Seeking Energy Security Through IBSA

Garima Singh

Prime Minister Manmohan Singh’s recent visit to Brazil has set the stage for a new era in South-South cooperation across three continents: Asia, South America and Africa.  The visit is significant due to the fact that the Indian Prime Minsiter chose to participate in the India-Brazil-South Africa (IBSA) summit and the Non-Aligned Movement (NAM) summit in Havana over the United Nations General Assembly, which is being held from September 19-27, 2006. This was the first summit of IBSA initiative, launched three years ago, as a forum for South-South cooperation. This reflects India’s strategic thinking that diversification of energy sources is vital keeping in mind the shocks and disruptions that can be reasonably expected in energy supply. 

Among the several issues discussed in the IBSA summit, energy security appears to have found a prominent place. Over the past few years Indian economy has grown at over six per cent per annum. Given the fact that gross domestic product (GDP) per capita and energy consumption have a close correlation, energy needs are likely to rise dramatically as the economy grows at 7-8 per cent a year.  Indian crude oil use is expected to rise from 105 million tonnes in 2001 to 264-324 million tonnes in 2024-25. Similarly, the demand for natural gas is estimated to increase from the current 62 million metric standard cubic metres per day to 195-225 million metric standard cubic metres per day in 2025, and the demand for coal from 473 million tonnes in 2006-07 to more than 1,100 million tonnes in 2024-25.  It is estimated that India’s oil import dependence is expected to increase. Most of the oil import is likely to be from the politically unstable Middle East. Hence, prudence demands that India look for alternative sources of energy supplies. India is exploring the possibility of importing natural gas from various countries like Russia, Myanmar, Bangladesh, Vietnam and Iran.

India has been trying to diversify its energy sources by investing in oil assets outside the country. It currently imports nearly three-fourths of its crude oil needs, mostly from the much turbulent Middle East. The focus on energy security is driven in part by limited oil stock and by high oil prices, which have doubled over the past three years. The current attention on India’s energy security is fuelled by the threat of terrorism and instability in the oil exporting nations, fears of a scramble for supplies, geopolitical rivalries, and countries’ need for energy to power their economic growth. The change in Indian thinking on energy can be understood by the maiden draft energy policy. The draft report examines the relevant issues from the point of view of energy requirements and supplies options, and also attempts to address energy security. The report is an attempt by India to take a macro view of the emerging energy scenarios in the context of a 7-8 per cent GDP growth.