By Sashi Mukundan, Regional President and Head of Country, bp India
"I see India moving fast towards becoming a gas based economy. This will steer sustainable, efficient and responsible growth for the foreseeable future.” Here are my views which I shared with a panel recently. We met to discuss on the topic “Leveraging natural resources to harness the India growth story” - It was a curtain raiser to the Global Natural Resources Conclave (GNRC) hosted in New Delhi, in March 2017.
“As a representative of the energy sector, my focus is on opportunities and challenges for upstream investment, and availability of natural gas – how to boost domestic gas production and attract investments - to move India to a gas-based economy. Before getting down to the crux of my discussion, I would like to share some major trends in the energy industry which need to be noted as context.
- The global energy demand is projected to grow by 1.0 -1.5% p.a. over the next 20 years. Virtually all this growth comes from emerging economies, with China and India accounting for over half the increase. The global demand has grown an average of 1.5 mb/d a year for the last couple of years. Nearly two thirds [66%] of the increase in global energy demand is for power generation, as electrification continues to expand in the world economy.
- As awareness of climate change grows, people are making a conscious choice to live responsibly – by opting for renewable sources of energy and low carbon fuels.
- There is a shifting pattern in the various sources of energy: natural gas is growing faster than coal and oil (1.6% p.a.), overtaking coal to become the second-largest global fuel source by 2035. As per bp Outlook, natural gas and non-fossil fuels will together supply almost 80% of the increase in energy to 2035.
And a spot of crystal-ball gazing regarding India. . .
- India’s economy is projected to grow at 7-8% per year until the end of this decade - energy being the KEY input for this growth
- It’s energy consumption is likely to grow by 4-5% p.a., faster than all major economies in the world, e.g., in 2016, it was 353 kb/d vs. global growth of 1.6 mb/d. The consumption growth of fossil fuels will be the largest in the world. Despite energy production more than doubling over the next 20 years, the country will remain import dependent to help meet this vast growth in consumption.
- The good news is that India is doing this in a very responsible manner given its commitment to the COP21 targets (reduction of 33% of carbon intensity of its GDP from 2005 levels by 2030). It has been stated that India will increase its power generation from renewables by 175GW by 2022 and switch 40% of its power generation capacity to non-fossil fuels.
Given the foregoing trends and forecasts, it is heartening to observe how India has been fast off the block in relating to shifting energy patterns and leveraging its energy resources. A slew of policy initiatives taken by the Government, under the leadership of Prime Minister Modi, has the potential to bring in sweeping changes in the way energy is sourced, supplied and used in the country. Amongst these, two major ones are to reduce oil and gas imports by 10% and increase the share of gas in the energy mix from 6.5% to 15%by 2022.
What more can India do to actualize this?
Our bucket list would be:
- Formulate a clear policy which enunciates a stable fiscal and contract regime to provide assurance to investors
- Exploration: carve large areas for PSU/IOC/Private partnerships to unlock frontier exploration
- Development: accelerate development of discovered resources
- EOR: Bring cutting edge technology to unlock reserves through EOR. [1% increase is 7% or 500 million barrels of additional reserves]
- Demand HUBS: Develop ‘Demand Hubs’ to promote gas with source of supply, anchor customers – refinery/petrochemical complex, power plants or fertilizer plants, pipeline infrastructure, CGD/PNG, commercial and industrial users, smart cities.
To conclude, my vote and voice is for a concerted effort to move India to becoming a gas based economy that will steer sustainable, efficient and responsible growth for the foreseeable future.
For this to fructify soon, we need to bring on board a Gas Master Plan – which will help incentivize and activate investments as never before. Natural Gas should play a key role in bridging the energy gap as India transitions to affordable clean energy and renewables.
The views expressed here are personal.