India says future energy landscape will see growth in oil, gas and renewables

India will pursue a diversified energy strategy to meet exponential demand growth in the coming years that will witness a sharp rise in refining capacity, a big push toward exploration, and a shift to a gas-based economy and zero-carbon fuels, Prime Minister Narendra Modi said Feb. 6.

Addressing the opening session of the India Energy Week, Modi told delegates the country would need to embrace all forms of energy -- both fossil fuels and low-carbon fuels -- to cater to rising demand and urged global investors to capture growth opportunities in the country's energy sector.

"The energy landscape is changing, and this is creating a lot of opportunities. The growth outlook for energy demand in the country is phenomenal," Modi said while speaking at the conference in the southern Indian City of Bengaluru.

Modi said that there is potential for India's oil demand share to rise to 11% in the global market in the coming years, from 5% currently. As a result, India would aim to raise its refining capacity to up to 450 million mt by 2030, from 250 million mt currently.

"India is doing a lot of work on this and at the same time we will need to also prepare for petrochemicals growth," Modi said. "We also want to increase our focus on domestic production and exploration of oil and gas."

A shift toward gas

Modi said that India's gas demand would grow over 500% in the foreseeable future as the country had set a target to raise the share of gas in the country's energy mix to 15% by 2030, from about 6%.

He said the country's regasification capacity is set to expand considerably as new terminals and proposed pipelines are being planned. India currently has six operational terminals -- Dahej, Hazira, Ratnagiri, Kochi, Ennore, and Mundra.

The country's gas pipeline network has risen to 22,000 km currently, from 14,000 km in 2014. "In the next four-five years, it should reach 35,000 km." Modi said.

He also highlighted the growth in compressed natural gas stations, saying they have grown to 5,000 currently, from 900 in 2014.

Biofuels, hydrogen, electric vehicles would also play crucial roles in the years ahead as the country embraces the energy transition process, Modi said.

Petroleum Minister Hardeep Singh Puri told the conference that 2022 marked a tumultuous period in energy prices globally, creating challenges for global development and sparking uncontrolled fears about high inflation and a recession. He quoted the World Bank, which has estimated that global economic growth in 2023 would decelerate to 1.7%, the third weakest in nearly three decades.

"This comes against the backdrop of considerable volatility in energy prices. From the pandemic time, crude oil price increased by over 500% from around $20/b in April 2020 to over $120/b in June 2022. Global LNG Prices also surged exponentially from around $2/MMBtu to $50/MMBtu," Puri said. "A nation of 1.4 billion plus has to be insulated against the global price rise, so that energy is accessible at affordable cost. This is the primary focus of India's energy needs."

LNG prices surged last year reflecting the impact of the Russia-Ukraine war, other geopolitical supply risks and facility outages worldwide. Heated competition for LNG cargoes between Asia and Europe also sent prices soaring, as procuring supplies for winter, and ensuring energy security became supreme concerns. For calendar year 2022, the Platts JKM averaged about $33.9789/MMBtu, compared with $18.59543/MMBtu in 2021, according to S&P Global Commodity Insights data.

Climate-sensitive agenda

India has pledged to become net-zero in emissions by 2070 and cut emissions by 1 billion mt by the end of 2030.

"Against this backdrop, India has carved out an energy agenda which is inclusive, market-based, and climate-sensitive. While we continue to underscore the importance of oil and gas, yet our commitment to climate change mitigation goals remains unabated," Puri said.

He said that India remains focused on energy efficiencies, while laying impetus on fuels of the future, including biofuels and hydrogen, and increasing the use of renewable energy. "At the same time, we are taking transformative steps to increase domestic exploration and production of traditional hydrocarbons," Puri said.

"As a country on a fast trajectory of economic growth, India is projected to witness the largest increase in energy demand of any country over the next two decades, accounting for close to 28% of incremental global growth in energy demand," Puri said.

"We have allocated Rupee 350 billion ($4.2 billion) for priority capital investments toward energy transition and net-zero objectives, and energy security, and made significant policy changes for accelerating outcomes."