Opinion
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News Analysis
Running on empty
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The country is already paying a price on the energy front for the recurrent tensions with Pakistan, says Sushma Ramachandran.
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ENERGY SECURITY is a prime concern for any country faced with the prospect of an armed conflict. In the present heightened atmosphere, India has to consider the implications for energy supplies in such a scenario since the bulk of its crude oil and petroleum requirements - about 70 per cent - are met through imports.
The domestic oil production, which accounted for 30 per cent of availability last year, is projected to fall to 29 per cent in the current fiscal.
Even official forecasts indicate that indigenous production is likely to remain static at around 32-33 million tonnes over the next few years.
No wonder then that the Petroleum Ministry is trying to resurrect a plan to build ``strategic reserves'' on the pattern of developed countries such as the U.S.
Currently, the country has 15 days of crude oil inventories and another 30 days of petroleum product stocks, which cannot be described as a ``strategic reserve''. To create such a facility, a long-term plan of constructing oil tankages will have to be undertaken.
The cost will be high and the project could take a few years to complete. In other words, for the time being, there is little prospect of a ``strategic reserve'' being available in case the demand for petroleum products suddenly rises.
It must also be noted that inventories are being estimated on the basis of normal requirements. In case demand shoots up, stocks will be drawn more quickly and the country will have to resort to more imports. The cost of these is already extremely high.
Total imports of crude oil and petroleum products during 2000-01 estimated at Rs. 70,353 crores, are Rs. 17,000 crores higher than in the previous year partly due to higher imports and partly the hardening of international oil prices during the year.
Present estimates are that the oil import bill, during the current fiscal, will be anywhere between Rs. 75,000 crores and Rs. 80,000 crores. Any rise in oil consumption due to a border conflict would mean an additional burden of thousands of crores.
The precise costs would be difficult to calculate since this would have to take into account world oil prices as well as the quantity purchased in international markets.
Apart from the costs incurred on physical imports, the country is already paying a price for the recurrent tensions with Pakistan on the energy front. This is in the form of uncertainty over supplies of natural gas, a cheap energy source.
For quite some time, India has been looking for a secure route to lay a pipeline for transporting gas from countries in the region. Hopes were raised several years ago when gas-rich Oman offered to supply natural gas through an overland pipeline. However, the project failed to fructify owing to the delay in selecting the route.
India preferred a deep-sea route, but since the cost was prohibitive the only option was for the pipeline to pass through Pakistan. Meanwhile, Oman had committed its surplus gas to other users.
Subsequently, Iran made a similar proposal. The same problem - lack of security - cropped up since the pipeline would have to pass through Pakistan.
For the time being, the project is at the feasibility report stage with both land and sea routes being examined.
India has also initiated plans for importing liquefied natural gas (LNG) through tankers. This also entails huge costs with storage facilities having to be created at the ports.
The pipeline is a cheaper option but given the current state of Indo-Pakistan relations, the prospects of it becoming a reality in the near future are faint.
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