Natural gas has been widely acknowledged as the fuel of the twenty-first century. Currently, the gas sector is going through a unique and challenging phase. With its high macroeconomic growth prospects and billion plus population, India is confronted with concerns about energy security and environmental sustainability.
The promise of energy security is alluring. For an import-dependent country like India, import independence is seemingly impossible to achieve, yet worth pursuing. Hydrocarbon exploration successes over the last decade have given India the confidence of achieving this dream.
The oil sector, albeit with the blessing of external factors, provided the economy in 2014-15 with reduced inflationary pressures, savings of exchequer costs, and contributions to collections. The sector caused a significant difference to the economy. The sector will continue to make its contribution more significant by increasing domestic production.
The government has unambiguously stated that it will continue with the policy of calibrated correction in diesel prices. Stabilisation of external exchange and stable international crude oil prices are stated in the Budget as critical in the process of rationalisation of diesel prices.
Energy security forms the basis of formulating energy policy in every country. For a developing nation like India, energy security, assumes critical importance, since the projected requirements have to be met in an environment where domestic energy supplies are limited and the energy needs are to be met through imports, amidst the persisting international uncertainties.
The budget speech dealt with an altogether different but critical subject of energy security. The acknowledgement by the government of the need to reduce import dependency by enhancing domestic oil and gas production was evident in the budget speech. Stops in hydrocarbon sector for energy securitisation appear to be getting challenged by the government.
Shale oil (light tight oil) is rapidly emerging as a significant and relatively low cost new unconventional resource in the US. There is potential for shale oil production to spread globally over the next couple of decades. If it does, it would revolutionise global energy markets, providing greater long term energy security at lower cost for many countries.
Economic growth of a country depends on the long-term availability of energy from the sources that are affordable, accessible and environment friendly. For developing countries, the energy sector assumes critical importance in view of the ever-increasing needs, which require huge investments.