A parliamentary committee on Thursday warned that India’s heavy dependence on imported crude oil and growing geopolitical risks pose significant challenges to the country’s energy security, and urged the government to diversify supply sources.
In a report tabled in the Lok Sabha, the Public Undertaking Committee noted that India imports nearly 89% of its crude oil requirements, leaving it vulnerable to global disruptions caused by conflicts, sanctions, civil unrest in oil-producing countries and interruptions along key shipping routes such as the Suez Canal and the Red Sea, PTI reported.
“Recent global events, including the Russia-Ukraine conflict and tensions in the Middle East, have underscored the vulnerability of India's energy supply chain and its dependence on international trade flows,” the news agency quoted the report as saying.
The committee recommended that the Ministry of Petroleum and Natural Gas and state-run oil companies intensify efforts to diversify crude sourcing both geographically and contractually, expand strategic petroleum reserves and develop alternative import routes.
It also called for risk management practices, through “improved hedging, revenue diversification and operational efficiency, along with cost optimisation via digital transformation, energy efficiency and overhead rationalisation”.
The report also highlighted internal challenges facing the oil and gas sector, including ageing oil fields, delays and cost overruns in projects, rising land acquisition hurdles and domestic crude production failing to keep pace with capital expenditure.
The committee recommended closer coordination between the Ministry of Petroleum and Natural Gas and the Ministry of External Affairs to strengthen diplomatic engagement with oil-producing nations, secure favourable investment terms and address taxation and regulatory concerns faced by Indian companies abroad, PTI reported.
Amid the conflict in Ukraine that began in February 2022, Indian entities have been facing a threat of Western sanctions for purchasing oil from Russia.
United States President Donald Trump has repeatedly claimed that purchases of Russian oil, including by India, are helping fund Moscow’s war. In August, his administration doubled tariffs on Indian goods to 50% in response to New Delhi’s continued imports of Russian crude. India called the move “extremely unfortunate”.
On November 10, Trump said the tariffs would be reduced “at some point” and claimed India had cut its Russian oil purchases.
On November 20, Reliance Industries halted imports of Russian oil to its Jamnagar refinery in Gujarat. The conglomerate which is India’s largest fuel exporter used to account for roughly half of the country’s total imports from Russia.
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