Securing energy

When Jaswant Singh took charge at the external affairs ministry, early in the tenure of the Vajpayee government, he had outlined oil diplomacy as one of his core objectives.

With a view to ensuring energy security for the country, he had talked of working out special arrangements with a variety of oil- and gas-producing countries. Some early beginnings were indeed made in this direction, but nothing to set any energy market alight.

So it is fortunate that the current petroleum minister, Mani Shankar Aiyar, has chosen to focus on the same issue (and even imported a seasoned diplomat into his ministry to help the process along).

Mr Aiyar has done well to point out, as he did last week, that India's oil reserves will not last for much more than another decade. As much should have been guessed from the fact that domestic oil production has been static, at a little over 30 million tonnes, for nearly a quarter-century.

Since the country's oil consumption has nearly trebled in this time frame, some two-thirds of India's oil needs now comes from overseas, and this dependence will grow.

With some reports suggesting that the global discovery and development of new oil fields will peak before too long, the business of tying up energy supplies through a variety of arrangements acquires urgency. Today, the issue with oil is its price. Tomorrow, it could be availability itself.

Public sector companies like ONGC Videsh have already been investing in oil fields overseas, with some notable success. Long-term gas supply contracts are being negotiated. Pipelines are being discussed.

Now even more ambitious schemes are being considered, like investing in Russian oil. And domestically, private sector firms like Reliance have met with success in unearthing new gas finds. These efforts need to be put into higher gear, given the urgency of the problem.

For instance, since Pakistan has finally indicated that it is willing to give India "most favoured nation" status for trade, India should now signal to Pakistan its willingness to be a partner in the proposed gas pipeline that will be linked to supply sources in west and central Asia.

These steps are not enough. Gas pricing needs to be addressed, so that major user industries like power and fertiliser can switch to gas as raw material. For this, downstream pricing issues in both those industries also have to be sorted out, and this will not be easy.

Coal, in which India is generally believed to have abundant resources, is another area in which action is required. It is unfortunate that the UPA government has turned its back on the opening up of coal mining to the private sector, because coal will benefit just as oil and gas have, from private sector investment.

Many of these issues have political overtones, and some of them have been long-festering problems. It must be hoped that the petroleum minister and the rest of the government will be able to bring sufficient urgency to the task, before the energy picture starts looking like a crisis.