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India’s Role in Global Oil and Gas Value Chain

Search 26th Oct, 2020 Spotlight News Analysis here: http://www.newsonair.com/Main_Audio_Bulletins_Search.aspx  

TOPIC: General Studies 3

• Energy – Oil
• Energy Security in the times of COVID-19

India is an important player in the global Oil and gas sector being the 3rd largest consumer of crude oil and the 4th largest LNG importer. India has been drawing investments across the oil and gas value chain and other sectors even during these challenging times, and the country is a bright spot in an otherwise difficult year for the sector.

India’s oil and natural gas sector is likely to receive fresh investment of over $300 billion by 2030 for developing natural supply and distribution infrastructure to meet rising demand. The government aims to more than double the share of natural gas in its energy base to 15 per cent by 2030. India consumes 5 million barrels of oil equivalent per day currently.

• Oil & Gas sector is a key contributor to India’s economy and accounted for almost 55% of our energy mix in 2017.
• India is the third largest consumer of crude oil and petroleum products in the world, accounting for 4.5 per cent of global oil consumption, behind the US and China.
• Indian Oil and Gas companies are present in 28 countries with investments worth approximately 38 billion US dollars.
• National Data Repository has been set up to facilitate potential investors to take informed decisions based on the geo-scientific data of hydrocarbon resources in the country.

Global energy trends favouring a big shift

Prominent global trends are shaping up in this regard — for instance, the big shift in energy consumption from Europe to Asia, the United States becoming the world’s largest oil and gas producer after the shale revolution, solar energy emerging as a competitive and most sustainable energy alternative, share of natural gas in the global energy mix rising, convergence of cheaper renewable energy technologies, digital applications and the rising role of electricity forming the basis for achieving many of the world’s sustainable development goals, and countries coming together to tackle climate change, including through global collaboration such as the International Solar Alliance (ISA).

India’s Way Forward

• Global energy producers must pursue more ‘responsible pricing’ policies and India needs ‘affordable and reliable’ energy sources
• India will make a strong pitch to global oil and gas companies to invest in the energy sector to realise the full potential of the Atma Nirbhar Bharat mission.
• This year has been challenging for the energy sector — 

• • Demand fell by almost one third
  • There has been price instability
  • Investment decisions have been impacted and leading global bodies project contraction in global energy demand over the next few years also. 

But these agencies project India to emerge as a leading energy consumer, which is set to double its energy consumption over the long term.

• During these challenging times, India has witnessed investments through the oil and gas value chain and is seeing similar signs in other sectors too. A self-reliant India, with energy security at its core, will also be a force multiplier for the global economy.
• After the initial effects of the pandemic and the national lockdown, India is now on the road to full recovery with petroleum products consumption returning to levels witnessed before the COVID-19 scourge.

Ensuring Energy Justice: India believes that access to energy must be affordable and reliable. That is when social economic transformation can take place. We view the energy sector [as one] that empowers people and improves ease of living.

Climate Concerns: India will stick to its global commitments towards climate change, while tapping more energy to improve the lives of Indians with a smaller carbon footprint.

With one of the lowest carbon emission in the industrialised world, India’s energy sector will be growth-centric, industry friendly and environment-conscious.

Note:

NITI Aayog organizes a roundtable of global Oil & Gas CEOs annually –

• There is a need for India to graduate from a passive consumer to an active and vocal stake-holder in the global Oil & Gas value chain.
• Objective: To deliver a global platform to understand best-practices, discuss reforms, and inform strategies for accelerating investments into the Indian Oil and Gas value chain.

The event also grows in stature with the rise of India, the world’s third-largest energy consumer, which is likely to see over $300 billion investment by 2030 in the Oil & Gas sector to meet rising demand.

Natural Gas Marketing Reforms approved 

The Union Cabinet has approved ‘Natural Gas Marketing Reforms’ to move towards gas based economy.

Aim of the Policy: 

1. To provide standard procedure for sale of natural gas in a transparent and competitive manner; 
2. To discover market price by issuing guidelines for sale by contractor through e-bidding.

Advantages: 

1. This will bring uniformity in the bidding process across the various contractual regimes and policies;
2. Ambiguity shall be removed; 
3. It shall contribute towards ease of doing business. 

Affiliate companies can also participate in the bidding process to make it more open and transparent. The policy will also grant marketing freedom to the Field Development Plans (FDPs) of those Blocks in which Production Sharing Contracts already provide pricing freedom.

These reforms in gas sector will further deepen and spur the economic activities in the following areas:

• The whole eco-system of policies relating to production, infrastructure and marketing of natural gas has been made more transparent with a focus on ease of doing business.
• These reforms will prove very significant for Atmanirbhar Bharat by encouraging investments in the domestic production of natural gas and reducing import dependence.
• These reforms will prove to be another milestone in moving towards a gas based economy by encouraging investments.
• The increased gas production consumption will help in improvement of environment.
• These reforms will also help in creating employment opportunities in the gas consuming sectors including MSMEs.
• The domestic production will further help in increasing investment in the downstream industries such as City Gas Distribution and related industries.

Must Read: Natural Gas Marketing Reforms

Connecting the Dots:

1. Impact of the Pandemic on India’s future energy demand
2. Securing supplies for India’s economic growth
3. What does energy transition and the climate agenda mean for India?
4. Natural gas in India’s Energy Mix: What’s the path?
5. Refining & petrochemicals: Strategies midst surplus
6. The pace of innovation: Biofuel, hydrogen, CCS, electric vehicles and digital transformation