New Delhi [India], July 1 (ANI): India’s handling of the Strait of Hormuz crisis shows that diversification, infrastructure upgrades and sustained policy support will be key to insulating the economy from any future supply shock, Vivek Kumar, Additional Chief Secretary, Land & Land Reforms Department, West Bengal, has said.
In an interview with ANI, Kumar recalled the timely and measured steps taken by the government to meet the supply disruptions caused by the West Asia crisis.
He laid stress on diversifying sourcing, strengthening seaborne crude and LNG infrastructure, and reducing dependence on imported oil and gas by expanding renewable and nuclear energy.
He also urged policy changes to attract global technology and capital into upstream exploration. Kumar noted that the E&P sector is highly technology-dependent and said tweaks to attract foreign investment could help domestic production pick up.
“Strait of Hormuz is very important for India’s energy security. And while nearly 20% of the world’s oil and gas flow through this Strait, even for India, these figures are rather high. Our dependence was so high that 90% of all the crude that was coming to India was coming from the Strait of Hormuz and for LPG the figure is 60%. When the war began in February, India was looking at a very difficult prospect in terms of its energy security… What was the most important thing that Government of India did? One of course was that very swiftly in fact, within 8-9 days of the crisis erupting, the government responded by bringing in very tough supply side and demand side management controls,” he said.
Kumar said the government issued orders concerning LPG in the first week of March and it was quickly followed by the LNG Gas Control Order.
“There were quantitative restrictions placed on the users of commercial and bulk users of LPG and we were encouraged, the consumers were encouraged where possible, to move to PNG. Nearly 300 cities are now covered with pipe natural gas in India and consumers in these cities were told not to depend on the LPG cylinders where applicable and, and to move to the piped connections and pipe network as far as possible,” he said.
The official said that the state governments were in tandem with the central government.
“This LPG gas control order had a very specific mandate for the Indian refineries. It said that we had to boost the domestic production of LPG and this could be done by tweaking the product slate… Within 7-8 days of this order being issued, the production of LPG rose from 35,000 metric tons per day to 54,000 metric tons per day,” he said.
Kumar said nearly 300 cities are now covered with piped gas.
“Within this three and a half month period… non-Hormuz sourcing of crude oil has gone up from 55 per cent to 70 per cent,” Kumar said. New suppliers include countries in North and South America and West Africa such as Nigeria, Brazil, Argentina and Ghana.
Kumar pointed out that LPG import terminals have risen from about 11 or 12 in 2014 to 22 now, while LNG terminals have also expanded. The LPG pipeline network also expanded sharply from 2,300 km to over 6,200 km. He stressed that this infrastructure is invisible to consumers but essential, and oil companies need healthy margins to fund such capacity expansion.
On retail prices, Kumar said the government chose to absorb the shock instead of passing it to consumers. While Myanmar saw retail prices rise 90 per cent, Pakistan 50 per cent and the US 44 per cent, India’s increase was limited to 7 per cent for petrol and 8 per cent for diesel during the crisis. Excise duty cuts of about Rs 10 per litre on both fuels helped cushion the impact. He noted that price under-recoveries still stand at around Rs 500 crore per day for fuels and close to Rs 650 crore per day for LPG.
Diplomatic coordination ensured supply lines stayed open. “Our oil diplomacy plays a very important role… the synergy shown by the Ministry of Petroleum and Natural Gas and the Ministry of External Affairs is something that deserves credit,” Kumar said. He cited Indian Navy deployment under Operation Sankalp and efforts to escort Indian flagged carriers through the region.
Kumar said work on long-term resilience has already begun. (ANI)
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