India to ink strategic partnership framework with IEA today
NEW DELHI: As part of its energy security efforts, India on Wednesday will sign a ‘strategic partnership framework’ with the International Energy Agency (IEA), the world’s premier energy monitor.
This is a significant development for India, the third-largest energy consumer globally, and comes at a time when international energy markets have been volatile. Also, tensions between China and India, the second- and third-largest crude oil importers, respectively, have been rising, with India’s transportation fuel prices at record highs.
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IEA’s 30 member countries hold 1.55 billion barrels in public emergency oil stocks. In addition, 650 million barrels are held by industry under government obligations and can be released as needed.
The Paris-based agency is keen on India becoming a member as the latter’s entry into IEA will boost the global energy security apparatus and add heft to its dealings with the Organization of the Petroleum Exporting Countries (Opec)-plus grouping. Saudi Arabia, the world’s largest oil producer, has recently cut output, leading to price volatility. Opec makes up for about 40% of global output and 83% of India’s oil imports.
“Within four years of the International Energy Agency welcoming India as an Association country, IEA members and the Government of India (GoI) have agreed to enter into a Strategic Partnership to deepen their collaboration across a wide range of critical topics including energy security and clean energy transitions,” IEA said in statement.
India’s energy needs are primarily met through imports, which raises supply risks in times of war or natural exigencies. India’s energy consumption is projected to grow at 4.2% annually up to 2035, with its share of global primary energy demand set to nearly double to 11% by 2040.
“This marks a major milestone in global energy governance that could lead to eventual IEA membership for India,” the statement added.
To become a member, India will have to meet eligibility criteria, including maintaining emergency oil reserves equivalent to at least 90 days of net imports.
India stores 10 days of the country’s crude oil requirements, with domestic refiners also maintaining 65 days of crude storage. In addition, the National Democratic Alliance government in June 2018 had approved the construction of additional strategic crude oil reserves to support 12 days of crude oil requirements.
With 23 refineries, India is a key refining hub in Asia and plans to grow its refining capacity from around 250 million tonnes per annum (mtpa) to 400 mtpa by 2025.
This partnership with IEA also comes at a time when US President Joe Biden has recommitted to the Paris Agreement. Some of the strategies adopted to meet the objective of energy security and energy transition by India include a faster clean energy trajectory.