India must rethink West Asia energy reliance after biggest shock: ONGC chief

As the world scrambles to recover from the biggest energy shock in decades triggered by the West Asia conflict, India should be cautious about relying on traditional supply assumptions, particularly its proximity to the Middle East for sourcing oil and gas, ONGC Chairman and CEO Arun Kumar Singh said on Friday.

India, which relied on the Middle East to meet nearly half of its crude oil imports, 30 per cent of its gas and 85-90 per cent of LPG, must invest in building strategic storages as an insurance against price and supply disruptions, he said. The six-week long was shut the only shipping lane that was used by the Gulf countries to export crude oil (raw material for making petrol and diesel), natural gas (used to make fertilizer, generate electricity, turn into CNG to power automobiles and piped to household kitchens for cooking) and cooking gas LPG.

This led to an energy crisis in several importing countries, including India which had to prioritise supply of gas.“Thinking that the Middle East is nearest to us and therefore all their resources (can be accessed easily), we should take it with a pinch of salt,” Singh said at the Energy Security conclave organised by oil regulator PNGRB.He warned that a shifting global order and rising geopolitical tensions are undermining long-held assumptions about energy security. “A paradigm shift has happened,” he said. “If the world gets more and more de-globalised, we will have more and more problems.”

Singh said India’s high energy import dependence makes it especially vulnerable in an increasingly fragmented world.“For the next 30-40 years if you have multiple (powers), then you have everyday war of supremacy,” he said. He stressed that boosting domestic production is now critical.

“We have been doing it very intensely except for deep water,” he said, adding that increasing output is an “existential necessity”.Calling for a strategic reset, Singh urged India to aggressively pursue domestic exploration and build resilience.“We should chase wherever oil or gas is in our country at any cost, because in a crisis nobody (will help),” he said.He also emphasised the need to expand storage capacity.“We must now address this storage whatever it takes,” Singh said.

Highlighting growing volatility in global markets, he said refining economics have become increasingly unpredictable.“We should be prepared to see more and more of this,” he said, citing unprecedented instances where product margins exceeded crude costs. “Nobody had ever imagined at least I, in this industry for last 40 years.”Singh also pointed to rising resource nationalism among producer nations.

“No country wants you to take away his oil. He wants you to take away his money, not the oil,” he said.He called for diversification across fuels and supply chains.“We must diversify energy types, we must diversify our energy storage,” he said.On liquefied petroleum gas (LPG), Singh said India has boosted domestic supply significantly.“Earlier 30 per cent, now 60 per cent,” he said, adding that refiners reconfigured operations to support the shift, though “it has come at a cost.”

He also suggested prioritising piped natural gas for households.“Instead of CNG, directive should be towards piped natural gas (PNG),” he said. “At least kitchens will not stop.”Despite global disruptions, Singh said India had managed the situation effectively.“You should be very proud of what country has done,” he said.