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Excerpts
Scramble for oil
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Petroleum has played a crucial role in India’s history. Exclusive excerpts from Dilip Hiro’s new book that looks at the battle for this precious resource.
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Though the per capita consumption of petroleum in India is less than a gallon a day — compared to 26 gallons in America — this mineral has played a crucial role in India’s history in war and peace.
The country’s only oilfield near the Burmese border became a prime target for the Japanese troops advancing from the occupied Burma during World War II (1939-45). Two steep jumps in oil prices in 1973-74 and 1991 shook the Indian polity severely — the first culminating in the declaration of emergency by the government of Indira Gandhi in 1975 and the second bankrupting India’s already depleted foreign exchange reserves, and compelling it to beseech the International Monetary Fund (IMF) for emergency assistance — at a price. It had to institute far-reaching economic liberalisation, a process that has continued well into the 21st century. So, in the final analysis, it was petroleum that triggered the economic reform which has pushed India’s annual growth to an impressive eight to 10 per cent.
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As it is, India has the distinction of being the first Asian country where petroleum was struck on a commercial scale: at Nahorpung, 540 km (340 miles) from Gauhati. That happened in 1867, a mere eight years after the first commercially viable oil well was drilled in Titusville, Pennsylvania. The subsequent developments in the two countries, however, diverged dramatically.
By the time India acquired its first, small-sized refinery at Digboi in 1901, America had become the second most copious petroleum producer in the world after the Baku region in Czarist Russia. The Digboi oilfield remained British India’s sole source of oil. It therefore acquired vital importance during World War II. The British Indian army fought hard to repulse the determined attempts by the Japanese forces to seize it. The vast cemetery near Digboi is a lasting testimony of that bloody battle.
By the time the British quit India in 1947 the oil industry was in the hands of such foreign companies as the Burmah Oil Company, Caltex and Royal Dutch Shell. Almost a decade passed before the government of independent India included petroleum in its public sector and established the Ministry of Petroleum and Natural Gas. It was handed a virtual monopoly in future oil and gas exploration and production. Since then, its operating arm, Oil and Natural Gas Corporation (ONGC), has become the largest Indian company by market value, with capitalization of over $42 billion.
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India’s scramble for oil and gas has resulted in a reconfiguration of its foreign policy. Such countries as Ivory Coast, Ecuador, Turkmenistan and Venezuela, hitherto on the outer fringes of Delhi’s diplomacy, now became part of its mainstream. The reality that Myanmar (aka Burma) had the tenth largest gas reserves on the planet now mattered more to India than the fact that it had been ruled by a repressive military junta since 1962.
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In per capita terms India is at the bottom of the polluters’ table. Nonetheless its government has been active in developing and installing renewable sources of energy. A quarter century ago it set up the Department of Non-Conventional Energy Sources, and soon upgraded it to the Ministry of Non-Conventional Energy Sources (MNES). In addition to harnessing wind, solar and. hydro energy, the MNES got involved in projects on chemical sources of energy, hydrogen energy, alternative bio-fuels for transportation, geothermal energy, and even ocean energy.
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But there is no getting away from the fact that, given India’s abundant coal reserves, coal will remain a vital element of its energy mix. Also cost remains a crucial factor for a country with a per capita income of less than $1,000 a year. Therefore it is only when the cost of generating electricity by the Integrated Gasification Combined Cycle (IGCC) process comes down to the level of producing electric power by traditional means will India be able to adopt this system on a large scale.
The price of oil is set to continue its inexorable rise beyond $100 a barrel. This will slow down the tempo of the car revolution in India. On the other hand, it will make developing and deploying alternative and renewable sources of energy for transportation and power generation on a mass scale more urgent as well as competitive.
Extract of Blood of the Earth: The Global Battle for Vanishing Oil Resources; Dilip Hiro, Penguin books, Rs. 450.
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