India is in a geo-economic sweet spot. As the world’s fastest-growing major economy, it is comfortable if it can draw at least 50 per cent of its energy needs from domestic sources rather than imports. This is unlikely to be achieved by expanding renewable energy alone, though RE remains a key part of its future strategy.

Accordingly, an emphasis on oil and gas (O&G) is still necessary. The fallout of the Russia-Ukraine war has spotlighted this imperative.

Earlier this month, at the Indian Energy Week – a prominent event of India’s G20 Presidency – Prime Minister Narendra Modi met the heads of global and Indian energy companies to discuss the possibilities. The government is already doing its best in RE, achieving targets ahead of schedule and leveraging innovative means such as blending ethanol with petrol. But oil and gas will remain crucial as limitations exist in how quickly green technologies can achieve mass commercial viability.

India’s demand for oil, from a current consumption level of 5 million barrels per day (bpd), will rise to more than 7 million bpd by 2030 and almost 10 million bpd by 2040.

The share of oil and gas in India’s total energy mix is likely to fall below 50 per cent only in 2050.

Import factor

In such a scenario, the country cannot afford to remain nearly 90 per cent dependent on imports for hydrocarbons, which is the current situation. Indeed, domestic oil production has fallen for 10 consecutive years since 2012-13.

In 2021-22, India’s crude oil imports touched $122 billion – 20 per cent of its total imports. This year, this is likely to touch $170 billion – almost 25 per cent of overall imports. If India takes big strides in domestic exploration and production of O&G, it will have virtually no external vulnerabilities.

Globally, investment in exploration and production has been sluggish in recent years. Investment in 2022 is 20 per cent below the pre-pandemic level and 30 per cent lower than its peak in 2015. Although investment in global upstream O&G increased in 2022 compared to the pandemic years, the real growth is diminished by cost inflation, which rose almost 25 per cent in the same period. Estimates suggest that globally annual investments must range at the level of $400 billion until 2045 for O&G supply to meet demand.

This presents a tremendous opportunity for investors in India’s huge but under-explored hydrocarbon potential. Around 75 per cent of our estimated 70 billion barrels of oil equivalent in reserves is still unexplored. India also has massive potential to produce sulphur-free crude O&G that is much better for the environment.

Global oil companies possess huge financial muscle of more than $3 trillion, which they can deploy. In India, major upstream and downstream companies can join hands and pool their resources for exploration.

Fortunately, the Centre offers long lease life, self-certification and moderate levies. The same policy regime can be extended to the matured fields, which can invest in technology and raise production as has happened in other geographies such as Canada.

Some experts believe India does not have recoverable resources of O&G. The lessons from Guyana are important. Guyana that produced no O&G at all 8 years ago, now produces 200,000-plus bpd and will produce more than 1.7 million bpd in a decade. India needs to invest money and technology to fulfil its true potential in hydrocarbons.

The writer is Chairman, Vedanta