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The total daily oil consumption in the US is more than 19 million barrels. However, it's about 5 million for Bharat. As India grows, oil consumption is expected to rise. In the coming years, India is expected to play a significant role in driving up the global oil demand. The point here is, the oil is here to stay and for a long time.
The problem is that Bharat imports most of its oil, costing us billions of dollars. It is in India's best interest to become an energy-independent country by hook or crook. A growing and low-income economy cannot handle the stress put on by the oil markets. Though India managed the Russia-Ukraine situation well, more is needed. Buying discounted Russian oil is a short-term solution.
What are India's options?
1. Buying Russian oil: Currently Russian oil is discounted for India. India buys a lot of this, refines it in its refineries, uses a major chunk of that here at home, and sells the rest abroad. Fun Fact: India is the largest supplier of refined oil to Europe. Daily, we export more than 1.5 million barrels of refined oil to Europe. Our exports to the Netherlands alone have risen by 2500 times. Many European refiners are shutting down because they say losses are the reason. Well anyone could suspect it's the cheap Russian oil they relied on as a source of raw material for years and suddenly it is not an option. The US diplomacy did a fantastic job in snatching the European Gas Market from the Russians. Earlier, the US used to supply less than 27% of Europe's total gas consumption. Today, that has risen to about 50%.
Bharat has done a tremendous job building up the downstream capabilities in this sector, ie, the refineries. India hosts some of the largest refineries in the world. We continue to invest here. Saudi is in talks with New Delhi for major investments in the refining sector. They want to invest as much as 100 Billion Dollars in India, with plans to set up mega refineries. India can continue heavy investments and be a major refined oil exporter to the developed world.
The crux is that India still depends heavily on the Middle East. More than 45% of India's oil comes from the Middle East, the majority of which is from UAE, Saudi, and Iraq. The current geopolitical tensions are indeed a headache for New Delhi. A lot of its gas supplies come from Qatar. Any major war in the Middle East is going to cause trouble.
The image above depicts the Strait of Hormuz, an area characterized by strained relations among the neighboring countries. Iran and the UAE-Saudi alliance are on opposing sides, and any conflict in the Middle East could lead to disruptions in the flow of oil through this strait. The UAE-Saudi alliance is aligned with the US, while Iran is aligned with Russia and China. Despite China relying heavily on oil from the Middle East, it has reportedly bypassed US sanctions to purchase oil from Iran, a move India has refrained from making. India has managed to maintain good relations with both parties so far, but escalating tensions in the region are making it increasingly challenging for India to maintain its neutral stance.
2. Looking for other sources: Venezuela, an oil-rich nation with the world's largest oil reserves, remains untapped by New Delhi to its full potential due to sanctions. Guyana, a smaller South American country, is also a significant oil producer and India has invested through ONGC Videsh Ltd. in its oil facilities. Nevertheless, this source is relatively minor and cannot satisfy India's burgeoning oil needs alone. The United States and Canada are other major suppliers, but the distance from these American reserves results in high transportation costs for oil and gas. Additionally, during wartime, the insurance premiums for oil tankers increase, further escalating the expenses.
3. Go Green: Going green is a necessity of the time but still an expensive luxury. Many experts in this field have told me that when a Lithium Battery system is installed with a Solar Power Plant, the cost rises from merely Rs. 2-3 per unit to more than Rs. 15 per unit. This is the reason why solar energy is used entirely during the daytime. The climate of India allows it to be a good place to install solar plants with almost uniform power production during the daytime, but at night it still has to depend on fossil fuel-based power plants. Plus, for hosting the EVs India has to invest a lot of money in the transmission lines and charging infrastructure. India is doing that steadily. The reliability of wind energy is doubtful. Electricity and renewable energy is a sector that will need continuous reforms and investments for decades to come and cannot be achieved in a year or two.
Green biofuels are another good energy source as India is one of the largest food producers with surpluses in its godowns. In Bharat, we usually have excess sugar, rice, wheat, corn, etc. The Government of India has been pushing for the E-20 norm where 1 liter of petrol will have 200 milliliters of ethanol for the same. It is an area where companies are coming forward to make ethanol and bio-CNG from various sources. But this might have scaling issues and we need to see how the story unfolds. Similarly, green hydrogen is a story that will take time to make any concrete statement about.
4. Drill Baby Drill: Most Indian sedimentary basins are unexplored. Some reports suggest that the Konkan-Kerela region alone holds Billions of Barrels of Oil and Oil Equivalent Natural Gas and that the Andaman region alone is sufficient for India to meet its current oil demand for 70 freaking years. India is indeed tapping those reserves but to date, most of India's basins remain in the unexplored category. India must try to find oil and gas in these basins and put forth significant investments and incentives.
Another major source of Gas is coal-bedded methane or CBM. It is one of the best domestic sources of energy. Bharat is home to some of the largest coal reserves. It is noted that numerous coal mines also have significant methane (a major gas in Natural gas) trapped in them. Earlier, with no extraction technology, that methane was getting emitted into the atmosphere. Now it can be utilized. India has a dedicated mission for this.
Drill Baby Drill can help India going forward. An energy-independent India is much more powerful during wartime than an India that relies on external sources for energy. Nobody should be able to have an upper hand while negotiating agreements with New Delhi. New Delhi must remain a neutral and strong country come what may. Even today India is a strong country, but that has happened because of the all-align approach it took a decade ago. The world even today respects India and the Global South looks at India as its leader but strength is the way forward.
An important observation that should be made in history is wars lead to a new superpower. In historical India, the lack of unity among the princely states led to conflicts that resulted in the rise of external powers. The Delhi Sultanate, the Mughals, and the Europeans gained influence through these conflicts. Holland (or the Netherlands) was one such superpower, Britain took over them when the Dutch were busy fighting wars. The world wars were fought between the Germans who were assumed to become the next superpower and the Axis who were the superpowers, in the end, the US became an unquestioned Superpower.
India's future lies in India's interest. In geopolitics, there are no permanent friends or enemies. The only permanent things are national interests, and nobody is above them. This may sound ruthless, but it is the hard truth. In these challenging times, safeguarding Indian interests is critical.
A true nationalist
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