Though renewable energy sources have not used by majority of the developed countries as most potential and viable source of energy, India’s energy sector is a mix of both non-renewable (coal, lignite, petroleum and natural gas) and renewable energy sources (wind, solar, small hydro, biomass etc).
In 2009, coal comprised more than two-fifth (42%) of India’s energy consumption, while oil comprised almost a quarter (24%) of India’s energy consumption basket. Moreover India’s energy consumption has been increasing quickly over the last few decades.
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Such rapid increase in the energy consumption is the result of numbers of factors, which includes population growth, unprecedented expansion of automobile industry, modernisation of lifestyles, higher electrification rates and fast growing gross domestic product (GDP). India’s oil demand is projected to double to 1,516 million tonnes of oil, and gas production likely to touch 90 billion cubic metres by 2040.
Now let us come to India’s dependency on non-renewable energy sources. Region-wise analysis of world oil consumption and production statistics reveals wide disparities between production and consumption of oil across regions. For instance, in 2011, Middle East accounted for one-third (33%) of world oil production and consumed less than one-tenth (9%) of total world oil consumption. In reverse Asia Pacific region which produced one-tenth of the oil produced in 2011 and consumed almost one-third (32%) of oil consumed by the world in the same time period
Production and consumption of oil in FY 2011 (In thousand million barrels)
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Region Production Consumption
North America 14301 23156
South & Cent America 7381 6241
Europe & Eurasia 17314 18924
Middle East 27690 8076
Africa 8804 3336
Asia Pacific 8086 28301
Total 83576 88034
Source: Statistical Review of World Energy- 2012, British Petroleum
The above statistics indicates that North America and Asia Pacific are the only regions where the difference between their share of world oil production and consumption is significant. Contraray to this position Europe & Eurasia consumed a little bit more than their production and Africa consumed around one third of their actual oil production.
If we would try to find out the reason behind such huge gap of production and consumption in the Asia Pacific region then we definitely come to the conclusion that this has been resulted because of the existence of two biggest economies of China and India in this region.
These two countries have the highest share of world population but the lowest share of world’s proven oil reserves. Proven reserves are reserves claimed to have a reasonable certainty of being recoverable under existing economic and political conditions, with existing technology. Below we have inserted a statistical table of region wise proven oil of this globe.
Proven Oil Reserves (In thousand million barrels)
Region 1991 2001 2011
North America 123.2 230.1 217.5
South & Cent America 74.6 98.8 325.4
Europe & Eurasia 76.8 102.4 141.1
Middle East 660.8 698.7 795.0
Africa 60.4 96.8 132.4
Asia Pacific 37.0 40.5 41.3
World Oil Reserves 1032.7 1267.4 1652.6
Source: Statistical Review of World Energy- 2012, British Petroleum
From the above table we can easily understand that though Middle East has the highest proven oil reserves in all of the three decades, however the highest increase has been in the case of South and Central America. This is primarily due to increase in Venezuela’s proven oil reserves, which are claimed to be the largest in the world.
Moreover, in last a couple of decades the centre of gravity of oil exploration and production is shifting to the western hemisphere as new reserves are being discovered in Brazil, Venezuela, Canada, Alaska and Russia. Though major part of the conventional oil reserves still lie in the Middle East/Persian Gulf, but one can easily presume that in near future because of technological advancement in oil extraction and exploration as well as swift use of alternative energy particularly in the western hemisphere, Middle East will no longer be a conflicting zone for asserting dominance over energy reserves.
In such a global context, India’s position is something unique and incomparable. According to the data available in respect of energy consumption, the US (21%), China (11%), Middle East (9%), Japan (5%) and India (4%) are the top consumers of oil in the world. The US produces less than one-tenth of the total oil production while it consumes more than one-fifth (21%) of oil consumed in the world.
Similarly, China and India produce 5% and 1%, respectively of total oil production and consume 12% and 4%, respectively of the total oil consumed in the world.The break in production and consumption is met through imports from oil surplus regions such as the Middle East, South & Central America and Africa.
However, the United States of America imports majority of its oil from friendly neighbours such as Canada and Mexico, South & Central America and Africa, rather than from disturbance and war-ridden Middle East. On the other hand, India and China depend on the Middle East for a significant portion of their oil imports. As the Middle East holds the highest proven reserves of oil world and located nearby, it is obvious that both China and India is highly dependent on the Middle East for their oil requirements.
Now let come to the historical transition that occurred in the middle east/Persian Gulf particularly after the Gulf War. It is an undisputed fact that the US has been playing a vital role in the Middle East for a long period and safeguarding their vested interest by the means funding to regional players and also setting up a string of military bases stretching from the Persian Gulf to Turkey.
This has ensured uninterrupted oil supply to the US. Perceptibly, as a result of such enduring western influence and dominance in the regional politics of Middle East /Persian Gulf, an era of autocratic regimes/petro states have been created which eventually developed inequalities in wealth and power. Instead of building infrastructure and industries, petro-states’ rulers used the petro-dollars to establish patronage networks that ensured the survival of their regimes.
With huge financial revenues earned from the oil exports these states could have turned themselves into the most prosperous nation of this globe, but in reality ‘black gold’ did not drive economic prosperity, industrialisation or generate productive jobs in the Middle East. As a result, prolonged conflicts associated with oil, within and between competing regional states as well as foreign interests, have shaped up a violent geo-political reality in the Middle East.
Now most of the countries of that region are facing a numbers of long lasting problems that includes growing rift between Sunnis and Shiites, tension between the West and an increasingly radicalized Muslim world, increasing terrorist activititis against oil facilities, protectionism, lack of investment, unresolved border disputes and the growing uncertainty about the political stability.
Previously there existed a relative stability and peace in the Middle East / Persian Gulf because of the interventions of US and other western countries and all the countries that are dependent on Middle East oil took this advantage. But after the falling of oil prices worldwide due to recession and conservation policies along with discovery of unconventional sources of oil in North, South & Central America and Africa, the US has gradually withdrawing their interest from Middle Eastern countries.
No doubt that India, China and other Asian powers whose economic success depends upon easy access to oil cannot escape from the fate of political disorders of Middle east/Persian Gulf in near future because of their sole dependency upon this region.
Contraray to the India’s position, China has been making all out efforts to secure oil resources by way of investing in high seas oil exploration and purchasing oil equity and thus trying to break out their age old reliance on Middle east /Persian gulf for energy security.
To avoid the external dependency in energy sector though the state of India is bound to adopt an alternative energy policy, but due to various reasons such as unwillingness to reduce energy consumption, lacking effort to find out alternative sources of energy, inability to increase domestic oil production as well as diversify import sources of oil, the country is statedly becoming more dependent on the petro states.
As we are very much aware that such a high dependence on imported crude oil has significant implications on energy security and the overall financial wellbeing of a country. Moreover, the country has to rely on a single energy resource that is primarily located in a volatile area where socio-political disruptions frequently arises without any predictions.
A scenario of war and disruption of oil production in the Middle East always drive both India and China to extreme uncertainty, as the duo are unable to feed their oil hungry economies with their own production. That again leads to higher prices of oil and diplomatic tension between the two countries.
As such, country like India has to give more focus on alternative means of energy so that it could avoid geo-political conflicts of the petro states that always have an adverse effect in our economy. Furthermore clean and renewable sources of energy will definitely reduce the burden of oil dependency which eventually will boost a self sufficient model in respect of energy security.