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15-October-2012

 

NEED PROACTIVE ACTION ON THREE FRONTS FOR ENSURING ENERGY SECURITY : SHRI S.JAIPAL REDDY

 

The Union Minister of Petroleum and Natural Gas Shri S Jaipal Reddy has emphasised the need for proactive actions on three fronts with an objective to ensure energy security in the country. He said “ all these three priorities viz: developing our domestic reserves , assessing global energy sources and ensuring energy efficiency will be focus areas in developing countries over coming decades .” Shri Reddy , said this while chairing the Theme Session-1 on “Securing Growth- Energy & Prosperity” after the inaugural session of the 10th International Oil & Gas Conference & Exhibition – “Petrotech-2012 here today .

Listing out specific concerns regarding energy security for India, Shri Reddy said “For India, energy security is a truly central issue. India is likely to emerge as one of the top 3rd or 4th importers in the world, of all energy forms – oil, coal, gas and uranium.” Given the high correlation between economic growth and energy consumption, For emerging economies like India and China, where economic growth and increasing population are driving strong demand for energy, this theme is highly relevant. Securing energy for these countries is a prerequisite for ensuring long term growth, Shri Reddy added.

Mr. Kiratu Murungi, Hon’ble Minister of Energy, Kenya, Mr. Kakageldy Abdullaev, Hon’ble Minister of Oil and Gas Industry and Mineral Resources, Turkmenistan also addressed the Theme Session-1.

Following is the full text of the speech of Union Minister of Petroleum and Natural Gas Shri S Jaipal Reddy .

“Mr. Kiratu Murungi, Hon’ble Minister of Energy, Kenya, Mr. Kakageldy Abdullaev, Hon’ble Minister of Oil and Gas Industry and Mineral Resources, Turkmenistan ,Distinguished delegates and invitees, Members of the Media, Ladies and Gentlemen,

A very good morning to all of you! It is indeed a privilege for me to be here today at the theme session for Petrotech 2012.

The theme for today’s session is Securing Growth – Energy & Prosperity. Given the high correlation between economic growth and energy consumption, the theme is an important one in today’s world. For emerging economies like India and China, where economic growth and increasing population are driving strong demand for energy, this theme is highly relevant. Securing energy for these countries is a prerequisite for ensuring long term growth.

Energy security is a greater challenge today than ever before, for several reasons:

¦ First, the demand for energy resources has been increasing, and in expected to continue to increase for the foreseeable future. Global demand for energy grew at 1.3% per annum during 1980-2000. This growth rate increased to 1.6% per annum during 2000-2010. Going forward, an energy demand growth rate of over 1.5% per annum is expected to sustain in the near future.

¦ Second, approximately 90% of incremental growth is likely to come from emerging economies. India and China alone will contribute to around 40% of the global growth in energy demand during 2010 to 2050. Therefore, we in emerging economies have the greatest concern for securing our energy supplies

¦ Third, volatility of energy prices has been increasing, which adds to the challenge of financing and planning the massive energy investments required to provide energy.

¦ Finally, the nature of energy demand in the next few decades will also be changing. Let us talk about the energy scenario for India as an example. India’s increasing population and growth in GDP imply a growth in energy demand of close to 3% per annum till the year 2050. This growth will be across all the fuel types, with natural gas and power likely to grow the fastest. But the energy mix will change dramatically. As India urbanizes, increased electrification will imply demand shift from traditional fuels to more energy efficient electricity in residential and commercial sectors. This can increase the power demand in the country by 5 times in the next forty years. While recent energy demand growth has come from the services sector, going forward our industrial sector is expected to grow strongly and could contribute nearly 40% of incremental energy demand. Similarly, the transport sector will continue to increase its energy demand. By 2050, there can be a potential 10 times increase in fleet size of the light vehicles in the country. What is more, India could well have the largest population of gas driven vehicles in the world. All these shifts will necessitate change the very nature of our energy supply and consumption infrastructure.

Therefore, securing energy is an important global concern.

For India, energy security is a truly central issue. India is likely to emerge as one of the top 3rd or 4th importers in the world, of all energy forms – oil, coal, gas and uranium. There are several specific concerns regarding energy security for India.

¦ For instance, energy demand from coal in India is likely to constitute half of our total energy demand, as a result of which India’s share in global coal consumption will double by 2050.

¦ Though we are making strong strides towards increasing reliance on renewables, hydro and nuclear power, there are natural limits to the extent that these sources of energy can be developed.

¦ The use of gas for power is likely to be constrained by availability of domestic gas, and the price of imported gas, unless the Asian LNG prices delink from crude, or we are able to secure large, reliable supplies of gas from overseas.

¦ Indian companies integrating backwards will emerge as new global resource developers, opening up new basins and supply sources. However, these projects continue to be subject to significant market risk due to high development and infrastructure costs, price volatility and shifting supply and demand mix.

In my view, ensuring energy security in the country will need proactive action on three fronts:

¦ First, we need to ensure sufficient and efficient monetization of India’s domestic reserves of coal, oil, gas and renewable resources. We are taking several policy measures for transition to a market based energy sector, while maintaining affordability and sustainable development. This remains a challenge, but I believe we are making good progress. Various measures are underway to speed up development and extraction of conventional and unconventional oil, gas, and coal, streamline our procedures and enact distribution side reforms.

¦ Second, we need to make major strides in global energy cooperation. Developing coal, oil and gas resources in Africa, for instance, can be a mutually beneficial path for emerging African economies and India. The Indian model of energy cooperation is based on ensuring sustainable development in the host country, including creating the necessary energy infrastructure, local skill development, and strengthening the local social fabric through education, healthcare and institution building. We have been and hope to continue to work with resource-rich countries in this manner.

¦ Finally, securing energy needs for India and other developing countries will require tremendous efforts in the area of energy efficiency and demand side management. With the vast majority of our energy infrastructure yet to be built, India, for example, has the opportunity to leapfrog developed countries in deploying the latest technologies, and emerge as the most energy efficient economy in the world over the next 20-30 years. This is already visible in the supercritical power plants being constructed as a new standard practice, in the widespread conversion of our commercial vehicles to CNG, and to the rapid adoption of energy efficient appliances across the country.

All these three priorities – developing our domestic reserves, accessing global energy sources, and ensuring energy efficiency – will be focus areas in developing countries over coming decades. For all the organizations in the room, this means tremendous opportunities for growth, innovation, and cooperation.

The challenge for energy security is massive. However, through collective efforts and a supportive policy framework, this challenge can be overcome.

Thank you!”

PIB, Aizawl

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