overtake China, it's an assessment based on the fact that Indian demand will increase. There is nothing new in this.

But our domestic oil and gas production has remained muted. What’s the strategy to ensure we have resources for the growing demand?

The other point you make about domestic production not taking place, I think you are being polite.

We were neglecting that sector and it's not just neglect, it was criminal neglect. It's now when the Modi government has come, they've taken some really revolutionary decisions.

Out of your 3.5 million square kilometres of sedimentary basin, 1 million sq km has been just opened up. Our exploration of our sedimentary basin used to be about 6 percent or so, it's already gone to 8 or 9 percent now.

We are going to take it to 15 percent. If your area was not available for exploration and production, how can you say that we were not growing? We've got over all that.

Today, the three things you require are data, and you require an enabling environment. We opened up the area of 1 million sq km. We made all the data available in a repository at the University of Texas and Houston, and we are telling people to explore.

They said earlier that it’s our domestic asset, and our company ONGC will do exploration. We stopped all that. We said if you don't want to spend your time and your money, we will incentivise you; we will get into not production sharing but revenue sharing contracts.

This has changed things and that’s why you find people are coming to India Energy Week. We don’t just make plans, we execute. Last year, the Prime Minister announced E20 at the Bengaluru IEW and today 9,700 petrol pumps are selling it. I think India is going to be the centre of the energy economy.

Even now, if you look at our bilateral trade figures, the import of crude oil is the number one item in the import basket. And the export of petroleum products is also number one.

So the Commerce Ministry’s first item for imports is crude and the first item on exports with the highest value is petroleum products. In green energy, we will have 20 percent blending by 2025, but that 20 percent blending is also a mindset issue.

You mentioned three points – access, data and enabling environment. What about the fourth important point – investment and the financing for these projects? How are you pushing the private sector to come into the sector?

I didn't mention the fourth because I took that as a given. But I mentioned the other three, and they define the India of today. During the India-US round table, companies spoke about hiring engineers in thousands to get the work done.

So that is money coming in. If you're moving from 5-6 percent of gas in the energy mix to 15 percent, where is the $93 billion coming from? Some of it is local, some will be from outside.

Also read: Exclusive: Retail fuel price cut possible if crude supply stays stable, says Hardeep Puri

But with a growing push towards climate action, financiers across the world are pledging not to finance fossil fuel projects…

Ask those guys, if you stop financing fossil fuels, are you financing green fuels? A lot of this talk is just talk. At Davos, in a heated discussion I heard – investments only respect returns. If that was correct, then that means we would never have taken off on green fuels.

We didn't go to anybody asking for funds. We devised an ecosystem, and if you are producing biogas in India. Then we have to make it viable for you. Although there are some shortcomings.

People want to go straight into the grid. Our synchronous national grid is growing, but there are still some gaps. We are making those decisions.

At IEW this week, India signed its biggest ever $78 billion deal to extend LNG imports from Qatar by another 20 years till 2048 at lower rates. Are there more long-term deals in the pipeline?

We don't talk about them. It so happened that the Qatar minister was going to be here at the IEW so we announced. But there is so much happening all over.

If you sign a long-term agreement at a fixed price, tomorrow the price comes down. People will accuse you of all kinds of things. So the beauty in all these deals is you sign long term, but benchmark it, so that you can’t lose on that. I think in the energy reserve we are reaching a station, where, other than us, there are not going to be too many buyers.

The US has emerged as the largest exporter of crude oil and gas. Could you ever imagine that? And they are now producing and exporting with a vengeance.

I don’t agree with the Western narrative; you shouldn't vilify fossil fuels.

Some countries have a lot of reserves but decide not to enter into long-term agreements. They might find that after two, five or ten years there are no takers for it.

Also read: Exclusive: Not considering additional subsidies for biofuels, says Hardeep Singh Puri

There are concerns that the ethanol blending target faces challenges due to feedstock constraints. What is your view?

There are no challenges. If you give a good incentive, it'll come. Today, the guys who are producing sugar are also saying that they need ethanol production. We need to produce more ethanol.

These are commodities that are globally tradable, even if sugar prices globally drop or whatever, we can import from somewhere else. But I'll give you one statistic. We have 5 million barrels per day of crude oil consumption, our consumption per day will go up to 6-6.5 million per day, I think.

But I don't know what will happen when that transition takes place and if suddenly green hydrogen gets a big boost. India uses close to 1 million barrels of cooking oil per day, if this used cooking oil is collected and the government comes out with a system to collect this cooking oil, it can boost SAF manufacturing.

Is there a definite plan for SAF in the making?

If Europe introduces mandatory SAF blending of 5 percent with jet fuel, India and Brazil are the only two countries capable of manufacturing the required SAF. We are working on a plan, and a lot of discussion has taken place in Goa.

Could there be more incentives for the biofuel industry in the main Budget this year?

The biofuel story is not because of incentives. It is to make them economically viable. Biofuel plants don't cost more. And the ones that do cost more, we are getting the OMCs (oil marketing companies) to do it. I think the incentives on the ground are more than enough.

You have said time and again that OMCs have borne losses in the past and they will cut retail prices when they have recovered; it will be their decision. Is it time they consider a price cut?

You have to start by acknowledging in difficult circumstances prices remained stable and came down. Now the issue is you want them to come down further.

If the anxiety factor on the Red Sea is not there, if the supply is not disrupted because of something else, surely it's something that is legitimately to be considered. But the decisions on that are to be taken by the oil marketing company.