Being the third-largest consumer of oil in the world, the oil and gas industry is one of the core industries in India. Demand for oil in India in 2021 was calculated to be around 4.76 million barrels per day. OPEC predicts that the country’s oil demand will rise to 5.15 million barrels per day by 2022, which is an 8.2% rise. As the COVID-19 pandemic recedes, and restrictions on mobility and travel are lifted, the oil consumption levels are also expected to increase. According to an IBEF report, Indian oil demand is expected to increase another 50% by 2030. Most of the oil requirements in the country are met through imports; around 85% of the oil needs are met from imports from countries like Iraq, Saudi Arabia, etc. According to data from the Petroleum Planning and Analysis Cell (PPAC), the amount spent by India on imports has doubled from $62.2 billion in FY 2021 to $119 billion during FY 2022. Amidst a global surge in oil prices due to Russia’s invasion of Ukraine, India spent $13.7 billion on oil in March alone. Meanwhile, the country’s oil refining capacity stands at 248.9 million metric tonnes per annum as of September 2021, of which around 35% is privately controlled. This makes India Asia’s second-largest oil refining country. However, these large numbers also come at a great environmental cost. Currently, India is looking into switching to alternative sources of fuel to reduce its dependency on oil. According to Nitin Gadkari, the Union Minister for Road Transport and Highways, the government is looking into sustainable alternatives for crude oil. Efforts being made include manufacturing ethanol and other clean fuels, and switching to lithium-ion battery-powered electric vehicles. Other efforts include a green hydrogen plant commissioned in Assam by Oil India Limited (OIL), which has a capacity of producing 10 kg of hydrogen daily. Green hydrogen is the hydrogen gas produced by using renewable energy such as solar or wind power. At the COP26 summit last year, Prime Minister Narendra Modi claimed India was aiming for net-zero carbon emissions by 2070. To reach this target, the country will have to take significant steps by declaring a proper plan and ensuring its effective implementation. Unless these efforts are taken, the oil and gas industry will continue to burden the country - both financially and environmentally.
10 May 2022
Yukta Patwardhan
