“India has to mobilise about $100-billion investments to push its (domestic) energy sector. I believe there is a strong need to get private investments into the picture. And in order to get private investments you have to design the energy markets appropriately…,” said Fatih Birol, Chief Economist, International Energy Agency, and Executive Director-designate of the organisation. A soccer enthusiast, Birol, who is in India to hold talks with policy makers as well as key industry players in the energy space, believes that oil security will be more of an issue in the years to come. In an interview to BusinessLine he shares his thoughts on oil security, gas market, and scope of renewable energy. Excerpts:
At the current global oil prices what should be India’s strategy for energy security?
I believe that oil security will be more of an issue in the years to come because West Asia is the main provider of exports around the world. Not just in terms of production but also the sea-lines which bring oil to market that are critical to all.
India today imports 75 per cent of its requirement and we believe this will increase in the future.
Therefore, many countries such as China are taking advantage of the low prices and filling their stocks for the difficult days. India also has a room for making use of the low oil prices and build up stocks.
There is also room to use oil much more efficiently. This marries very well with the subsidy reform India has implemented and hopefully will continue to implement in the years to come, which would give the right price to oil products so that growth in consumption slows down a bit that in turn would control imports.
What are the key policy issues India needs to work on?
India today is in the middle of a profound transformation which could bring the country to the centre stage of global affairs. Here, energy is a critically important sector and successful development of the energy sector depends on three factors — investments, investments and investments.
India has to mobilise about $100-billion investments and a strong need to get private investments in the picture. To get private investments you have to design the energy markets appropriately.
India has set a strong and ambitious solar target. This gives a lot of inspiration to many countries around the world. Solar energy will reduce the environmental footprint of the Indian energy system which currently is based on fossil fuels — coal and oil. But, many of our member countries, when they introduced a lot of renewable energy, faced problems with the electricity network.
They had problems with peak load, with electricity cuts and blackouts. So in our report — India Energy Outlook — we will share the experiences of our member countries and provide recommendations on how to deal with the electricity network problems.
You said India needs to develop a gas market. What should be India’s approach?
Today, the global energy system has 25 per cent intake from natural gas. In India it contributes just 5 per cent.
There is a huge potential for gas to penetrate the Indian system. If it replaces the low efficiency coal, it will reduce environmental emissions. But, to see stronger penetration of gas in India, some steps are required.
India needs to make more use of its domestic gas. India has significant gas resources.
In order to make use of those resources it has to get the gas prices right. Besides, we see a downward pressure on liquefied natural gas (LNG) prices. I think it is a good time to see whether India can make more use of LNG in order to increase the share of gas and therefore lower the local pollution and cut carbon emissions.
But, does India have significant gas reserves?
There are some geological studies that show presence of significant reserves. But, India will never be a gas exporter.
However, some of the gas needs can be met by domestic resources in addition to the imports coming from Australia, West Asia and others. India needs to find a right gas price to provide incentives for the investors to produce gas from the existing resources and at the same time make it affordable for the consumers.