India’s Time To Capitalize On Oil And Gas Sector

The dominance of oil, natural gas and coal in the global energy mix is being questioned by intensifying carbon policies, technological disruptions in mobility and, to an extent, changing energy geopolitics. A closer look at India’s energy mix reflects a clear trend towards gas and renewables, but there is no imminent danger to demand for oil, forecast to grow at least until 2040. However, oil companies are under pressure to prepare for a possible low-carbon future. There is a fear of being too late to embrace newer energy sources, matched by equally high risks in moving too fast. In such a scenario, oil companies are likely to take a two-pronged approach: diversify into new sources of energy while capitalizing on growth opportunities in conventional forms of energy.

Today, the major fossil fuels account for more than 90% of India’s total primary commercial energy supply (TPCES). At present, India’s import dependence in the oil and gas sector is significant and the Prime Minister has set a target to reduce dependence on crude imports by 10% by 2022. The moment is opportune for India to take advantage of shifting pricing and supply dynamics in the oil and gas sector globally. In order to leverage the resources advantage, it should focus on the following areas:

Taking advantage of softened oil prices: The oil and gas industry is recovering from the upheaval caused by the fall in global oil prices and weak demand. The price per barrel of Brent crude crossed $60 mark this month, against $40 a year ago; still well below the $115 peak reached in 2011. Even with the uptick in oil prices expected to continue, it is a buyer’s market and India needs to be aggressive in scouting for the best prices and competing supply sources. Recently, government-owned refiners started taking supplies of US crude in a bid to curtail dependence on West Asian crude and Opec (Organization of the Petroleum Exporting Countries) in an expanded supply market. Read More…

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natural gas, Oil and Gas, OPEC, TPCES