Augmenting strategic reserves and inking long-term import agreements are some of the measures that are key to ramp up India's energy security, according to Petroleum Minister Hardeep Singh Puri.
Puri, while speaking to Moneycontrol at sidelines of the India Energy Week in Bengaluru, said the country is "making strenuous, comprehensive and bold efforts to increase the area under exploration and production".
He pointed towards the decision taken by Prime Minister Narendra Modi to increase the area under exploration in the 3.5 million sq km-sedimentary basin to 1 million.
The minister also lashed out at the previous government for the alleged lack of efforts towards increasing the area for oil exploration. "So you have a situation where -- from 1947 to, let's say, to 2014 -- you've got exploration and production of the available sedimentary basin of 6 percent or so," he said.
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India consumes around 5 million barrels of oil per day, and 60 million residents visit the petrol pumps on daily basis, Puri said.
The country's requirement of energy in the coming months and years will increase. "In fact, estimates have said that, between 2020 and 2040, whatever growth takes place in the world, 25 percent (of energy demand) will come from India," the minister noted.
"You have studies which say, by 2040 or thereabouts, India should be a $26 to $27 trillion economy. So I submit to you, if at $3.5 trillion GDP, you are consuming this amount of energy, what if your GDP goes up eight or nine times – to $26 to $27 trillion?"
In the recently presented Budget 2023, Finance Minister Nirmala Sitharaman allocated Rs 35,000 crore for energy transition and energy security.
"Out of that Rs 35,000 crore, I think Rs 5,000 crore is earmarked to augment the strategic petroleum reserve," Puri noted.
The government is also focusing on cleaner energy, the minister said. "Here is our story on biofuel transition. In 2014, we had only 1.4 percent blending. Today, we are able to achieve 10 percent, five months ahead of schedule," he added.
Similarly, the government brought forward the target for 20 percent blending of ethanol from 2030 to 2025, Puri stressed.
Long-term import agreements
One of the measures that may prevent the volatility in prices in the oil market is the signing of long-term import agreements.
Oil prices have been heading downwards since the second half of 2022, after shooting to up to $120-per-barrel mark following the outbreak of COVID-19 pandemic. Puri, however, pointed out how the prices meteorically rose after as the post-COVID-19 period began.
"When you say prices are going to go down, prices will come up also. You have to deal with particular phases. I mean, at the height of the pandemic, the price of oil went down to $19.56 per barrel. Then, when economic recovery took place, it went up to $120. It's at $80 to $82 today," he said.
Puri said the current price-level could be an issue emanating from the supply side, resulting from the Russia-Ukraine war and other global factors.
"There are issues of access. We need to work on supplies. But do you need to sign really long-term agreements? Or are you better off watching how the prices move going ahead?"
"Or maybe, as you should, I think, have a long-term agreement linked to the price of oil. You can have a long-term agreement and you can have a safeguard there," he said.
India, notably, was the top buyer of Russian crude in December 2022, as per the data shared by energy cargo tracker Vortexa. The quantum of import had climbed by 33 times on-year to 1.2 million barrels per day.
The Modi government has vociferously defended its policy of buying Russian crude despite the war in Ukraine, claiming that the decision has been taken keeping the best interest of consumers in mind.
