India's Energy Security Challenge

INDIA'S ENERGY SECURITY CHALLENGE
Like China, India is a growing giant facing the critical challenge of meeting a rapidly increasing demand for energy. With over a billion people, a fifth of the world population, India ranks sixth in the world in terms of energy demand. Its economy is projected to grow 7%-8% over the next two decades, and in its wake will be a substantial increase in demand for oil to fuel land, sea, and air transportation.

While India has significant reserves of coal, it is relatively poor in oil and gas resources. Its oil reserves amount to 5.9 billion barrels, (0.5% of global reserves) with total proven, probable, and possible reserves of close to 11 billion barrels. The majority of India's oil reserves are located in fields offshore Bombay and onshore in Assam. Due to stagnating domestic crude production, India imports approximately 70% of its oil, much of it from the Middle East. Its dependence is growing rapidly. The World Energy Outlook, published by the International Energy Agency (IEA), projects that India's dependence on oil imports will grow to 91.6% by the year 2020.

Concerned about its growing reliance on oil from the Persian Gulf - 65% of its energy is imported from the region - India is following in the footsteps of other major oil importing economies, and seeking oil outside the Gulf. Indian firms' investment in overseas oilfields is projected to reach $3 billion within a few years. Of particular interest is Africa, especially Sudan, where India has invested $750 million in oil, and Nigeria, with which India reached a deal last November enabling it to purchase about 44 million barrels of crude oil per year on a long term basis. Additionally, India recently finalized a contract in Syria for the exploration, development and production of petroleum with a Syrian company. Sakhalin, in Russia, and Vietnam and Myanmar in Southeast Asia are also potential suppliers to the Indian market.

But the most attractive oil domain...