"New Delhi ensures that nuclear power is factored into the rising energy requirements"

NEW DELHI: With no signs of a respite in oil prices and given India’s growth, a serious attempt is being made to push for energy sources.

India has scaled up its estimate of power requirement to between 800,000 MW and 950,000 MW by 2030 to achieve the targeted growth of over eight percent. The choices China and India make in the next few years will lead the world on a path based on efficient technologies or growing ecological instability, the US-based World Watch Institute in its State of the World 2006 report has said.

New Delhi has also announced major plans to tap various sources of energy.

Natural gas has emerged as a more environmentally sound, cheaper and easily available substitute to oil. When compared to oil at over $70 a barrel an equivalent amount of gas costs only in the region of $ 20-25.

The Indian government has drawn up an ambitious bid to garner 60 million metric tons per annum of equity oil from overseas by 2025 by empowering public sector oil companies to enter exploration and production business abroad. India is seeking oil assets in countries such as Kazakhstan, Iran, Sudan, Vietnam and Ecuador through ONGC Videsh (OVL). OVL currently has stakes in 24 oil and gas projects spread across 14 countries including Russia, Sudan, Vietnam and Myanmar.

The government is expecting a capacity addition of 2,000 MW from non-conventional energy sources this fiscal and up to 15,000 MW during 11th Plan (2007-12), while aiming to raise the share of renewable energy to more than 20 per cent of the country's power generation capacity.

It is estimated that wind, small hydro and biomass sources have the potential to generate 80,000 MW. India, at present produces around 4,300 MW of power from wind projects, standing fourth in the world behind Germany, Spain and USA in utilizing this energy source. The ministry of non-conventional energy foresees a capacity addition of 5,000 MW from wind by 2012.

India’s largely indigenous nuclear power (so far, that is) program aims to generate 20,000 MW nuclear capacity by 2020, from the current levels of close to 3,500 MW. In May, New Delhi announced that plans were being chalked up to double electricity production from nuclear power plants by 2030 with the possibility of international cooperation. ``We are trying to realize the target of 20,000 MW and scale it up to 40,000 MW by 2030,’’ said chairman of government controlled Atomic Energy Commission Anil Kakodkar. At the current levels of 3,310 MW, nuclear energy constitutes only 3% of the installed capacity in the country.

India-Iran

The US is no longer the main stumbling block to the US $7 billion Iran-Pakistan-India (IPI) pipeline. All issues, including US pressure to abandon the 2,100 km project, have been relegated to the backburner as India and Pakistan team up to persuade Iran to soften the price at which it wants to deliver the gas.

Tehran has placed its demand at $7.2 per million British thermal unit (mBtu) with a linkage to global crude oil price trend. The Iranian position is considerably higher than India's offer of $4.25 mBtu at its border with Pakistan. Though Pakistan has been voicing plans of going it alone in case India decides to drop out, that may not happen if the price issue is not resolved.

Iran has rejected India's demand for a price equivalent to international long-term gas supply contracts for the IPI pipeline saying that New Delhi should forget about buying Iranian gas at a low price. Tehran’s stand has been emboldened by Europe desperately seeking other sources of gas after last year’s crisis due to the spat between Russia and Ukraine.

Tehran has also said that it wants to reopen the US $22 billion (at earlier prices) commercial agreement for a 5 million ton liquefied natural gas (LNG) signed between Indian Oil Corporation and the National Iranian Gas Exporting Company, last year. Iran had in June 2005 agreed to supply LNG for 25 years beginning in 2009-10. Oil minister, Murli Deora, has said the dispute was about the price India will pay for LNG.

According to Indian officials, at the price that Tehran is seeking, it would be the costliest long-term LNG deal in the world. Currently, India imports five million ton of LNG from Qatar at $ 2.53 per mbtu. This price will rise to $ 3.5 per mbtu in 2008. Qatar sells LNG to USA at $ 4.5-4.8 per mbtu and other long-term LNG contracts around the world cost not more than $ 4.75 per mbtu. India started importing gas from Qatar in 2004 and has been promoting LNG imports since then.

India-Myanmar

However, other options are been looked at. New Delhi is also in talks to build pipelines to bring natural gas from Myanmar, but the efforts have been slowed due to problems with Bangladesh. New Delhi was hoping that supplies from Iran would substantially ease the energy situation.

Recently, state-owned Gas Authority of India Ltd (GAIL) announced that it will invest Rs 7 billion in harnessing oil and gas reserves in the Eastern coast of Myanmar in the next two years. The focus will be on the augmentation of gas supplies for the pipelines coming from Myanmar. GAIL has estimated 5.7- trillion cubic feet to 10 trillion cubic feet of natural gas reserves in three discovered fields in two blocks in Myanmar

GAIL has completed a feasibility report for laying a 1,400 kilometer pipeline from Arakan State capital Sittwe, in Burma, to Gaya in Bihar via Mizoram State of India. The pipeline will inject gas from Arakan's A-1 field into the Jagdishpur-Haldia supply line at Gaya. A-1 Block in Arakan is held in 30% by GAIL and ONGC Videsh Equity. T

The report paves the way for India to do a direct deal with Burma for gas. The prospects of a pipeline through Bangladesh, the cheapest potential option, looked uncertain as Dhaka refused to sign a three-nation MoU, unless it were to include trade and transit issues with India. With PetroChina threatening to hijack its share of gas from Burma, India is pushing the US $3 billion pipeline through the northeast with the aim of skirting Bangladesh.

Central-Asia

India has also put Central Asia in the radar once more, with the oil ministry informing the Asian Development Bank that it will join a $3.5-billion project for wheeling gas from Turkmenistan through Afghanistan and Pakistan (TAP). Unlike the Iran pipeline, TAP is politically easier to implement as it has Washington's tacit backing by way of the ADB's participation. The project is free from funding fears, the bane of Iran pipeline, over US sanctions law.

The US has also outlined a courageous energy project to tap the energy-rich ex-Soviet republics of Central Asia. The plan would develop a regional power grid from Kazakhstan to India to feed India, Pakistan and Afghanistan, and help integrate the economies of Central and South Asia, circumventing Iran and reduction in reliance on pipelines through Russia. US assistant secretary of state Richard Boucher presented the plan and said that Kazakhstan and Turkmenistan are rapidly becoming top energy producers.

In this context, India has been encouraging power and fertilizer plants to switch to cheaper gas from naphtha to cut costs. This has lead to a surge in demand as domestic gas production adds to up to just half of the country's consumption.

India-Russia

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India is also looking to closely engage with Russia to tap new energy sources. India’s flagship ONGC is in talks over exporting its share of natural gas from Russia 's Sakhalin-1 via Royal Dutch Shell's LNG terminal. Indian policymakers are also trying to rope in state-run Russian gas monopoly, Gazprom -- by first agreeing to their proposed gas swapping arrangement with Iran for the IPI pipeline and then seeking Russian cooperation for participation in the entire LNG chain for Sakhalin.

ONGC has kicked off negotiations with the Exxon Mobil consortium for importing eight million tons of LNG to India from Sakhalin gas fields. In order to strike the deal, the company has set up a price negotiation committee. Indications are that Exxon Mobil, which has 30 per cent stake and is also the operator of the field, is open to considering the option of shipping the LNG.

India will receive its first cargo of crude oil from Russia's Sakhalin-1 exploration block in October. 'ONGC Videsh is planning to bring the first two cargoes of crude oil each having the capacity of approximately 700,000 barrels (bbls).

On June 16, Russian President Vladimir Putin said after a meeting of the Shanghai Cooperation Organization that Gazprom, Russia's leading gas company, is ready to participate in plans to build the IPI pipeline.

Prime Minister Manmohan Singh has proposed a high-level taskforce on energy with Russia to draw up plans for cooperation between the two sides in this crucial area.

Earlier this month, state-owned Gujarat State Petroleum Corporation (GSPC) and the Astrakhan-based Russian company Suntera Group signed a MoU for participating in oil and gas exploration blocks in India as well as Russia

Concerned over the unstable oil market, India called for an Asian regional market for oil products at the recent G-8 summit. It is in this context that the Indo-US nuclear deal as well as the focus on renewable energy (wind, water, solar, geo-thermal) becomes very important as alternate sources of power.

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