‘We need to cut dependence on energy imports by 10%’
The government is pursuing a two pronged strategy on diversifying sources, while
trying to cut energy dependence, says Oil Minister Dharmendra Pradhan. He spoke to
Suhasini Haidar and TCA Sharad Raghavan ahead of PM Modi’s visit to Iran later this
month.
PM Modi is headed to Iran this month, what can we expect from the visit when it
comes to the energy deals you had discussed during your visit in April?
In the post-sanction era, Iran and India are seeing this kind of high profile engagement for the first
time, with my visit, followed by the EAM Sushma Swaraj, and now PM Modi’s visit. This will give our
relationship a new bilateral height. Not only Iran but all Persian Gulf countries want to build a new
strategic relationship with India. Iran and India have old ties. In all the difficult days of Iran, India
stood by its economic interests, and Iran recognizes that. So our discussions have been positive.
Specifically, two issues seem to be a challenge: one is for the payment of $6.5 Billion in
dues that India needs to pay Iran, and the question of interest. The other is India’s
desire to secure the Farzad-B gas field. Is an agreement likely soon, when the PM
travels?
There is no confusion in either of these. Regarding the dues, we will pay Iran in full, and in Euros.
Last month we finalized an agreement between our federal banks on the channel for the payment,
and this money will be duly transferred through a European bank. Regarding the terms, including
the interest, we still need some clarity. With Farzad-B there is complete clarity. They have assured us
it is meant for India and is taken out of the bidding process. We have to still decide on a price that
secures our investment and ensures a profit for Iran, which is ongoing.
If Iran still expects a higher interest rate on the dues…at present the government has announced that
as a goodwill gesture, India will pay 1.5% interest.
Well that has to be discussed at a business-to-business level. But I do want to say that when Iran
faced bad times, India made an effort to keep the business going. There was an agreement at that
time and we don’t want to deviate that.
The visit to Iran comes close on the heels of the visit to Saudi Arabia. How will India
manage the balance of procuring energy from these two archrivals?
Our bilateral relations depend on India’s national interests. The world is changing, so we mustn’t
remain in the old mindset. In OPEC these two countries sit together. As a consumer who needs to
import 60% of my 70% oil imports from the Persian Gulf, I need to have equal relations with all
stakeholders.
After Saudi Arabia, PM Modi is going to travel to Iran, Qatar, also to Mozambique and
other African countries, which have deep energy reserves, and you have travelled to
already. Is the need for energy security giving rise to energy driven diplomacy now?
Definitely PM Modi is trying to redefine diplomacy for the country. In the old days, diplomatic
relations referred only to political relations or cultural ties. PM Modi has put the emphasis on using
his diplomatic initiatives for the country’s economic benefit. Economic diplomacy is the order of the
day and PM Modi is very focused on that.
And within that, energy diplomacy?
Yes, after all what are we trading in? Ours is a country that imports 75% of its energy needs for
transportation fuel. If I look at oil and gas consumption as 35% of the total consumption, then 75% of
that is what is driven by foreign trade, so I have to have a dynamic relationship with the world energy
community.
To that end, has India lost the battle to China? Each of these regions where India is
talking of acquiring access to fuel reserves, Central Asia, Africa or Iran…. China has
already guaranteed its energy supplies, it has pipeline and infrastructure in place. For
eg they even have a train line to Teheran now. Has India lost out?
Lets not fall for the temptation of comparing and copying any model. China is a different model.
China’s democratic and governance mode is poles apart from India’s (zameen asman ka pharak). The
size of the consumer’s pocket and their social sector spending is different. I also thought that as a
welfare state, a communist state, China would spend much more on social sector. But we actually
have many more schemes for the poor than they do. I don’t want to divulge the details but I am
confident even at my level, not just PM Modi’s leave, that India has its own advantages when dealing
with counterparts. The size of your pocket doesn’t determine the nature of your relations with
friends. Historical relations, social nature, bilateral behavior, vision, leadership, and your market
size…these are all our advantages.
You are saying that at least some of these countries will prefer to deal with India?
Yes. Why does PM Modi get such a red carpet welcome in the whole Persian Gulf region?
Well, to be fair, so does the Chinese President Xi Jinping….
Well no Indian PM had got such a red carpet before. So I don’t want to compare myself with China.
They have a model to offer, I have a model, and I am confident.
What is the future of the TAPI pipeline? It’s been six months or so since the ground-
breaking ceremony, there has been a steering committee meeting recently, yet the
security concerns seem to still outweigh all cost benefit analyses on it. Is it a
pipedream?
No it’s not a pipedream. Lets put it this way. TAPI is a multi-stakeholder project, with four countries
involved. We need natural gas; we are talking to Russia as well about how to bring piped gas from
Russia. We have stakes in in Kazakhstan, we are developing our relationship with Iran, and we might
also get Farzad-B. So we are focused on how to bring this energy to India. The day TAPI was
conceived, everyone knew about the challenges. Unfortunately due to Turkmenistan’s sovereign
policy not international consortium can own the gas fields and therefore we ran into trouble. We
don’t want to look at it as a pipedream. We need gas, and we should pursue it.
I ask because the route through Pakistan will be tricky, and has already caused
problems for the IPI-Iran Pakistan India pipeline…
Look, if we get the stake in Farzad-B, we are going to have to bring it via some route. It could be
through a pipeline through Pakistan, or undersea, or as LNG. Look at the benefits. If I can increase
our infrastructure and capacity, we could bring the piped gas to the west coast, the east coast, supply
to Bangladesh, put it on the world market for trade. The dimensions are changing, the gas economy
is now very important. So we will try where we can.
Where will India’s priority be in the next year? Is energy dependence an issue for the
government, and are you considering ways to reduce it?
Our government is working on building a strategy to reduce energy import dependence by 10% in the
next six years by 2022. Our consumption is going to grow threefold. We have an average growth of
10% in demand. Diesel consumption grew 7% and Petrol grew 15%, LP 11%. Demand is now about
183 million metric tonnes. In 2022 this would be 350 mmt and in 2040 it would be 550 mmt. That’s
our roadmap and we have to see how we can cope. In renewable energy, we have a problem with
storage for solar energy. With bio-energy, we have emerging potential, if we can find ways to turn
chaff, surplus grain into fuel. If we have food security, we can consider making waste grain into
ethanol. So our strategy is to diversify our sources and to have good bilateral relations with all so
there is no pressure on us because of energy dependence, to innovate domestically through
technology. Our country’s institutions and corporates need to work better. For example we are
working with IIS to look at ways to exploit shale, coal bed Methane (CBM), other fuels. There’s so
much work also on hydrogen cell technology. If we can monetize our gas hydrates on the east coast
for example, we will be energy dependent for centuries. But I need the technology. If I spend too
much, I will have the CAG ask me like they are asking GSPC why I spent on it, why I didn’t do due
diligence! That’s also a challenge.
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