Energy security - prospects of indo-us energy trade- centre for public policy research, india

Tom Cutler Cutler International, LLC

INTERNATIONAL CONFERENCE ON ENERGY SECURITY CHALLENGES

India’s Energy Security: Prospects for Indo-U.S. Energy Trade

Centre for Public Policy Research, Cochin (www.cppr.in)

ORGANIZED BY,CENTRE FOR PUBLIC POLICY RESEARCH (CPPR)

COCHIN, INDIA12-13 DECEMBER, 2014

WWW.CPPR.IN

http://www.cppr.in/

• India is world’s 4th largest energy consumer but per capita energy consumption is 1/3 global average

• Coal is and will remain the dominant fuel • Demand will grow relentlessly at 2.8% per

year, slower than in recent years, with greatest growth seen for oil in transport sector. Natural gas use will also grow.

• The share of commercial energy in India’s demand mix will grow as use of biomass & waste declines due to urbanization, etc.

• Government policies on energy pricing and energy efficiency will have major impact on India’s long term energy security outlook

India’s Energy Scenario Centered On Coal


Growing Fossil Fuel Imports Pose a New Vulnerabilty


Growing Level of Coal Imports Puts Spotlight on Domestic Production Challenges Despite Ample Levels of Reserves


• India imported 142 mt of coal in 2012, mostly from Indonesia & Australia

• U.S. supplied 9 mt, mostly met coal, but steam coal shipments are rising

• Shale gas boom led to higher coal exports as U.S. now 3rd largest exporter

• Exports from Powder River Basin could be a game changer for Asian coal markets

U.S. – India Coal Trade Has Potential to Grow


Increased PRB Coal Exports Uncertain Due to Infrastructure Constraints & NIMBY/Environmental Opposition


• Dependent upon ME for 60% of oil imports which total over 2.5 mbd net and are rising

• EIA projects demand of 3.7 mbd will more than double to 8.2 mbd by 2040 while domestic production will remain flat

• Half of domestic production is off-shore • Private investment sought through NELP • Leading oil product exporter due to world

class refineries but growing demand will eventually absorb domestic surpluses

• New economic rationale for U.S. crude oil exports due to fracking revolution sparks policy debate to lift trade ban

India’s Oil Import Reliance of 75% a Vulnerability That U.S. Crude Oil Exports Could Ease


• Surge in tight oil production altering U.S. oil supply posture as output surges from 5 mbd in 2008 to over 9 mbd in 2015

• Light, tight oil distorting U.S. refining sector geared to run on heavier grade crudes and creates economic incentive for exports

• Crude oil exports banned by law in 1975 during time of price controls which no longer exist

• Commerce Dept. BIS has regulatory authority over crude oil exports

• Lifting ban would create jobs, promote investment, increase oil production by 3 mb/d, lower oil prices, improve trade balance and bring geo-strategic benefits.

• Proponents for exports pushing for decision in 2015

Economics Favor Allowing U.S. Crude Oil Exports but Domestic Politics Will Decide


Despite Strategic Location India Needs More Emergency Oil Stocks and Links to International Oil Sharing Plans


LNG Import Option Pursued As Gas Pipeline Projects Stall


Shale Gas Boom Transforms U.S. Natural Gas Production Outlook

Source: EIA Annual Energy Outlook 2014 Early Release Centre for Public Policy Research, Cochin (www.cppr.in)

Growth in U.S. LNG Exports Dependent Upon Regulatory Approvals by DOE & FERC

• DOE approval of LNG export applications to FTA countries is automatic under the Natural Gas Act • LNG exports to non-FTA countries subject to DOE “public interest determination process” • FERC approval required to build LNG export terminals; MARAD approves off-shore facilities• Not all projects granted USG approval will be built; that depends upon market forces • India involved in three projects to date: Sabine Pass , Cove Point and Main Pass.


• Unreliability of electric power supplies undercuts India’s economic potential

• Fuel shortages plague the sector which needs reform, market pricing and more investment

• Ambitious plans for nuclear, renewables and natural gas to displace coal

• Infrastructure and grid modernization through smart technologies will create new cyber vulnerabilities

• Benefits of South Asia regional cooperation • International cooperation with U.S. featuring

Energy Dialogue, PACE program, PEACE initiative and Joint Clean Energy R&D Center

Viable Power Sector Central to India’s Energy Security


Changing Calculus of Asian Energy Security

Access to affordable energy, market pricing and targeted subsidies where needed Oil import vulnerability and continued exploration efforts for new discoveries Gas supply security and build-out of domestic infrastructure Coal self-sufficiency and commercialization of technology to reduce GHG emissions Ensuring nuclear power and its fuel cycle are safe and secure Power sector reliability contingent upon attracting adequate levels of investment Resilient energy infrastructure and cyber security Ramp up renewable energy deployment as costs go down Energy efficiency and environmental security Energy supply disruptions, strategic oil stocks and international oil sharing schemes Geo-politics of energy security and intra-regional cooperation in South Asia Growing importance of the U.S. in strengthening India’s energy security through

technical cooperation, energy trade and investment, and policy coordination

Changing Calculus of India’s Energy Security


Energy security - prospects of indo-us energy trade- centre for public policy research, india

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