Page 6 - AsiaElec Week 05 2021

AsiaElec COMMENTARY AsiaElec

India forges closer ties with IEA

The Indian government has signed a Strategic Partnership Framework with the IEA

INDIA INDIA’S concerns over energy security amid Taking steps
international oil price volatility have prompted India, which became an IEA associate country
WHAT: the country to forge closer ties with the Par- in 2017, is the first such affiliate country to for-
The two sides will is-headquartered International Energy Agency malise its desire to advance ties with the agency.
collaborate on energy (IEA). Sahai said: “The signing of this agreement reaf-
security and clean energy Just a week after remonstrating over Saudi firms and advances the invaluable relationship
transitions Arabia’s decision this month to cut oil produc- that IEA members and India have. We hope this
tion, the Indian government has signed a Strate- partnership leads to an extensive exchange of
WHY: gic Partnership Framework with the IEA, setting knowledge and can be a stepping stone towards
India is deeply concerned the country on a path that could see it become a India becoming a full member of the IEA.”
by its exposure to the member of the group. IEA Executive Director Fatih Birol, mean-
international energy The Indian Ministry of Power’s Secretary, while, said the IEA was a perfect partner to help
market. Sanjiv Nandan Sahai, described the signing as support India in expanding its energy system.
“historic” and said his government would work He added: “[T]his Strategic Partnership is the
WHAT NEXT: with the IEA on key areas, including energy natural next step for India and the IEA that
The partnership could security, clean energy transitions and “co-oper- could eventually lead to full membership.”
help India hone its ation across the full spectrum of IEA activities”. If India were to graduate as a fully fledged
long-term energy security The agreement is the latest sign that India, member of the IEA it would have to meet cer-
strategy. the world’s third-largest energy consumer, has tain obligations. For example, as part of the IEA
grown tired of leaving its energy security inter- mission to help members insulate against global
ests in the hands of OPEC+. oil crises, each IEA country is expected to main-
tain an emergency oil stockpile that is equivalent
Supply concerns to at least 90 days of net oil imports.
Indian Minister of Petroleum and Natural Gas In the event of a global oil shock, IEA mem-
Dharmendra Pradhan has denounced the Saudi bers can choose to release their collective stocks
decision to cut 1mn barrels per day (bpd) of its to the market to reduce volatility and give the
own crude production in February and March international community time to respond.
even as other members failed to plug the gap. India has long been concerned by its expo-
Pradhan described the move as a “contra- sure to the oil market, with the country having
diction” in talks with OPEC Secretary-Gen- come to rely on imports to meet more than 80%
eral Mohammad Barkindo during the Atlantic of demand in recent years.
Council on January 19. The minister said the As such, it has taken to developing its stra-
policy was “creating confusion for the consum- tegic petroleum reserve (SPR), having built
ing countries”, before adding that OPEC’s deci- around 10 days of worth of crude oil storage,
sion might encourage India and other buyers to with a further 12 days of capacity under con-
embrace alternative energy sources more readily. struction. The country’s commercial oil storage,
Barkindo, however, sought to reassure the meanwhile, is estimated to be able to hold 65
minister that OPEC bore “the interest of con- days of crude.
suming countries in mind” when making its
decisions. What next
Given that India’s oil imports have regained While India’s membership of the IEA is likely to
momentum, hitting a nearly three-year high be still many years away, the South Asian coun-
in December 2020, Pradhan could be forgiven try still stands to benefit from a closer working
for entertaining a certain amount of scepticism relationship with countries further along the
when considering Barkindo’s suggestions. energy efficiency curve.
India’s future as an oil importer is virtu- If the country struggles to improve its energy
ally guaranteed after years of domestic policy security outlook through domestic oil produc-
reforms that have failed to revitalise a tired and tion, one possible solution could lie in sup-
sluggish upstream sector. The country’s explo- pressing domestic demand through embracing
ration and production scene is not a tempting energy transition.
target for foreign investors and little seems to The IEA has projected that the Indian econ-
be changing on this front, despite bold govern- omy will likely emerge as the engine of global
ment targets of reducing the country’s oil import oil demand growth in the next decade. While it
dependency by 10%. New Delhi appears to have is unlikely New Delhi can derail that train, the
realised that its chances of reversing the slow but government is looking for ways to improving the
steady decline in oil production are scant and has country’s energy systems wherever it can. The
begun to look for answers to its energy security Strategic Partnership with the IEA represents
questions beyond simply counting on a domestic one possible solution. ™
upstream revival.

P6 www. NEWSBASE .com Week 05 03•February•2021