Md Imtiaz (MI): With India's emerging role in global energy order, how do you see the various energy themes play out in achieving the Panchamrit target as referred to by the Honourable Prime Minister of India at COP26 in 2021 and its implications in net-zero targets? How do you feel about this important milestone? Is India in the right place to meet those goals?
Rasaal Dwivedi (RD): India has been the fastest-growing large economy in the world. As we continue on this fast trajectory of growth and move towards a $5 trillion economy and then to a $10 trillion economy, there is a need to ensure stable, secure, and affordable energy supplies.
COP26 Summit in Glasgow provided an appropriate demonstration of why India will succeed on sustainability. Prime Minister Modi stunned and inspired the world when he announced India’s aggressive agenda against climate change through the Panchamrit Action Plan which envisages India becoming a net-zero emissions country by 2070. This is one of the shortest time spans proposed between peak emissions and net zero status by a developing economy—reiterating India’s firm belief that the roadmap to prosperity lies in sustainability. Many other achievements have further cemented India’s intentions.
India is undertaking an ambitious journey of energy transition culminating in achieving net carbon zero by 2070. However, for the transition to be enduring and stable, it is imperative that the accessibility and affordability aspects of energy remain intact. As a developing country which imports 85% of its demand for oil and close to 50% of its demand for natural gas, we are acutely aware of the need for a just and stable energy transition. While we are the only one of the G20 countries on course to achieve its Paris Agreement ambitions, we are also aware that in the coming decades India’s energy base load will be met by hydrocarbons. In this context, the government of India has undertaken landmark reforms in the upstream, midstream, and downstream sectors of the hydrocarbon industry in India.
India has one of the largest synchronous grids in the world, capable of handling intermittent renewable energy, and we have achieved One Nation-One Grid-One Frequency. We have enacted the National Green Hydrogen Mission with a production target of 5 million tonnes by 2030 and related development of renewable energy capacity.
The Indian government is incentivizing in-country production of auto components capable of running on up to ethanol-85 (E85) fuel and has earmarked $3.4 billion for this initiative.
The energy transition, with its requirement of combining disruption and scale, will only be truly successful when all stakeholders, big and small, collaborate to complement each other’s strengths through the creation of symbiotic relationships and strong ecosystems. We must realize that this journey is about creating comprehensive ecosystems as it is about specific technologies. It is crucial to acknowledge that our energy transition journey is ongoing, and we face challenges that require collective efforts. However, with the determination and resilience of our nation, I am confident that we will continue to make significant progress towards a sustainable and prosperous energy future.
Our oil marketing companies (OMC) have come out with their respective net-zero targets—Indian Oil Corporation Ltd. by 2046, Bharat Petroleum Corporation Ltd., and Hindustan Petroleum Corporation Ltd. by 2040, which also means that OMCs are gearing up for the change in energy source and use going forward.
MI: How much of our energy requirement is imported? How do we reduce our dependence on fuel imports?
RD: Currently, India imports approximately 80% of crude oil and 55% of natural gas to fulfil its energy requirement. It poses significant challenges to our energy security and economic stability. To reduce our dependence on fuel imports, the Government of India has implemented comprehensive strategies focusing on diverse solutions.
Firstly, the promotion of renewable energy sources has been a key priority. India has made remarkable progress in the biofuel revolution, launching E20, a 20% ethanol-blended gasoline, which will be rolled out in 15 Indian cities and expanded nationwide in the next 2 years. Ethanol blending in gasoline has increased from 1.53% in 2013—2014 to 10.17% in 2023. Moreover, India is setting up second-generation ethanol plants capable of converting agricultural waste into biofuel, simultaneously reducing pollution from stubble burning and generating income for farmers.
Additionally, Indian petroleum-sector Public Sector Undertakings (PSU) are leading the green hydrogen revolution, supported by the National Green Hydrogen Mission. With an allocated budget of $2.4 billion, the mission aims to develop the entire green hydrogen ecosystem in the country, targeting 5 million metric tonnes of annual green hydrogen production and cumulative fossil fuel import savings of $12.2 billion by 2030. Leveraging cheap renewable energy and a robust grid infrastructure, India is poised to establish a thriving $12 to $13 trillion green hydrogen industry by 2050.
Furthermore, the government is actively enhancing domestic production of oil and gas. India is committed to both traditional fuel exploration and energy transition. The country's efforts to attract exploration and production investments have been recognized, with consulting firm Wood Mackenzie noting India as the licensing wildcard of 2023. By 2025, India aims to increase its net geographic area under exploration from 0.25 million km2 to 0.5 million km2. Additionally, prohibitions in the Exclusive Economic Zone (EEZ) have been reduced by 99%, releasing 1 million km2 for exploration.
India also is actively promoting electric vehicles (EVs) through various measures. Production-linked incentives are provided for advanced chemistry cells of 50 GW hours, along with Viability Gap Funding and customs duty exemptions for the EV sector. Moreover, plans are in place to install alternate fuel stations (EV charging/CNG/LPG/LNG/CBG, etc.) at 22,000 retail outlets by May 2024, facilitating the adoption of cleaner mobility solutions. By adopting an integrated approach that encompasses renewable energy, domestic production enhancement, and sustainable mobility initiatives, India is working diligently to reduce its dependence on fuel imports and enhance energy security.
MI: Indian consumers remained protected from international CNG price volatility. Tell us how the government managed to keep gas prices low despite these global fluctuations.
RD: The Indian government has undertaken several proactive measures to mitigate the impact of international CNG price volatility and ensure that Indian consumers are shielded from its effects. These efforts have been instrumental in keeping gas prices low and stable, even in the face of global fluctuations. Let's delve into the key strategies that have contributed to this achievement.
First and foremost, the government has set an ambitious target to increase the share of natural gas in India's primary energy mix from the current 6.3 to 15%. To support this objective, the government plans to invest a staggering $60 billion in the development of natural gas infrastructure over the next 5 to 6 years. This substantial investment will lead to a significant rise in gas consumption, surpassing 500 million cubic meters per day (MMSCMD) by 2030, compared to the current level of approximately 155 MMSCMD.
Remarkably, the recent reforms implemented by the government have already begun to yield positive outcomes. Gas production in India witnessed an impressive 18% increase last year, effectively reversing the previous downward trend. From 28.7 billion cubic meters (BCM) in 2020–2021[PB1] , gas production escalated to 34 BCM in 2021–2022 and further climbed to 35 BCM in 2022–2023. This enhanced domestic production serves as a critical factor in meeting the growing demand for gas and reducing our reliance on imports.
To ensure a steady and affordable supply of gas, the government has prioritized the allocation of natural gas to the CNG (transport) and PNG (domestic) segments of the City Gas Distribution (CGD) sector. As a result, these sectors have been classified under the "NO CUT" category, guaranteeing uninterrupted supply. Notably, around 91% of Administered Price Mechanism (APM) gas is allocated to CNG and PNG consumers, offering them stability and protection from price fluctuations.
In a major policy reform decision, the government approved a series of critical pricing reforms aimed at establishing a sustainable, affordable, and secure energy future for the citizens of India. Under the revised pricing mechanism, the price of APM gas is determined on a monthly basis, considering 10% of the average Indian Crude Basket Prices. The introduction of a price ceiling ($6.50/MMBTU) and floor ($4.00/MMBTU[PB2] ) ensures that gas prices remain competitive with alternative fuels while providing a predictable pricing framework for consumers.
These pricing reforms also incentivize investment in India's exploration and production (E&P) sector. Gas production from new wells in nomination fields receives 20% higher prices, encouraging greater domestic production. Importantly, these reforms do not affect private operators of NELP/HP-HT (New Exploration Licensing Policy/high-pressure/high-temperature) fields or new gas production from field development plans submitted after February 2019, thereby fostering a conducive environment for private-sector participation.
Additionally, the Petroleum and Natural Gas Regulatory Board (PNGRB) has introduced amendments to the Natural Gas Pipeline Tariff regulation, implementing Unified Tariff regulations. These changes aim to provide access to natural gas in remote areas at competitive and affordable rates. The implementation of unified tariffs aligns with the vision of "One Nation, One Grid, One Tariff," effectively reducing regional disparities in gas prices and benefiting consumers across the country.
Thanks to these comprehensive measures, Indian consumers have experienced the tangible benefits of low gas prices. The average cost of PNG has already witnessed a reduction of approximately 10%, while CNG prices have seen a notable decrease of 6 to 7%.
With a combination of robust investment in infrastructure, increased domestic production, priority allocation to key sectors, pricing reforms, and tariff adjustments, the Indian government has successfully managed to keep gas prices low and shield consumers from international CNG price volatility. These efforts exemplify the government's commitment to ensuring affordability, stability, and energy security for the people of India.
MI: Are you of the opinion that India's planned investments and technology available can make hydrogen a profitable energy behemoth?
RD: The National Green Hydrogen Mission with an outlay of $2.4 billion, including an outlay of $2.13 billion for the Strategic Interventions for Green Hydrogen Transition (SIGHT) Program. was launched.
To achieve the mission for net zero, India is targeting the following areas to make a successful transition to green hydrogen.
- Both near-term and long-term policy pathways to reduce the cost of green hydrogen need to be encouraged to enable cost competitiveness against alternatives.
- A cost-competitive green hydrogen is bound to lead to market creation.
- An emerging green hydrogen economy means opportunities around research and development and manufacturing of components such as electrolyzers and fuel cells, crucial to enabling the industry to develop and scale.
- A globally competitive green hydrogen industry also leads to prospects of exports of green hydrogen and hydrogen-embedded low-carbon products such as green ammonia and green steel.
MI: What is the ministry's plan for bringing Foreign Direct Investment into the oil and gas industry? Are you confident that we can replicate a Guyana-like boom in India?
RD: Government has set a target to increase the net geographical area under exploration from 8 (0.25 million km2) to 15% (0.5 million km2) by 2025.
No Go areas have been reduced by almost 99%. No-Go areas has recently been opened for exploration under special arrangements with the Indian Navy to initiate prospecting of hitherto unexplored areas.
We are also launching a scheme for stratigraphic wells, where the Government of India will incentivize discoveries of potential basins using the National Data Repository (NDR) by drilling exploratory wells at its own cost.
At the same time, Special Coal Bed Methane (CBM) round–2022 is offering 16 blocks falling in 7 states of India covering an area of about 5800 km2.
The global E&P companies are being encouraged to take up large acreages in the newly opened EEZ, supported by quality data and a pro-investor incentive structure.
All newly acquired seismic and well data are being hosted on the NDR.
Several multinational companies like Chevron, ExxonMobil, and TotalEnergies are showing keen interest to invest in Indian E&P segment. TotalEnergies has purchased data from NDR for Andaman basin area. They have also visited the NDR at Directorate General of Hydrocarbon Noida office and Oil & Natural Gas Corporation (ONGC, Indian NOC) Dehradun office to view Andaman area data. They are at an advanced stage of deliberation with ONGC for firming up a mutually beneficial partnership. Chevron has also shown keen interest for exploration in Tripura and northeastern part of India. They are already analyzing geological data of sedimentary basin.
Apart from above, the government has undertaken major reforms for enhancing ease of doing business in E&P by reducing compliance burden through self-certification, notification regarding dispute resolution committee, digitalization of E&P roadmap document, and performance monitoring dashboard.
MI: Normally the petroleum industry is considered a blue-collar industry. Talent in quantity and quality has been a concern, more so in talent retention. Any message for today’s young energy professionals on India's energy sector's growth prospects?
RD: The International Monetary Fund projects that India’s economy will grow at 6.1% in FY 2023–2024 followed by 6.8% in the FY 2024–2025. Ernst and Young projects India to become a $26 trillion economy by 2047 with a sixfold increase in per capita income to $15,000.
OPEC in its World Oil Outlook report expects India’s share in global GDP will increase from its current 7% to 14% in 2045. Such a growth in global share of GDP is the highest for any country in the world. Other reputed institutions and credible voices tracking the global economy have also shown unprecedented confidence in India. Global Investors share the same optimism resulting in India receiving record-breaking Foreign Direct Investment. The Indian energy sector is expected to grow at a compound annual growth rate (CAGR) of 6.5% from 2021 to 2026.
It is a generally an understood fact that economic growth is increasingly dependent on energy consumption on account of rapid urbanization and industrialization. This growth-energy correlation is evident in India as it is now the world’s third-largest energy consumer, third-largest consumer of oil, third-largest LPG consumer, fourth-largest LNG importer, fourth-largest refiner, and fourth-largest automobile market in the world. The energy demand in India will continue to provide the fuel for future economic growth.
India's energy demand is expected to grow at about 3% per annum till 2040, compared to the global rate of 1%. Further, 25% of the global energy demand growth between 2020 and 2040 is going to come from India due to our fast-growing economy and demographic dividend. It is projected that India will overtake Europe as the world’s third-largest energy consumer by 2030.
During the past few years, the Indian Government has taken concerted and focused steps to maximize the overall production capacity of the economy, and the energy sector is playing a vital role in achieving that goal. Since 2000, India has been responsible for more than 10% of the increase in global energy demand. On a per capita basis, energy demand in India has grown by more than 60% since 2000. The sector is expected to attract $100 billion in investment by 2030 which will boost jobs and employment opportunities.
Young Professionals in Energy (YPE) is a platform that fosters an environment where members can learn from each other's experiences, share industry knowledge, and discuss career opportunities. The India Energy Week (IEW) Technical Conference offers energy professionals access to the latest developments and trends in the energy sector. YPs can join these types of programs and contribute towards the environment and country in a more suitable manner. An increased number of professionals working in energy sector equals more growth and sustainability.
It is crucial to acknowledge that our energy transition journey is ongoing, and we face challenges that require collective efforts. However, with the determination and resilience of our nation and YPs, I am confident that we will continue to make significant progress towards a sustainable and prosperous energy future.
I will also take this opportunity to invite young oil and gas talent to be part of India Energy Week 2023–2024 that will be held in Goa between 6–9 February 2024. The IEW is expected to provide a dynamic unique opportunity for India to bring together all the international stakeholders on a common platform to facilitate growth, collaboration, and transition to a transformative and prosperous future for all.
