A year on year to USD 26.2 billion,
A very popular topic of the dinner table these days is about the import of oil in India. How much longer will India keep on importing for? Can it ever stop importing Oil? If yes, then how? India, being the world’s 3rd largest oil importer, meets 80% of its petroleum needs though imports. Through the years, the quantity of oil imported has only increased. From 189 million metric tones in 2012-2013 to 220 million metric tones in 2016-2017, India imported a record of 4.83 million barrels per day of oil in September 2017 to meet its rising local fuel demand. Total oil imports rose 4.24 per cent year-on-year to US$ 86.45 billion in 2016-17. The need for oil and gas is projected to grow more as India’s economic growth is closely related to energy demand. This makes the sector quite conducive for investment. The country is expected to be one of the largest contributors to non-OECD petroleum consumption growth globally. OPEC has estimated that India’s demand for oil will reach 10 million barrels per day by 2040.
Talking of rising imports can’t go without screaming ‘Trade Deficit’. Considering the April-November period, the country’s trade deficit widened sharply to USD 99.9 billion from a USD 67.9 billion deficit a year earlier as imports jumped 21.9% while exports rose at a slower 12%. Purchases of petroleum, crude and other products went up and constituted of 39.1% of total imports. But that’s just one side of the trade. Moving onto the country’s sales, Exports jumped 30.6% year on year to USD 26.2 billion, boosted by sales of petroleum products (47.7%). But taking baby steps, we ask, Can India at least balance its oil imports and exports? Can it achieve oil import dependence soon? The answer may have been lying under the country’s nose this entire time. Modi said India’s dependence on imports for of its “energy” requirement should decline 10 per cent by 2022, and 50 per cent by 2030. Let’s see how.
India has proven to have reserves of 206 billion barrels of oil, of which only 67 billion barrels are online and less than 25% of India’s sedimentary basins are explored. To meet rising domestic demands the country must increase its refining capacity. Supporting that, Indian companies are expanding into new areas and experimenting with technology to feed growing demand. One of such technologies, Super Wave Technology is developing an alternative extraction technology, using shock waves to initiate fractures in shale reservoirs located in the depth of 1000-1500 meters. Cost effectiveness and efficiencies can be reached with these kinds of innovations as oil is becoming harder to find and drill for. As India’s energy future remains hidden in unexplored, difficult-to-access basins across the country, the amount spent daily on foreign energy sources must be reinvested in such efforts to narrow India’s energy imbalance.
Moving on to the bigger question – Can India ever be a net exporter of Oil? The Minister of State for Petroleum & Natural Gas Smt. Panabaaka Lakshmi said that the refining capacity is not only sufficient for meeting domestic consumption requirement but also leaving a substantial surplus for export of petroleum products. If India is to be an exporter then export oriented refineries are to be built immediately. Current export orders, to develop the supply chain can be met from the existing refineries. But a serious effort to become an exporter will require a serious rethink on the part of Government of India. Moreover, India’s capital involvement will be low as external interests are financing the expansion. India will be sharing the benefits, just like China where FDI has created a manufacturing export heaven.
According to PwC the challenge before Indian companies is to take effective measures for enhancing the exploration and production of petroleum resources. Simultaneously, the infrastructure for refining, distribution and marketing, import, export and conservation of petroleum products must be improved. If planned and implemented perfectly, not only can there be a trade surplus but a picture of India as net exporter of petroleum and petroleum products can be seen clearly in the near future.