Analysis of required Investments in Energy Sector for India by 2030

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Analysis of required Investments in Energy Sector for India by 2030

Jul 18,2011

With a booming economy and GDP expected to grow at a rate of 8.0 - 8.

5% over the next 5 years, India' energy needs are set to reach all time high in near future. At present, more than 50% of energy needs of India are met by Coal owing to it availability and affordability with Crude Oil being the second most important source of energy.

India's proven crude oil reserves are not expected to last more than 33 years at current rates of consumption
Crude Oil prices, currently at price range of $110 - $115 per barrel, largely owing to chilly winter experienced in US, Europe and China and unrest in MENA region, are set to fall to $80-$85 per barrel once tensions in MENA region subside

The prices are expected to hover around $80 - $95 mark over the next 5 years with upward bias.

India's vast reserves of coal suffer from inferior quality owing to greater ash content and higher percentage of sub-bituminous grades as opposed to higher quality hard coal or anthracite.

Though, India is the third largest producer of coal in the world, the rail infrastructure to transport coal over long distances (> 200 Km) is inadequate and as such many power generation companies import non-coking coal, mainly from Indonesia and Australia
Share of imported coal is set to rise from current levels of 3% to 12% over the next 5 years.

To bridge the demand-supply gap,

India would need investments of about USD 600 billion across various segments of hydrocarbon chain in next two decades to take care of its energy requirements
Though India has a surplus of installed refining capacity of 185 million tonnes per annum, companies are aggressively upgrading their capacities to produce Euro IV and Euro V compliant fuels which can be exported to the United States and Europe.
The surplus refining capacity can be put to good use in wake of many refineries expected to shut down in coming years in developed countries and emerge as a major refining hub globally.

Source: CRISIL, Economictimes

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