India has taken a significant step towards energy security; New Delhi has signed a Memorandum of Understanding (MoU) with the US for cooperation on strategic petroleum reserves operation and maintenance.
This move is of immense importance. It was accomplished last week during the Second Ministerial Meeting of India-US Strategic Energy Partnership, an initiative which was established at the direction of Prime Minister Narendra Modi and US President Donald Trump in April 2018.
With the signing of such MoU, the country will not only be able to ensure uninterrupted energy supply in the event of geopolitical turmoil, but also shield itself from unprecedented oil price volatility as was seen in 2008, causing immense stress to the exchequer.
Further, to overcome challenges from disruptions in oil supply or volatility in the international oil price, India wants to increase its strategic oil stockpile by storing crude oil in the US Strategic Petroleum Reserve. Discussions between the two sides are at a advanced stage right now. Currently, India has 5.33 million tonnes of oil storage facility, enough to meet the country’s energy requirement for 9.5 days.
Under the rubric of Strategic Energy Partnership, both India and the US are also keen to maximize the benefit of each other’s experience and knowledge. The announcement by the two governments for research in the areas of transformational power generation based on supercritical Carbon dioxide power cycles and advanced coal technologies for power generation and hydrogen production should be seen in this context.
To scale up technologies for producing hydrogen from renewable energy and fossil fuel sources and to bring down the cost of energy production, both India and the US have launched a public-private Hydrogen Task Force. While this is seen as a visionary step in the direction of clean energy, what is noteworthy is India and the US’s keenness to boost collaboration between them for the development of technology for renewable energy generation. Both sides are also keen in expanding cooperation for utilizing the economic value of converting bio-waste into biogas. The two countries would also jointly organize the first ever Solar Decathlon in India, in 2021. Under this programme, a collegiate level competition has been planned in order to prepare the next generation of professionals to design and build high efficiency buildings powered by renewables.
Under the strategic energy partnership, both sides are already engaged in modernizing the distribution sector so that reliable, quality 24×7 power supply could be availed by the people. Modernization of the distribution sector also involves deployment of Smart Metres across the country, setting up of Smart Grid Knowledge Centres.
Besides, USAID and US International Development Finance Cooperation are developing a concept to establish a new US$ 25 million worth of credit guarantee for the Small and Medium Enterprises (SME) sector to deploy rooftop solar panels. Overall aim of India and the US is to support each other’s vision of national development in the energy sector.
The same perspective was shared by India’s Minister of Petroleum and Natural Gas Dharmendra Pradhan who represented the country at the second India-US Strategic Energy Partnership.
According to Mr. Pradhan, besides fostering bilateral energy trade and investments, India and the US are seeking to align energy cooperation with energy security, expanding energy and innovation linkages across the energy sectors of the two countries. New Delhi and Washington are also keen for an increased industry and stakeholder engagement as well as among institutions of excellence from both countries.
During 2019-20, bilateral hydrocarbons trade touched US$ 9.2 billion, accounting for 10 percent of the overall trade.
The two sides have also seen significant reduction in the trade deficit. India is currently the fourth largest buyer of US crude and the 5th largest buyer of US LNG. This shows while India has the market, the US has oil and gas reserves and advanced technology. In this context, the India-US Strategic Energy Partnership a win-win situation for both.
Script: Shankar Kumar, Journalist