Economics
Context: The Ukrainian crisis has altered the contours of the global energy landscape and created a tangle of relationships and issues for India.
- Few months before there was a deepening sense that fossil fuels and the industry built around them were in terminal decline and that the era of oil, gas and coal was, if not at its end, certainly at the beginning of its end
- But today, The petroleum market is tight and prices are ratcheting up.
- Oil prices are close to $120/bbl and gas prices have jumped 500 per cent year on year in Europe.
- The share prices of the oil majors are trading at multi-year highs.
- India is caught in the vortex of this turmoil.
Three issues are of particular significance.
- First, India is now a major purchaser of Russian crude.
- Russia is now our largest provider of crude oil surpassing Saudi Arabia and Iraq.
- The reason for this ramp-up is the price discount offered by Russia.
- The decision is driven by good economics and energy security.
- This has created some apprehensions with western countries
- Second, recently, Russia and China has signed a “no limits” partnership.
- Russia is also now the largest supplier of petroleum to China.
- This tightened economic and energy embrace has implications for India like will Russia be a reliable providers of crude oil, military equipment, minerals, and metals essential for India?
- Third the changed stance of Western relations with Gulf recently, will have implications on India’s energy security.
Thus Our long-standing “friend“ (Russia) is now in the bad books of our other friends (the US and Europe) and in a deepening relationship with our adversary (China).
How do we navigate this consequential cross currents?
- The need is to create a mechanism for the development and execution of an integrated energy policy.
- And also there is a need for energy authority this is because currently there is no executive authority responsible for energy.
- There are ministries responsible for components of energy policy but no formal mechanism for aligning their separate approaches.
The new energy (dis) order has created fissures that impact our national security, economic growth, trade, clean energy supply lines, transfer of technology and international relations. Thus carefully planned approach is the need of the hour.
Source: Indian Express
