|India ranks 6th in terms of primary energy consumption accounting for 3.5% of the global commercial energy demand. Between 1971 to 2005, its total final consumption (TFC) has increased by four folds, however, energy supply has not kept pace with its demand. A large portion of the demand is met through imports. Production of crude oil has also stagnated thus there has been rapid increase in crude oil imports also. India�s oil import dependency registered 76 % in 2005-06 out of which, nearly 67 % is of total crude oil was imported from Middle East countries. On the prices front, international crude oil prices have increased by four times between 2002 and 2008. Energy mix of India has shown that importance of petroleum products have gone up significantly, coal consumption quantity has marginally increased, whereas electricity consumption registered more than nine times increase. Another interesting fact is that natural gas consumption has increased by almost 48 times during this 34 years time span, while its consumption was minor compared to other energy sources in 1971.
|On the demand side, total final consumption of energy has increased for every sector- industry, transport sector, household sector. Crude oil maintains great importance in energy mix and is expected to remain the most dominant fuel worldwide till 2030 as per International Energy Outlook 2007. In lieu of this, projecting crude oil demand for India using a trend analysis involving simple extrapolation of past trends (The advantage of this method is its simplicity and limitation is that there is no attempt to explain why certain trends were established in the past and assumes that same trend will persist in future too) is expected to be 177.26 million tones of oil equivalent (mtoe) in the terminal year of Eleventh Economic Plan and that of Planning Commission is 185.40 mtoe. Moreover, stronger correlation has been found out between crude oil consumption and GDP. Thus with higher GDP, high-energy needs for the country is expected.
With deficit in supply, it becomes crucial to come up with efforts to expedite the process of exploring domestic avenues and avoid excessive reliance on external sources to meet our energy requirement. Other than Middle East countries, IBSA can be a good option (IBSA Africa is a trilateral, developmental initiative between India, Brazil, and South Africa to promote South-South cooperation and exchange) for reducing dependence on Middle East. Other option can be Sasol, a South African- petrochemical group is a leader in the gas-to-liquid (GTL), and coal-to-liquid (CTL) technologies, in collaboration with Tata, have been attracting attention because they provide an alternative to traditional oil extraction and can be useful for reducing imports. To reduce dependence on oil consumption, development of non-conventional sources (which include renewable) as substitute is important to meet the energy needs. Also good management of local energy resources without distorting environment is necessary. The Integrated Energy Policy of India has noted that lowering the energy intensity of GDP growth through higher energy efficiency is critical for India to meet energy challenge and ensure energy security.