INDIA'S ENERGY (IN) SECURITY: White Paper Study

Online, August 7, 2012 (Newswire.com) - Indian economy is at a crucial juncture. Year 2012 marks the beginning of the 12th five year plan; the economic scenario does not look very encouraging. Not just the European crisis but the fluctuating crude price (on which India's dependence is precariously high at ~80% currently) is increasing the uncertainties. And though in recent times, crude prices are showing signs of relief, the depreciation of Indian Rupee vis-a-vis US Dollar is not helping. But again, this also underlines the issue of India's growing dependence on energy. Analysts believe that situation will not change much, be it high crude prices or lower valuation of Indian currency, neither of the problems augurs well for Indian economy.

During the second half of the last decade, India's energy consumption has gone up from 382 million tonnes of oil equivalent (MTOE) to 525 MTOE. And when we talk about maximizing self-sufficiency, it includes increasing the exploration activity in the country; bring in more technology and liaison with mature countries in the oil & gas sector, like Norway. Invite more foreign investments and make the environment more investor friendly. Needless to mention, for all these India needs - bureaucracy, polity, tax regime working in tandem to achieve nation's energy security.

HURDLES IN INDIA'S ENERGY SECURITY
• Bureaucratic and political hurdles : Domestic production stagnated
• Lower indigenous production and exploration: Fizzling NELP
• Energy security vs. national security : Defence hurdles
• International force: Fear of supply disruption
• Gas imports and international negotiation
• Overseas merger & acquisitions: Chinese aggression
• Non-remunerative taxation regime
• New technology for new source of energy - CBM, Shale Gas, Oil Sand, etc.
• Interrelated policy framework for upstream, midstream and downstream

More than 30% of India's gas demand is still not fulfilled. And situation is getting grimmer as domestic production has not delivered as per expectations.
• Other problems include delayed/failed negotiations for international pipelines (IPI: Iran-Pakistan-India pipeline)
• Problems in sourcing long term LNG (except Qatar and little bit from Australia, there is limited contract for India)
• Competition from China, Japan and South Korea is weighing heavy on India's aspirations.
• China, Japan and South Korea have smoother decision making process compared to India.
• Diplomatic and bureaucratic failures in Qatar and even IPI have defeated India's energy needs
• Even price issues delayed TAPI (Turkmenistan-Afghanistan-Pakistan-India) pipeline
• Limited LNG import infrastructure in the country and concentrated only in western India

Goldman Sachs study shows increase of $10/barrel can lower the GDP growth by 0.4%. Also higher oil prices result in outgo of forex reserves impacting India's trade deficit.