Strategy to Reduce Net Costs Incurred Due to Imports

India is a net importer of petroleum, gas and other gaseous hydrocarbons. It is expected that India’s import of hydrocarbons would amount to 300-500 billion dollars annually by 2030. To get rid of this energy dependence, India should

Invest in Fuel Exploration Technology: That India has verified reserves of 206 billion barrels of fuel is testament to the fact that there is huge potential in fuel exploration and production. However, India only produces 67 billion barrels of fuel and less than 25% of India’s sedimentary basins are explored. India should look at using the latest technology to improve in this regard. Super wave technology, an initiative of the Indian Institute of Science is developing a way to use shock waves to create fractures in shale reservoirs located in the depth of 1000-1500 metres. This is better than using the hydraulic fracturing process as it would reduce water contamination and would also improve cost efficiencies.

Explore other alternatives: As per the Paris Climate Agreement in 2015, India promised to install 175 GW of renewable power capacity by 2022. But, targets have been continuously missed for solar, wind, hydro and bio energy production. India must focus on following through with its promises in a bid to reduce dependency on imports. The government has also promised to have only electric vehicles on roads by 2030. This would involve significant investment to scale up at such a rapid pace. The government is taking steps in the right direction by announcing its plans to provide up to 1.05 billion rupees in grant funding for the purchase of EVs under the Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles in India (FAME) program.

Hybridize fuel: The government plans to set up a “Methanol Economy fund” to promote methanol production. It could substitute 10 percent of crude oil imports by reducing the fuel bill by around 30 percent, as it only costs Rs.19 per litre approximately. By 2025, India could potentially produce 20 million tons of methanol annually. Blending Methanol with diesel, LPG and gasoline will result in the annual reduction of our fuel bill by Rs.26000 crore, Rs.6000 crore and Rs.5000 crore respectively. Widespread implementation would further reduce the imports bill by thousands of crores of rupees in future.

Form a Strategic Partnership with China: This option was initially proposed in 2005 and could be revisited. The oil consumption of China and India together accounts for 17% of the world’s oil consumption. A bilateral agreement between the two nations would give them the necessary bargaining power to negotiate better terms with the OPEC (The Organization of the Petroleum Exporting Countries) exporters.