Key Takeaways
- India’s energy consumption will see sustained growth on account of increasing population and economic advancements
- The country is facing stiff challenges due to increasing imports amid declining domestic production, attracting foreign investment for upstream projects, and sporadic transmission infrastructure
- The government is striving towards greater energy security, infrastructure development, and market liberalization
Government Interventions
- The Ministry of Petroleum and Natural Gas said it will increase the exploration area for oil and natural gas to approximately 310,000 square miles by 2025 and to 620,000 square miles by 2030.
- India allowed 100% foreign direct investment in upstream projects in 2021. However, the response from foreign investors and firms has been remarkably muted. The government, therefore, has asked domestic companies to boost investments in upstream projects and to undertake them in collaboration with foreign firms as far as practical.
- The government gave a go-ahead to build a Strategic Petroleum Reserve or SPR to mitigate risks of supply disruptions and to add commercial storage. India completed its first phase of SPR construction in 2018 and plans to construct an additional capacity of 48 million barrels.
- To reduce its import bill, the government is increasing the supply of Russian Ural which is being offered at a discounted rate. Crude imports from Russia now account for more than 25% of the total crude imports by the country.
- The government has envisaged a USD 60 billion distribution infrastructure for natural gas to connect almost 70% of the population to the natural gas grid.
- The government is set to invest USD 55 billion in coal gasification and liquidation and also has a Methanol Economy program that includes six methanol plants, five of which are based on coal ash.
Targeted Energy Mix
- The government intends to increase the share of natural gas in the total energy mix to 15% by 2030 from the current 6% levels.
- The share of renewables in the total energy mix is targeted at 50% by 2030. It currently stands at around 38%.
- The Ministry of Coal desires to increase domestic coal production to levels that will completely offset the need for coal imports by 2024.
Proposed Investments and Upcoming Projects
- The Oil and Natural Gas Corporation’s 44,000 barrels per day crude production facility is expected to commence operation in the Krishna - Godavari basin in 2023.
- The Oil and Natural Gas Corporation has further announced a USD 4 billion investment in exploration between 2022 and 2025.
- Domestic Oil Marketing Companies are planning to make a combined investment of USD 27 billion to boost refining capacity by 20% by 2025. This would take their total refining capacity to 6 million barrels from 5 million barrels per day currently.
- In terms of nuclear energy, eight reactors with a combined net installed capacity of 6.6 gigawatts are planned.
- 55 greenfield and 193 brownfield coal projects are expected to begin production by 2024.
- Reliance is currently developing three projects in the Krishna - Godavari in collaboration with British Petroleum to achieve approximately gas production of approximately 1 billion cubic feet per day
- About 9,000 miles of natural gas pipeline network are under construction as of November 2022.
- As of October 2022, six Liquid Natural Gas regasification projects are under construction that will add approximately 1.4 trillion cubic feet to the existing 1.9 trillion cubic feet capacity in the country.
