Energy Access Vital in India as Oil Demand to Outpace China

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By Nushin Huq

India will target expanded access to energy and greater efficiency as its oil demand is expected surpass China’s in the next five years, a Ministry of Petroleum and Natural Gas official said.

To prepare, the Indian government has rolled out a series of changes in its energy regulations to open its markets to private investors, Shri Dharmendra Pradhan, a minister of state in the Ministry of Petroleum and Natural Gas, said during a news conference at the CERAWeek Energy conference in Houston. India is the world’s third-largest oil consumer, and its demand growth will eventually outpace China’s by 2022, according to an International Energy Agency report released March 6.

“Our high growth rate has led to increasing pressure on our energy sector across the upstream and downstream domains,” Pradhan said.

Indian Prime Minister Narendra Modi’s energy plan focuses increasing access by developing petroleum infrastructure and expanding the national gas grid network, Pradhan said. Another focus is encouraging capital investment in the oil sector and also in railways and opening new waterway routes, Pradhan said.

The country also is focused on increasing oil and gas production by the upstream sector and acquiring assets overseas, Pradhan said. The country plans to increase the production of renewable energy, though Pradhan told reporters that India has no intention of abandoning coal-based power production.

In February, the ministry announced the winning bids for oil exploration contracts. Pradham and a delegation of comprising of senior ministry officials and India’s leading oil and gas companies will unveil at the conference the country’s next set of energy exploration policies, which aim to open up India’s exploration and production sector to private and international investment.

Natural Gas Expanding

Modi’s energy program also aims to expand the national gas grid network from the current 15,000 kilometers to 30,000 kilometers and extending natural gas pipeline to 10 million houses over next five years, Pradhan said.

Currently, natural gas makes up about 7 percent of energy consumption in the country, but the government would like that to increase to 50 percent over the next five or six years, Pradhan said. This expansion includes a project to expand the use of liquefied natural gas as transport energy in long-haul transportation, both in trucks and ships. A long-term contract already is in place in which one train of liquefied natural gas from the Sabine Pass facility in Louisiana is earmarked for India, Pradhan said.

The country’s new hydrocarbon exploration license and policy aims to propel investment in exploration and production sector and increase flexibility to investors, Pradhan said. Features include the issuance of a single license to explore conventional as well as unconventional oil and gas resources, freedom in pricing crude oil and natural gas and freedom in marketing crude oil and natural gas.

India’s Ministry of Petroleum and Natural Gas is a major sponsor in IHS Markit’s 2017 CERAWeek conference.

To contact the reporter on this story: Nushin Huq in Houston at nHuq@bna.com

To contact the editor responsible for this story: Larry Pearl at lpearl@bna.com

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