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Address by Mr. Murli Deora, Minister of Petroleum & Natural Gas on the occasion of Annual General Meeting of the US Energy Association (USEA)

Washington,  DC
April 4, 2006 

It gives me great pleasure to be present here on the occasion of the Annual General Meeting of the US Energy Association (USEA) and share my views with the distinguished audience on the energy security of India.

First let me congratulate USEA for the pioneering role being carried out by it and contributing to carry forward the mission of the World Energy Council (WEC) “ to promote the sustainable supply and use of energy for the greatest benefit of all”. 

Today let me share with you about the energy security concerns of India to fuel its targeted economic growth with utmost regard to preserve the environment.

India cradling a sixth of world’s population is also its sixth largest consumer. The Structural Adjustments initiated in the country’s policy making in the 1990s initiated a process of visible economic change in India. With the National Common Minimum Program and its various policies for stimulating and sustaining growth, India is poised to achieve a sustained GDP growth rate of 8% this year, and may be even higher in the future. 

Even with this rapid pace of growth, India at 520 kg of oil equivalent consumes only a third of the world’s average annual per capita energy. The country’s total primary energy requirements, which are close to 360 million tons of oil equivalent per annum, are projected to go up to 1.6 billion tons of oil equivalent by 2030.

Nearly the entire need of our commercial energy is met by fossil fuels namely coal and hydrocarbons. Oil and gas currently account for nearly 45 % of the primary commercial energy requirements of the country, and their share is likely to remain high in future, with gas providing for a larger share than the present. 

Our focus to give top priority to our energy security concerns can be seen from a statement made recently by our Hon’ble Prime Minister before the Indian Parliament in the context of the historic agreement between India and US on civil nuclear cooperation. He stated that:
“the search for an integrated policy with an appropriate mix of energy supplies is central to the achievement of our broader economic or social objectives. Energy is the lifeblood of our economy. Without sufficient and predictable access, our aspirations in the social sector cannot be realized. Inadequate power has a deleterious effect in building a modern infrastructure. It has a direct impact on the optimal usage of increasingly scarce water resources. Power shortage is thus not just a handicap in one sector but a drag on the entire economy. I believe that the needs of the people of India must become the central agenda for our international cooperation. It is precisely this approach that has guided our growing partnership with the United States”.

We are in the process of drafting an integrated energy policy to provide a road map to augment and meet our growing energy need in an environmentally sustainable manner. 

I will confine myself to oil and gas scenario which is my charge. It is projected that the demand for oil and gas in India, will during 2005-2025, grow steadily at a rate of 4.3 % and 7.3% respectively. At current levels domestic production meets only 25% of the country’s oil needs which are at around 2.6 Million Barrels per Day (mbpd). This demand is expected to increase to 7.5 mbpd when India may need to import almost 85% of its oil requirements unless new major exploratory successes are reported in our now unexplored basins. We expect the demand for natural gas during the same period to increase from 150 million standard cubic meters per day (MMSCMD) to about 390 MMSCMD. 

India has crafted a multi pronged strategy to counter the challenge of fueling India’s economic growth. This strategy includes a conscious shift to promote larger public-private participation in oil and gas. Our policy has been carefully evolved to create a level playing field for all the participants in the sector. With the recent passage of the Petroleum and Natural Gas Regulatory Board Bill in our Parliament, agencies to regulate and monitor the mid stream and downstream sectors of oil and gas are being put in place. For the upstream the Director General of Hydrocarbons already fulfils all technical regulatory functions.

Our New Exploration licensing Policy has been successful in opening up new and hitherto unexplored sedimentary basins for exploration and has enabled us to add a sizeable quantum of oil and gas reserves. The global perception of India’s Hydrocarbon endowment is rapidly changing with more investments and modern technology pouring into India. Our policy dispensation today provides for unhindered flow of investment into the entire Hydrocarbon value chain- including E&P, refining, pipeline infrastructure and marketing.

While the price of crude oil and petroleum products have been extremely volatile in the international markets, our policy in this regard has been calibrated with extreme care to insulate our economically weaker sections so to enable them access their most basic energy requirements. This has been done through a carefully evolved equitable sharing of burden of high prices by all stakeholders, namely Government, oil companies and the consumers.

Energy efficiency and energy conservation are two vital areas of energy management. While the energy intensity in the Indian economy has registered a considerable decline over the past 15 years or so, making our industrial sector globally more competitive, we are not complacent in this regard. Newer and better ways of enhancing efficiency of energy use are continuously being employed in our economic activity. This is particularly important in the context of globalisation.

Another important component of our oil and gas security is to acquire equity oil and gas assets outside India. Indian companies have succeeded in getting a significant foothold and are currently operating in 14 countries with a production of about 100,000 Barrels per day of oil and oil equivalent gas in Sakhalin I, Sudan and Vietnam. Our emphasis is to further expand overseas activities and secure a significant portion of our domestic requirement through equity oil and gas route.

In addition to accelerating efforts at home and through international participation, India sees enhancement in its energy security through building energy corridors for supply of oil and gas across and within its borders. 

Coming to the renewable sources of energy, India, as you are aware, is among the select list of countries with a large installed capacity of wind power. Environmental concerns demand that we enhance the share of renewable energy sources as expeditiously as possible. 

Those of you who have been visiting our cities of Delhi and Mumbai over the past few years will be able to notice the considerable reduction in emissions in these metropolitan cities of late. We have achieved this through converting a large proportion of our fleet of vehicles from the emission – spewing gasoline and diesel to environmentally clean CNG. We are planning to expand CNG and piped Natural Gas facility to more cities and towns in the next few years, with the twin objectives of better environment and better economy.

To ensure steady supplies of energy, it would be prudent to introduce for developing economies to use new technologies for enhancing their energy security. This will not only enable efficient and more productive use of their resources, but would also help the world in proving many technologies viable through higher and larger commercial usage. Technologies in the field of Gas hydrates, Coal gasification, Gas to Liquids, Coal bed Methane, ultra deep exploration and production are lesser known in the developing world. The time has now come for the world to collectively share the responsibility for sustainable development and elevation in the quality of life of the masses. 
India is exploring the possibility of meeting its energy requirements from various sources of energy - through fossil fuels, thermal power, hydro-electric, nuclear power or renewables. In this regard, US and India have initiated the Indo-US energy dialogue, which would provide a meaningful exchange of information and a forum to help us in planning and implementing our agenda for energy security. 

The recent conclusion of agreement between US and India during the visit of American President, Mr. George Bush on civil nuclear energy cooperation marks an historical turning point in the ever increasing cooperation and mutual understanding between the two countries. India has always been engaged in peaceful nuclear energy programme to meet its growing energy demand. This measure will help India in adding its power generation capacity. This cooperation in civil nuclear programme, I am sure will expand to other areas also. Our cooperation should cover the entire energy spectrum from oil and gas to clean coal, CBM, gas hydrates, wind and solar power. India has already agreed to participate in the future – gen programme for zero emission thermal power plants and integrated ocean drilling programme for gas hydrates.

I would urge that India and the USA partner and initiate an institutional process of ensuring global energy security and lay the foundation of a new beginning, to realize the vision of a secure, sustainable, equitable, efficient and productive global energy market.

USEA and Indian institutions could also cooperate and share knowledge, information and expertise in the energy sector and an effective arrangement could be worked out within the framework of the Indo-US energy dialogue to achieve this and to strive towards the laudable goals of ensuring for our citizens access to energy in an economical and an environmentally sustainable manner in the years to come.

I once again thank the USEA for giving me an opportunity to share this platform and wish them all success in promoting the vision of WEC on energy.