India, the world’s third-largest oil consumer and importer, wants to reduce its reliance on oil — and working with Russia could help it achieve that, said Indian Minister of Petroleum and Natural Gas Dharmendra Pradhan.
The South Asian country imports around 80% of its oil needs, but Prime Minister Narendra Modi has said he wants to bring that down to 67% by 2022. At the same time, the Indian government plans to raise the share of natural gas in the country’s energy mix from 6% to 15% by 2030.
“Today, India is sourcing its energy requirement from a different part (of the) world, Russia is one among the important destinations for us,” Pradhan told CNBC’s Tanvir Gill at the World Economic Forum in New Delhi, India.
Following a meeting between Modi and Russian President Vladimir Putin last month, the two countries announced several energy-related deals. According to Reuters, they include:
India’s Petronet LNG agreeing to buy liquefied natural gas from Russia’s Novatek and invest in the Russian company’s future projects.India’s H-Energy looking to buy LNG from Novatek on a long-term basis.Coal India signing a deal to mine coking coal in Russia.
Those deals and investments would help India and Russia to reach their goal of hitting $30 billion in annual trade by 2025. Bilateral trade between the two countries currently stands at around $11 billion.
Diversifying India’s energy mix allows the government to better manage its finances, according to Pradhan, who’s also the country’s steel minister. India’s large oil imports, sourced mainly from the Middle East, make the country highly vulnerable to spikes in crude prices.
That’s one of the reasons why some investors have been cautious about investing in India.
“Yes, this is an area of challenge ... how to manage our finance in this area,” said Pradhan. The minister said that India is adding more gas into its energy mix, especially with plenty of natural gas supply in the market at a more competitive price now.
The country is also expanding its use of renewable energy, said the minister.
“So, India is a growing energy market. We know the challenges ... geopolitical influences are there, we know the volatility of the issue, the price especially. We’re consciously preparing the alternative methods,” he said.