New Delhi: While India and China are in a race to secure energy assets overseas, Royal Dutch Shell Plc. believes the strategy is unnecessary.
The global energy market is one of the best functioning markets and, therefore, there is no need for capturing hydrocarbon resources, according to Jeremy Bentham, vice-president, global business environment at Royal Dutch Shell, and Suman Bery, chief economist, strategy and business environment, at Shell International BV. They were in New Delhi on Friday to present Shell’s report on the energy sector titled New Lens Scenarios.
The Shell study said environmental stress is one of the more troubling aspects that have to be addressed in the decades until 2060. Intensified economic cycles, urbanization, emerging resources such as shale gas and political and social instabilities are other reasons for volatility in the global energy markets.
“Yes, I think all governments have an obligation to ensure energy security... but the reality is that India is going to be a large part of the global energy scene in a way that Japan is,” Bery said. “India is a country that has a great deal of goodwill. The notion of locking up resources and worrying that they are going to become scarce because others will buy them up is a wrong mental model for energy security.”
This comes in the backdrop of countries that are dependent on Iranian energy supplies such as India being hit by sanctions imposed by the West over that country’s nuclear programme. India is the world’s fourth largest oil importer and a major customer of Iran’s 1.7 million barrels per day of oil exports. Iran has the world’s second largest oil and natural gas reserves.
“Not long ago it would have been difficult for international energy companies investing in Iraq. Focusing on one particular area or one particular country is a wrong lens of thinking about what is a global energy system,” Bentham said.
India’s dependence on imports is as high as 80% for crude and 25% for natural gas. The country’s energy demand is expected to more than double by 2035, from less than 700 million tonnes of oil equivalent (mtoe) now to around 1,500 mtoe, according to India’s oil ministry.