New Delhi: With a 9% GDP growth target for the Twelfth Five Year Plan, ensuring a secure supply of energy to support this growth is a key thrust area for India. As a step in this direction, securing long term energy supply from the Gulf is critical for India, given the country’s strong dependence on this region which accounts for over 65% of India’s energy requirements. This will ultimately promote greater participation of Indian companies in exploration and development projects in the Gulf and simultaneously create investment opportunities for Gulf companies in India's downstream and petrochemical sectors.
Given the importance of securing energy supply from the Gulf region and to capitalize on the opportunities in this space, the Confederation of Indian Industry (CII) released a study, “India’s Energy Cooperation with the Gulf Countries: Emerging Business Opportunities and Growing Concerns’’ at a Round Table Conference on the same subject that was organized by CII.
Kickstarting the conference, Dr Sudhir Kapur, Member, CII National Committee on Power and MD & CEO, CountryStrategy Business Consultants emphasized on the huge opportunities for India and the gulf countries to work together leading to a win-win situation for all. He said, “India imports 75% of its oil needs and this is only likely to grow as oil consumption rises with GDP expected to grow at 9% and as inclusive growth happens. This will create strong interrelationships between the gulf countries and India.”
Delivering the special address at the conference, Mr A R Ghanshyam, Joint Secretary (Gulf), Ministry of External Affairs, Government of India said,” The Gulf region is extremely important for us. The region not only accounts for about 60 per cent of our oil and gas requirements but also about 20 per cent of our trade estimated at about $135 billion. In addition, the region provides employment to over 6 million Indians and accounts for over 50 per cent of the remittances into India. Most importantly the Gulf region has trillions of dollars of investible surplus and is looking at India as a promising investment destination. However, given the political tensions in this region, India is keeping all its bases covered and has diversified its oil and gas supplies.
Mr Atul Chandra, Former CMD, ONGC and Advisor, Reliance Industries Limited, reiterated on the need to ensure energy security and stated that this was almost at par with national security. “While some effort has been made to ensure energy security, more needs to be done,” he said. On the possibility for collaboration between India and the gulf countries, he stated that there is tremendous potential to collaborate in the areas of refineries through joint ventures with these countries; LNG imports, sourcing crude oil and collaboration in solar energy. “India has many opportunities for working with countries in this region. For instance, we can explore working with Iran in the upstream segment as the country has substantial oil and gas reserves. However, in light of the political issues, developing relations with Iran can be explored only in the long term. Meanwhile, there is a huge opportunity to import LNG and heavy oil from Qatar. Similarly, Saudi Arabia is our natural ally for sourcing oil.”
In the course of his remarks, Prof Girijesh Pant, Centre for West Asian Studies, School of International Studies, JNU, New Delhi said, “Gulf countries have higher expectations as far as co-operation with India is concerned and energy as well as oil and gas is only one dimension of this cooperation. However, India needs to factor in the political tension within Iraq and other issues like the impact of Arab Spring on India when developing its policy for the region.
Dr Sudhir Kapur, Member, CII National Committee on Power and MD & CEO, CountryStrategy Business Consultants emphasized on the huge opportunities for India and the gulf countries to work together leading to a win-win situation for all. He said, “India imports 75% of its oil needs and this is only likely to grow as oil consumption rises with GDP expected to grow at 9% and as inclusive growth happens. This will create strong interrelationships between the gulf countries and India.”
Clearly, there is potential for collaboration with the Gulf countries. However, India will need to take into account the issues that these countries are battling with as it frames its policy for this region.