By – Akshara Gupta
Abstract
As India acquires its role as one of the fastest growing economies, so is increasing its demand for energy. Currently, India imports nearly 87% if its crude oil, and therefore, security becomes a central pillar of its foreign and economic policies. In response to the volatility of global oil markets, which further gets affected by geopolitical tensions, sanctions and supply constraints, India’s response has been two-fold. First is the development of strategic petroleum reserves (SPR) and diversification of its energy supplies. These moves in the broader discourse aim on gaining energy independence, and strategic autonomy. The Strategic Petroleum Reserves have been an important aspect of oil security for India since the 1973, when the Arab countries imposed and Oil embargo on many of the Western Nations. But its effectiveness has been questioned for a long decade. This article seeks to argue that India’s current energy policy makes it resilient but not independent, as independence is dependent on structural, geopolitical, and technological constraints.
Introduction
Strategic Petroleum Reserves were designed for emergency stockpiles which help in unexpected disturbances in oil supplies. Currently, India’s SPR Programme, run by Indian Strategic Petroleum Reserves Limited, is capable of storing 5.33 million metric tonnes of oil, which is equivalent to meeting oil imports for a week. However, the oil reserves are currently holding only 3.37 million tonnes oil or just two thirds of their total storage capacity.
Such moves on India’s part need to be subject to deeper scrutiny. SPRs and diversification might result in India being more resilient in the short term but do not fundamentally alter India’s dependency on external actors from the roots. Rather, it makes India more resilient in ways that reflect inequality in the global system.
Strategic Petroleum Reserves Gap
The key limitation of the SPR Programme appears to be in its temporary nature. It is not meant for long-term solutions. If there is any geopolitical disturbance in oil supplies, say in the Strait of Hormuz or any other major oil-producing countries, then even with SPR, oil supplies will not be sustained for long. It is just a delay in oil supplies. Moreover, the regulation of SPRs requires a high level of bureaucratic approval. This again proves that the SPR is a reactive tool that is used to manage crises rather than preventing them. SPR does provide an opportunistic efficiency, when necessary, like it did in 2020, when the government filled the SPRs completely, taking advantage of the low oil prices. However, it also proves that the efficiency of SPR is subject to the vagaries of the global market, which is beyond the control of India. Therefore, the SPR makes the country more resilient but does not change the fundamental reality.
India appears to be in the face of expansion for these SPRs in, Chandi Khol(Odisha) and Padur(Karnataka) but the implementation is restricted as India lacks both budget and land to build the plants.
Diversification of Energy Suppliers: Shifting not Solving
The second main strategy that India uses for oil supply management involves diversifying its oil sources which appears to be a better strategy for Indian oil Industry as it helps India to reduce excessive dependence on suppliers by acquiring crude oil from multiple regions which include the Middle East and Russia and the United States and Africa. India historically depended on Middle Eastern oil sources that included OPEC member countries. After Iran faced sanctions, India started to import oil from Saudi Arabia and Iraq. After the Ukraine conflict began India started to import more Russian oil because of its lower pricing. The price reduction through this shift created immediate savings for India but it also brought various geopolitical risks which included both sanctions pressure and damage to India’s diplomatic standing.
The evidence shows that organizations use diversification as a response to changing conditions instead of using it as a planned method for development. Organizations develop their responses to external events which include wars and sanctions and price changes instead of following a permanent energy independence plan. The process of acquiring new suppliers brings new dependencies and diplomatic ties and security weaknesses. India maintains its existing state of dependency while establishing new patterns of reliance.
The Oil Industry: Political Dynamics Determine Market Outcomes
Companies, when they implement their diversification strategies, use the assumption that oil markets function according to economic principles which include price, demand, and supply. The assumption fails to recognize that global energy systems operate as political entities. Oil movements occur because of market forces and the distribution of power between nations. OPEC members use their production capacities to establish price control over international oil markets. The Strait of Hormuz maritime chokepoint enables the passage of substantial oil shipments to global markets.
The realist viewpoint holds that energy security exists throughout international power structures. India, as an importer lacks the power that major producers possess according to its current market position. The company must deal with three external factors which include sanction compliance, price fluctuations, and shipping route security measures. The belief that diversification results in complete independence from energy resources fails to recognize that energy resources function as geopolitical assets which lack neutral status.
Renewable Energy: A New Form of Dependence
India focuses on Renewable energy resources because they offer a sustainable solution to its oil dependency problems. The country needs to invest in solar and wind, power, and electric mobility solutions, which will help it in achieving greater sustainability and will decrease its fossil fuel requirements. The strategic autonomy of the system will not be established through this transition, although it needs to occur. The system generates new forms of dependence on its users. India’s renewable energy infrastructure relies heavily on imported technology and materials. China controls the global solar panel manufacturing industry, which leads to the country supplying most solar panels and components to India. The country imports most of its essential battery minerals including lithium and cobalt and nickel from regions with political tensions. The system creates a fresh risk through its dependence on technological and supply chain resources. The shift from oil to renewable energy sources does not create complete self-sufficiency because it transfers dependence from hydrocarbons to essential minerals and production systems. The term “green transition” means more than creating independence from energy sources because it creates new energy dependency patterns.
The Myth of Strategic Autonomy
India has followed strategic autonomy as its fundamental principle which permits the nation to conduct independent foreign relations without any outside interference. The country faces problems achieving its ideal of strategic autonomy because it depends on imported energy resources.
India conducts oil diplomacy through two conflicting goals which involve sustaining its United States relationship while buying Russian oil and establishing ties with Gulf nations while managing its Iranian diplomatic issues. The two parties involved in these balancing activities maintain their power by establishing agreed limitations which restrict their complete control.
India must fulfill its energy requirements through practical solutions which often lead to conflicts with its diplomatic objectives and its fundamental values. Russia sells discounted oil to India because it makes economic sense for the country, yet this decision shows that actual resource requirements determine how countries conduct their international relations.
Strategic autonomy exists in this situation as an ongoing negotiation process which operates within established boundaries.
Conclusion
India uses its energy security strategy to create effective solutions which adapt to changes in the international security landscape. The Strategic Petroleum Reserves function as an essential protection measure which safeguards immediate disruptions while supplier diversification methods decrease risks associated with vendor concentration.
The current measures used by the country fail to establish complete independence from external sources. The system to some extent protects against the risks but fails to provide complete protection in emergencies. The system maintains dependence on three factors which include oil producers, geopolitical chokepoints, and global cartels as well as the supply chains which support renewable technologies.
Energy security in India, not only presents as a technical and economic challenge, but also represents a political issue. What India needs currently is to establish a strategic autonomy by expanding its resource, developing local resources, diversifying the supply network, while also protecting essential supply roots and redefining its roles in the international energy market. India has used its energy strategy to manage its energy needs through dependence on foreign sources.
About the Author:
Akshara, is a third-year law Student at the Jindal Global Law School. She poses an avid interest in financial law, Social Justice, and emerging technology. Passionate about researching and diving into untold stories.
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