CEEW flags risks to India's energy security from import exposure

The think tank recommends diversifying crude and LNG suppliers, expanding strategic reserves and modernising refineries to reduce vulnerabilities to supply shocks

India faces energy security risks due to concentrated suppliers, vulnerable shipping routes, limited reserves and storage, refinery constraints, and direct exposure to global price volatility, according to a report by the Council on Energy, Environment and Water (CEEW).

 

More than 85 per cent of India’s crude imports come from just six countries, including Russia and West Asian nations, limiting flexibility during supply shocks, according to the report. The risk is further compounded by refinery configurations that restrict the range of crude grades India can process economically, it added.

 

CEEW recommends diversifying long-term crude sourcing to suppliers such as Brazil, Guyana and West African countries, modernising refineries, and preparing a national refinery transition plan.

 

 

India is further exposed to supply risks as the country’s strategic petroleum reserves cover only 9-10 days of net crude imports, in addition to 64 days of refinery operational stocks. This is far below other major import-dependent economies such as Japan, which holds roughly 200 days of reserves, and South Korea, which holds approximately 207 days.

 

For gas, India imports nearly half its supply as liquefied natural gas (LNG) but has no dedicated strategic gas storage, leaving fertiliser plants and city gas networks exposed, CEEW said. It recommends mandating and commercialising oil, gas and liquefied petroleum gas (LPG) reserves, including emergency stock obligations, gas storage in depleted wells, and expanded underground LPG storage.

 

Over the medium and long term, CEEW called for diversifying crude and LNG supplies, expanding hub-indexed LNG contracts, modernising refineries, aligning infrastructure with future demand, selectively developing domestic resources, and accelerating electrification-led demand substitution.

 

“India’s next phase of energy security must move beyond securing fossil fuels to a clear transition plan: optimising gas system utilisation, avoiding further refinery expansion, accelerating viable EV adoption, electrifying industry, reconfiguring refineries for lower gasoline demand, and building resilient green technology supply chains,” said Hemant Mallya, fellow at CEEW.