Investments in Oil & Gas sector to fetch Energy Security for India

How soon can we see major investment in the domestic, upstream oil and gas sector? Remember, this is in line with Prime Minister Narendra Modi’s “Make in India” initiative, to give domestic manufacturing a major push

Industry analysts predict a major chunk of investment in the domestic oil and gas sector in the next 5 years. In line with Prime Minister Narendra Modi’s ‘Make in India’ initiative.

The initiative will give domestic manufacturing a major push, and all sectors – upstream (oil and gas exploration), midstream (gas pipeline and ship transport) and downstream (refining) – are likely to benefit.

Recently, the Boston Consulting Group came out with a report where it mentioned that the upstream oil and gas sector will see in excess of 1.5 lakh crore investment over the next 5 years, for discovery & exploration of basins across the country – onshore and offshore.

For a complete energy security, India needs a robust grid of natural gas pipeline infrastructure. This infrastructure will ensure an equitable distribution of gas & the sector will see investments in excess of 2.5 lakh crores. Refinery & petrochemicals, too, are likely to see huge investments of about Rs 88,000 cr and Rs 100,000 crore, respectively.

Moreover, to jump-start manufacturing industry, the government will emphasis on local value addition, opening of more service centres in India and providing access to capital at globally competitive rates.

Energy-Security

India presently imports more than 80% of its oil needs, and it doesn’t have adequate storage facility to store oil. Developed countries are constantly increasing their capacity to store oil domestically, to ensure uninterrupted supply in times of distress. China has enough storage to last more than 90 days, and they’re building reserves to store 180 days’ worth of supply. Given the unpredictable political situation in Asia, the Government of India must expedite the process of building storage facilities. In fact, consumer markets have made the most of crashing global crude prices by investing in large-scale storage facilities – both strategic and financial.

Low energy prices are a boon because India is—and will, in the near future, remain—a net energy importer. However, if energy prices start to inch up, as they inevitably do, it’s domestic exploration and production that will give India an edge against higher oil prices.