Thirst for oil

 By Peter Ward

India is aiming to attract $25bn worth of investment in natural gas and crude oil over the next few years. India currently imports nearly three quarters of its oil. Peter Ward explains what are the benefits and why is one of the world’s largest energy consumers producing so little…?

India has a thirst for oil. The Asian country’s economy, the third biggest on the continent, consumed 4 million barrels of oil last year, according to the International Energy Agency. The country is also expected to become the third-largest oil user this year. India will be the fastest-growing crude consumer in the world through 2040, IEA data shows, adding 6 million barrels a day of demand, compared to China’s 4.8 million.

India is one of the few countries with a healthy demand of oil. “We expect India and other smaller non-OECD Asian economies and the Middle East to provide most of the 2016 growth,” the International Energy Agency wrote in its March Oil Market Report.

To quench that thirst, India aims to attract $25 billion worth of investment in natural gas and crude oil over the next few years. The Minister of State for Petroleum and Natural Gas Dharmendra Pradhan says the country’s new hydrocarbon exploration and licensing policy(Help) and a more liberal gas price regime would help ease the country’s heavy dependence on imported energy.

“Forty billion dollars of hydrocarbons will be unlocked for production through this policy reform,” he told the Financial Times in an interview. “To realize this amount we are expecting investment of more than $25 billion in the next two to three years.”

People buying gasoline and diesel at an Indian Oil gas station at Srisailam, Telangana (Imagine by

India currently imports around three quarters of its oil, a figure it would like to reduce by 10% by 2020. The new policy announced in March includes a uniform license for new exploration and production of all hydrocarbons, and “marketing and pricing freedom.”

Aside from attracting investment, India is also working to develop its own energy sources. State-owned explorer Oil & National Gas Corp. recently approved an extra $5 billion to develop a field off India’s east coast. That development could add about 10% to India’s oil output and 18% to its natural gas production, according to data compiled by Bloomberg.

India’s other major oil problem is that it lacks an emergency stockpile that would protect against supply disruptions. In order to remedy that, the country’s new budget allows foreign oil companies to avoid taxes on crude oil that is stored in the country. This is particularly appealing to OPEC nations pumping out excess supply at a time when oil prices are low.

A state-owned Indian company is also working to build three caverns with a storage capacity of 4.3 million metric tons (4.7 million short tons) of oil, around 12 days of supply, according to CNN Money.

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about the author
Peter Ward
Business and technology reporter based in New York. MA in Business Journalism at Columbia University Journalism School 2013. Five years experience reporting in the U.S., the U.K., and the Middle East.