India has a moral duty to secure oil supplies for its people: Oil Minister Hardeep Singh Puri

India is taking every measure possible to secure energy supplies in times of conflict and economic uncertainty says the country's Petroleum and Natural Gas Minister Hardeep Singh Puri in an exclusive interview to Khaleej Times. On Russian oil supplies to India despite Western sanctions, he says: "If one were to dive deeper and see the per-capita consumption of Russian crude, it will give you an even starker figure of the disparity between India and countries from where some criticism about India’s energy trade seems to be appearing."

The UAE has oil storage facilities in Mangalore and Padur in Karnataka in India. Do you think they are likely to supply more oil as India expands its supplier base?

The UAE is an important energy supplier for India. In 2021-22, our total bilateral trade was over $72 billion. In fact, in FY 2022, 29 per cent of our LPG, 14 per cent of LNG and about 10 per cent of crude oil were sourced from UAE, totalling more than $17.7 billion even as India exported petroleum products worth $5.72 billion to the UAE. It has been among our top five suppliers of crude oil, LPG and LNG.

As I mentioned earlier, India's energy demand is on an upward trajectory. We welcome all parties to enter into mutually beneficial arrangements with Indian companies.

India's ties with the UAE and GCC have grown steadily over the last few years, especially with the rise in oil imports. How do you see this energy cooperation going forward?

India and the GCC share historical ties that are strengthened and enriched by constant dialogue, and as you rightly pointed with a robust energy partnership. For the financial year ended March 2022, our total bilateral trade stood at $154.65 billion – an increase of 77 per cent from 2020-21. Energy trade constituted around 53 per cent of the total trade, which translates to more than $82 bn. Crude imports from GCC alone were close to $50 billion, and in volume, was around 48 million metric tonnes (MMT).

What is important to note is that this relationship is mutually reinforcing and beneficial. For instance, while Saudi Arabia is our second-largest supplier of crude, India is also their second-largest export destination. Similarly, while UAE was the third-largest source of crude oil to India in 2021-22, India was also their third-largest export destination for crude. Indian public sector undertkings (PSUs) have made investments in producing blocks in UAE and Oman whereas Adnoc (UAE) and Saudi Aramco are partnering with Indian companies for investment in petrochemicals.

Since my association with the Petroleum and Natural Gas ministry beginning in July 2021, I have been underscoring the importance of India’s energy demand as well as the importance of other consuming countries to the decision-making processes in the energy sector. These are opinions that many authorities and experts in the world are also echoing. According to BP 2022, India's energy demand is expected to grow two times by 2040 while the recently released World Oil Outlook estimates that India will be the largest contributor to incremental demand by 2045, adding around 6.3 million barrels per day (bpd) against a total increase of 12.9 million bpd.

There is global recognition that India is a leader in the renewables and emerging fuels sector. In fact, our companies have already signed agreements to supply green ammonia to Europe. Such developments have spurred many other countries to partner with India across various verticals of the energy ecosystem. In this context, we are progressing on broadening our relationship with the GCC countries. I was recently at Adipec 2022 where we signed an MoU with Dr Sultan al Jaber, UAE Minister for Advanced Technology and Adnoc Managing Director, covering not just natural gas but also renewable energy.

National oil companies (NOCs) of GCC countries are also partnering with Indian PSUs in the oil and gas sector on greenfield projects, India’s strategic petroleum reserves, and technological advancement in clean energy. India is a preferred investment destination for many GCC countries which want to collaborate in the areas of natural gas, green hydrogen, and clean energy technologies. This partnership is not restricted to our major public sector companies; even Indian private sector companies are patterning with investment firms of GCC countries.

India has been criticised a lot, especially by the Western media, over its increase in oil imports from Russia, even as the Ukraine crisis drags on. What is your take on this 'moral posturing' by the West and some others?

I don't share your assessment. I was recently in the United States for the meeting of the Sustainable Clean Energy Partnership and met with Secretary for Energy, Jennifer Granholm. Similarly, I was invited by both Sultan Al Jaber and UAE Minister of Economy Sultan Al Mazroui last month at Gastech. They did not refer to this at all in our interactions. In fact, it was only some journalists who seemed to ask me questions on these lines.

It is important to appreciate the global scenario under which we are all operating. Russia has been exporting close to 4.5 million bpd, which is roughly around 5 per cent of the global production. In the tight oil markets we are facing currently, ensuring supply stability is important. You would have seen various reports from agencies that have posited that the impact of reduced Russian exports of crude will result in an increase in crude price to between $175-380 per barrel.

As for imports by different countries, you would have seen the recent import figures estimated by Bloomberg. I believe seaborne imports of crude, not including pipeline imports for Europe were more than two times that of India. On top of this, you will need to add Russian pipeline exports. In fact, for the month of September, Europe total crude imports were almost thrice that of India. If one were to dive deeper and see the per-capita consumption of Russian crude, it will give you an even starker figure of the disparity between India and countries from where some criticism about India’s energy trade seems to be appearing.

I have been clear from the beginning; India has a moral responsibility to its citizens. We have to ensure that they are supplied with energy. While developed countries require energy availability to sustain their high standards of living, the requirements of energy in developing countries such as India are to ensure socio-economic development and upward mobility. To appreciate the scale and magnitude of India’s requirements, it is important to bear in mind that 60 million people in India visit petrol bunks every day. Our crude oil imports increased by 15.1 per cent during April-September 2022 year-on-year. Our demand for petroleum products this year has already gone up by 13.4 per cent. This was led by an 18.5 per cent growth in motor spirit (MS), a 16.1 per cent in high-speed diesel (HSD) and a 72.1 per cent in aviation turbine fuel (ATF) consumption during the half-year.

Against this backdrop, one must also consider the proactive steps taken by the Government of India such as introducing revenue cuts to ensure that energy remains affordable. Despite the burden it put on the exchequer, India has not only ensured energy availability and energy affordability for its citizens.

So, while the issue of India’s imports may generate attention in certain sections of the Western media, it is clearly a non-issue when weighed against the larger responsibility India has to its citizens. By and large, decision-makers across the world appreciate the volatile situation currently and the need for a country like India to secure its supply stability. The US treasury secretary's statements a few days which noted that the US is happy for India to purchase as much Russian oil as it wants is another indication of the global position on this matter.

Keeping in mind the fact that coal continues to be major source of energy in India, how does India then plan to make the transition to clean energy?

India is not merely planning to transition to clean energy, but has already taken definitive steps to mainstream sustainability in development and reduce the country’s carbon footprint on relative terms. A clear indication of this progress is that India is the only G20 nation that is on track to achieve the country-level goals set under the Paris Agreement.

The Ministry of Petroleum and Natural Gas in India is maximising the deployment of energy sources like natural gas and biofuels, and emerging fuels such as hydrogen. In the coming decades, India’s energy base load will be met by traditional hydrocarbons wherein natural gas will be both a bridge fuel and an enabler in our transition to clean energy. At the same time, the Government of India has embarked on energy transition pathways by increasing the use of Green and Blue Hydrogen, biofuels, waste-to-wealth through Compressed Bio Gas, and renewable energy including solar and wind.

Over the last 8 years, we have increased the number of city gas distribution connections from 2.5 million to 9.6 million. Around 98 per cent of the country’s population and 88 per cent of the area has been covered is covered by city gas distribution (CGD). We have nearly doubled our LNG terminal Re-gasification capacity from 21.7 million metric tonnes per annum (MMTPA) in 2014 to 42.7 MMTPA in 2022 even as a further 20 MMTPA LNG regasification capacity is under construction. At the same time, our LPG coverage has surged from 55 per cent in 2014 to more than 99 per cent today.

There is a bio-fuel revolution in India today. India’s ethanol blending programme has resulted in a significant jump in blending percentage, with us achieving 10 per cent blending before time. Buoyed by the success, we have advanced the 20 per cent ethanol blending target by five years to 2025. Ethanol is one of the major priorities of 21st century India. We are setting up 2G biofuel refineries with the twin objectives of reducing pollution along with achieving energy security goals. The Indian government is incentivizing in-country production of auto components capable of running on up to Ethanol-85 fuel and has earmarked $3.4 billion for this initiative.

We are also in the process of boosting the rural economy by waste-to-wealth generation under the Sustainable Alternative Towards Affordable Transportation (SATAT) initiative. We have a target to set up 5000 compressed biogas (CBG) plants by 2024 with a production of 15 MMT.

In terms of renewable energy (RE), you would be impressed by the progress India has made. In March 2014, our installed RE capacity, including large hydro, was about 75 GW. Today, it has more than doubled to about 163 GW. In March 2014, our solar installed capacity was just 2.6 GW but it has now crossed 59 GW, increasing by more than 22 times. In 2014, solar tariffs were around Rs7 per unit and wind tariffs around Rs3.5 per unit. They have now fallen to Rs1.99 and Rs2.77 respectively.

This has supported our push for Green Hydrogen, and has enabled us to target to make India an exporting hub by 2030. To this end, we have launched the National Hydrogen Energy Mission (NHEM). We are working with companies in countries such as UK and Germany for the domestic manufacture of electrolysers to make deployment of Hydrogen as an affordable energy source possible. GAIL is setting up a 10 MW PEM electrolyser to produce 4.3 TPD/1.4 KTA Green hydrogen at Vijaipur. It is also in the process of selecting partners for electrolyser manufacturing to aid in the production of Green Hydrogen. Avantika Gas Limited (AGL), an Indian CGD company, has started blending of 2 per cent volume of Hydrogen in Natural Gas for distribution to PNG/CNG/Industrial customers as a pilot project in Indore, and is now exploring the possibility of increasing the share of blending to 5 per cent. Indian Oil Ltd., India’s largest crude refiner, is venturing into Green Hydrogen production, and is targeting 5 per cent of hydrogen produced by it as green hydrogen by 2027-28, and 10 per cent by 2029-30.

Do you think that the India-UAECEPA (Comprehensive Economic Partnership Agreement) can serve as a template for an FTA (Free Trade Agreement) between India and GCC countries?