PM concerned over oil supply mismatch

Energy demand to rise 40%, but oil fields to deliver 12% more.

Prime Minister Manmohan Singh on Monday expressed concern over the mismatch in demand and supply in the energy sector. Expressing a note of caution, he said – while the demand for energy is expected to increase over 40 per cent during the next decade – the supply from maturing oil fields is expected to rise only 12 per cent.

Inaugurating the 9th International Oil & Gas Conference and Exhibition (Petrotech 2010) here, Singh said the country was witnessing supply side uncertainties. “Developing domestic sources involves huge capital investment. Like other emerging economies, India needs adequate supplies of energy at affordable prices to meet the demands of a rapidly growing economy,” he added.

Singh underscored the need to build strong economic partnerships with other oil-producing countries and their oil and gas industries for mutual benefit. Rather candidly, he said: “Oil and gas today are not seen merely as commodities to be traded freely. They are often used by countries to meet their political objectives.”

Events like Petrotech 2010 do help India to pursue oil diplomacy bilaterally with participating countries, but government-owned companies have not made any major acquisitions after the 2008 purchase of Imperial Energy by ONGC Videsh Ltd.

Adding another dimension to diplomacy, Singh said: “We also seek to work together with other countries, especially those that are active in the oil and gas space, to tackle the problem of climate change.”

He said energy-endowed countries have problems in augmenting production because of various reasons, including a lack of required technology and sometimes political uncertainty. “Emerging energy technologies have to be adequately tapped to manage carbon emissions. We also need a rethink on the traditional energy basket that is presently loaded in favour of fossil fuels,” he said.

No dual pricing: Deora
The PM’s note of caution on supply concerns was followed by Petroleum Minister Murli Deora’s observation later in the day that pricing was another major concern for the government. “Some people ask why subsidy is given to those who do not need it? There are proposals by which we are trying to resolve this matter. It is under consideration. But it is not possible to have dual prices. You cannot have one design (of petrol price) for the industrialist and another for the farmer.” Deora also said the government has a commitment to see that kerosene or LPG, which is subsidised, must reach “the poorest of the poor”.