Energy diversification in India is a job halfdone
New Delhi must convert ideas regarding green energy into reality
India can look forward to some relief on the oil price front. Saudi oil minister, Khalid Al Falih, has declared it is “inevitable” that the Organisation of the Petroleum Exporting Countries (OPEC), and thus the cartel’s partner Russia, will increase production. Any drop in prices can only be welcomed by the Narendra Modi government. Brent crude prices have dipped to $67 dollars in expectation. Saudi Arabia and Russia successfully persuaded Opec to cut production by 1.8 million barrels per day to force up prices in 2016. Prices rallied further when Venezuela’s production collapsed, US shale oil exports stalled on transport bottlenecks, Washington announced sanctions on Iran, and Chinese demand spurted. The result was a price spike. India, among others, has been suitably reminded of its continuing vulnerability to external oil prices.
Saudi Arabia and Russia now agree oil prices need to moderate. The two understand that overly expensive crude leads to a shift towards other energy sources and an inevitable price collapse. India and China are reportedly considering jointly buying more US oil and gas. While this is partly about trying to avoid trade sanctions by Donald Trump, this addresses the Saudi-Russia axis, not oil dependency.
The spring oil crisis actually strengthened a sense that the days of $ 100 a barrel are over. Nonetheless, as the world’s fastest growing oil importer, India needs to be doubling down on diversifying its dependency on the black stuff. Sadly, energy reforms remain a job half-done. The natural gas sector struggles to fund the infrastructure needed to make it a serious part of the energy mix. Solar and wind markets are so volatile as to scare away investors. The much touted electric vehicles policy is out of charge. It is hoped that when oil prices begin to sag again, India won’t be diverted from converting its many ideas regarding energy diversification and green energy into reality.