18 May 2005 

Reuters News 

English 

(c) 2005 Reuters Limited 

NEW DELHI, May 18 (Reuters) – India is looking to become a major oil products exporter while it aggressively chases foreign petroleum assets and sharply boosts imports of gas, the “fuel of the 21st Century”, its oil minister said on Wednesday. 

Mani Shankar Aiyar also told Reuters the United States was not putting pressure on India to walk away from an ambitious plan to pipe natural gas from Iran through Pakistan to India’s border. In fact, he said, Washington wants to work with New Delhi on developing its civilian nuclear energy programme. 

“Gas is increasingly the fuel of the 21st Century,” Aiyar said over breakfast at his sprawling villa. He said India’s imports of natural gas will rise sharply in the next 10 years. 

“I’m looking for a minimum import within the next five years of 100 million standard cubic metres (of gas) per day, which will double over the next decade to a minimum of 200 million,” he said. 

The suave former diplomat from India’s south, who has launched a bold campaign of “energy diplomacy” since taking office a year ago, was backdropped by a roomful of antique furniture and artefacts and South Indian religious icons. 

In March, U.S. Secretary of State Condoleezza Rice told reporters on a visit to New Delhi Washington was concerned about the Iran-India pipeline project. 

“There is no U.S. pressure on India at all. Condoleezza Rice did not raise this issue when she met with (Indian foreign minister) Natwar Singh either in New Delhi in March or more recently in Washington,” Alyar said. 

He said he had told U.S. Ambassador to India David Mulford that while India was sensitive to U.S. concerns about Iran, he hoped the U.S. was aware of India’s energy requirements. 

“Now in fact that has provoked them to extend their cooperation for nuclear energy. So much the better.” 

India expects domestic oil consumption to grow 4-5 percent a year for the next two decades but analysts say growth would slow if domestic fuel prices, frozen since November, are raised. 

Aiyar said prices needed “some rectification” as the freeze hurt oil firms and the cabinet might discuss the Issue next week. 

India’s gas consumption is also rising and will account for 20 percent of the country’s energy basket after two decades, up from 7 percent, encouraging the government to look for new sources of natural gas, he said. 

Aiyar noted India is “producing, or on the brink of producing” oil from stakes in assets in 12 countries and has a strong presence in 47 countries. 

He also said he was optimistic about the $4 billion Iran-India pipeline plan and another to import gas from Myanmar. 

The Iran project has been held up for years by hostility between New Delhi and Islamabad, but a slowly deepening detente between the nuclear-armed rivals has revived hopes. 

“We need energy security for national security and I think the atmosphere that is being established on all fronts with Pakistan should give us the comfort to take the bold decision of moving forward on the Iran- Pakistan-India pipeline,” Aliyar said. 

India produces barely half the gas it uses and is due to import 7.5 million tonnes of liquefied natural gas this year to boost domestic supplies by about 27 million cubic metres a day. 

Aiyar said the growing energy needs of the country, which imports 70 percent of its oil, were a key factor in its security and foreign policy agenda. 

“Energy considerations are increasingly influencing foreign policy but I would equally say that foreign policy considerations cannot be brushed aside in determining energy security sources.” 

Aiyar said he wanted the Iran-India pipeline to extend to China and would discuss this in Teheran and Beijing this year. 

He wants India to expand refining capacity and become a large exporter of petroleum products. India’s oil product exports rose 20 percent to 17.6 million tonnes in 2004/05, helped by higher refining capacity and substitution of liquid fuels by gas. 

India’s crude oil import bill in 2004/05 was 1,170 billion rupees ($27 billion), while earnings from exports amounted to 284 billion rupees ($6.5 billion).