Strategic need to raise oil output

At a time of relentless US pressure to reduce dependence on Russian oil and uncertain global energy prices, India must go all in to increase relative self-sufficiency

- N CHANDRA MOHAN

THESE ARE CHALLENGING times for India’s energy security with relentless pressure from the US to reduce its purchases of deeply discounted Russian oil if the bilateral trade deal is to go through. Punitive tariffs of 50% will remain amid indications that our dependence on Russian oil might attract even higher duties.

India’s reliance on imports for its oil requirement, which is as high as 88%, faces geopolitical risks. To bolster its energy security, India must make determined efforts to boost domestic oil output that has been steadily declining. This has been falling for various reasons including lowinvestment due to obstructiveregulations, high taxation,and declining output from mature fields. India also lacks the technological capability for deep-water exploration.

Discontinuing such purchases from Moscow, no doubt, will impact India’s external accounts as they met 36% of its requirements of 5 million barrels of oil a day since 2023.Duetothese cheapersupplies, India’s oil import bill declined year-on-yearby17%to $50.4 billion this fiscal till August. But there are nascent signs of change with India seeking to balance between Russian oil and reliable West Asian supplies to ensure security and avoid overexposute to geopolitical shocks. Diversifying India’s oil basket to include more oil supplies from the US, the world’s largest producer, is also underactive consideration. But the fact remains that opt-

ing out from buying deeply discounted Russian oil only implies costlier supplies from West Asia and the US.