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A potent mix

Discussions of Jaipal Reddy?s changed portfolio failed to consider that science should be firmly integrated with energy policy.

The day after the Cabinet reshuffle, TV and print media spent an inordinate amount of time speculating on why Jaipal Reddy had been shifted from petroleum to science and technology. The commentary was speculative and uninformed and focused on the reasons for Mr Reddy?s ?demotion?. What it failed to point out was that there is, in fact, a healthy and much-required synergy between petroleum and science and technology, and that, were it not for the unwritten pecking order in the cabinet, the shift of a person knowledgeable about petroleum to a portfolio focused on the mainsprings of future energy production could augur well.

I am familiar with the ranking in the cabinet. The ministers of home, defence, external affairs and finance are first tier?a fact made explicit by their membership of the cabinet committee on security. The others fall into order on the basis of individual seniority as manifest by their proximity to the Prime Minister around the cabinet table and the financial clout wielded by their ministry. In this regard, the minister of petroleum, with responsibility for a critical part of the economy and with supervisory oversight over the largest, and at one time the wealthiest, of the public sector entities certainly carries more heft than the minister of science and technology. Hence the volley of comment and the wayward speculation.

The message I had hoped the anchors might emphasise was that it is because of government support and investment in science and technology that the world is today reaping the benefits of globalisation and connectivity, and that this particular ministerial reshuffle might therefore offer an opportunity to weave technology and innovation more strongly into the fabric of petroleum policy. The anchors did not make this point, but rather encouraged the panelists to dilute the importance of Reddy?s new portfolio.

Less than half a decade ago, US decision-makers walked a tightrope. They were the votaries of democratic principles, but they were also in a cosy embrace with the dictators of oil-rich regimes. The reason for this balancing act was the conventional wisdom that America would remain dependent on imported hydrocarbons and that principled politics might lead to a disruption of the country?s oil and gas supply lines and economic well-being. Today, America?s energy situation is radically different. The decision-makers have stepped off the wire. The country has an oversupply of gas and oil production has increased by 25% since 2008. Dan Yergin, chairman of the reputed Cambridge Energy Research Institute, has noted that this increase is the ?highest growth of oil output of any country in the world over this time?. He has also indicated that this surge in production has added 17 million new jobs, boosted federal and state governments tax revenues by $62 billion, reduced the oil import bill by $75 billion and saved America approximately $100 billion annually in imported LNG. The LNG re-gasification facilities that were built to receive LNG from the Middle East are in fact today being converted to gas liquefaction terminals, and the operating companies have sought permission to export LNG. This dramatic transformation has happened because of science and technology. It has occurred because of the innovative application of two well known technologies?hydraulic fracturing and horizontal drilling. The combination has enabled the companies to recover the oil and gas molecules trapped in shale rock formations.

In other parts of the world, too, science and technology has put paid to the Cassandras of the ?peak oil? theory?the theory that the world is running out of hydrocarbons. There have been huge discoveries in the pre-salt basins of Brazil; the ultimate recovery rates of oil and gas from producing fields has increased to as high as 70% (the Indian average is still only 28%); and digitisation has improved operational productivity sharply. All of this has happened because of innovation. The Brazilian discovery has been made possible by improvement in seismic technology, which now allows companies to see the subsurface more sharply. And the recovery rates have increased because nanotechnology has improved reservoir surveillance.

The success of science and technology has been built on public investment and where the government has provided the enabling environment for the effective application of technology. The shale gas/oil revolution, for instance, was made possible only because the government set a clear regulatory framework and removed the ambiguities related to land. In India, the biggest hurdles to harnessing our shale resources would be precisely these two issues. The essential point of these examples is the message that science and technology, combined with government support, can upend conventional wisdom.

A handful of people know why Reddy was shifted, but it was certainly not those who commented on TV channels or who wrote about it in the print media the following day. The viewers may have been titillated by their speculation but the content of discussion was without value. It would have been constructive had the anchors seized upon the potential beneficial synergy between petroleum and innovation and used that as the peg to emphasise that science and technology needed to be integrated more firmly into the fabric of economic and energy policy.

The ministry of science and technology has never been given the importance it deserves. Its mandate is narrow and the financial assets under its control are minimal. This is a situation that should now be reversed. The minister should rank higher in the pecking order; the siloed walls of cabinet governance should be perforated so that science and technology is on every economic ministry?s agenda and its mandate should be broadened to cover R&D across all technology-intensive sectors. More immediately, the question should be asked: how can the minister of petroleum and his predecessor combine hands to catalyse the revolution that science and technology have wrought in the petroleum sectors of other countries?

The author is former chairman of Shell India. Views are personal

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First published on: 05-11-2012 at 02:41 IST
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