India must boost domestic oil, gas to shield against geopolitical shocks: bp
The bp Energy Outlook 2025 said that geopolitical fragmentation would lead to a decline in global trade and worsen energy security concerns. So, while a decline in trade would result in growth slowdown, energy security concerns would also lead to an increase in domestic energy production.
New Delhi: As geopolitical uncertainty spikes, India needs to boost domestic production of oil and gas, and accelerate electrification of industrial operations backed by coal and renewable power to achieve energy security, Spencer Dale, chief economist at energy major bp plc, said.
Speaking to reporters in the national capital on Monday on the bp Energy Outlook 2025, he said that for countries dependent on imports for their energy requirements, energy efficiency is also a major area to focus on.
"Increased geopolitical fragmentation will lead to greater energy differentiation and the point here is, how countries react will vary very significantly, depending on the nature of that country... If you see the case of China or indeed here in the case of India, about 85-90% of the oil you consume is imported, and nearly 50% of the natural gas you consume is imported. In a world where you're worried about those increasing geopolitical tensions, you'll want to reduce your imports of those, if you're able to," he said in response to a question on the geopolitical uncertainty and the likely impact on India.
"And so your natural instinct will be to try to consume less of oil and natural gas. How can you do that? One is by trying to produce more domestic oil and more domestic natural gas. And as you all know, bp is actively involved in producing natural gas. With Reliance, we produce about a third of the natural gas produced domestically. We're working with ONGC to try and help maintain oil production. So, one is increased production on domestic oil, domestic natural gas," Dale added.
Spencer also spoke of electrification of processes which would include industries and mobility, in a bid to reduce the import dependence of oil and gas.
"The second one is trying to electrify as many processes that you possibly can. Then produce that electricity with either a combination of domestic coal and with renewables. So that push towards more domestic energy leads to sort of a shift in fuel mix."
The bp Energy Outlook 2025 observed that geopolitical fragmentation would lead to a decline in global trade and heightened energy security concerns. So, while a decline in trade would result in a slowdown in economic growth, energy security concerns would also lead to an increase in domestic energy production, hitting climate goals.
Global oil markets have been volatile since the start of the Russia-Ukraine war in 2022, with West Asia tensions, steep US tariffs, and potential secondary sanctions on Russian oil further heightening supply concerns.
Amid concerns over supply constraint, OPEC+—the alliance of the Organization of Petroleum Exporting Countries (OPEC) and other major oil producing countries including Russia—on Sunday agreed on an output increase of 137,000 barrels per day (bpd), starting November 2025. According to OPEC's World Oil Outlook 2025 released last month, global oil demand is set for continued robust growth of 9.6 million bpd over the medium-term, rising from 103.7 million bpd in 2024 to 113.3 million barrels by 2030.
According to bp's outlook, India's energy demand is expected to increase in all scenarios, including as per the current trajectory and in case global warming can be capped below 2 degree Celsius from the pre-industrial levels by 2050. India's oil demand is projected to grow from 5 million bpd in 2023 to 9 million bpd in 2050 in current trajectory, as per the projection.
It noted that the Indian economy is seen growing at a rate of 5% per year during 2023 to 2050, double the rate of growth of the global economy, and it is the fastest growing region as per the bp Energy Outlook. Further, renewable energy will become the largest source of primary energy in 2050 in case of a below 2 degree trajectory, and the second largest source of energy as per the current trajectory.
India's consumption of natural gas increases in both scenarios, growing on average by 1-3% per year till 2050, it added. In the overall energy basket, coal is projected to remain India's largest source of energy, with its share in the energy mix staying above 40% in 2050. However, in 'below 2 degree' scenario, coal's share drops sharply to 16%.
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