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Intensive discussions with oil experts and strategic analysts suggest a five pronged strategy with these thrust areas acting as the pillars of a strong foundation of energy security for the Indian economy. According to Subir Raha, chairman of ONGC, India needs to pay attention to all five, even if some appear contradictory in the short run. The five pillars, in a nutshell are:

_ Learn a few lessons from countries like the United States and build a strategic reserve that would preclude spot buying when prices are high.

_ Get into long term agreements and joint ventures with big oil supplying countries to cushion India from wild fl uctuations in prices.

_ Aggressively push for oil and gas exploration all over the country by involving the oil majors.

_ Leverage the huge gas discoveries by putting them on the market as quickly as possible.

_ Utilise India’s vast coal reserves and hydroelectric potential to reduce dependence on oil as a source of energy.

At the moment, policy makers are pursuing or mulling over the five thrust areas independently. What needs to be done perhaps is for a ‘brains trust’ at the policy level to put them together as an integrated strategy. Public sector bosses of India’s oil and petroleum companies do seem to be playing a more proactive role in recent times. According to MS Ramachandran, chairman of Indian Oil, a reorganisation and consolidation of the oil companies could make them stronger and more competitive. In fact, there is a move at the top to attempt precisely this, creating even bigger oil giants in the bargain.

But then, to what extent are Indian policy makers pursuing this ‘integrative’ strategy? As mentioned, individually, something is being done about each of the four strategies. For instance, the Ministry of Petroleum has recently cleared a Rs.2 billion plan to store oil underground in caves near Mangalore – a first of its kind for India. OVL – the overseas wing of ONGC - GAIL, IOC and Reliance are all aggressively pursuing acquisitions. OVL has, in fact, already invested more than $2 billion on overseas joint ventures in countries like Vietnam, Sudan and Algeria. Companies ranging from Oil India to Reliance to Cairns are significantly stepping up exploration activities across possible strikes all over the country. Even though many new promising finds are being claimed, they are yet to be added to official reserve estimates. The Ministry of Petroleum is talking to the Ministry of Finance to offer tax breaks to downstream industries that could soak up the huge discoveries of gas. And encouragement to private players in the mining industry could lead to a big jump in coal production.

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Source : IIPM Editorial, 2007

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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