Pulitzer Prize winner Daniel Yergin, vice chairman of leading oil and gas consultancy firm IHS and author of award-winning book on oil and gas Prize, told reporters at Petrotech that unless immediate steps are taken, India?s energy crisis will turn out to be very dangerous. He welcomed the gas price hike but said many more such steps are needed to be taken for increasing the investment attractiveness of India. Excerpts:
What is your view onthe Indian energy market now and do you think it is headed in the right direction, especially in terms of energy security?
From what I see, there are lots of issues in the energy space in India that are being slowly addressed. Behind all political noise (about energy security), there is a quiet crisis brewing in India, which can be very dangerous in the future. It is good that some steps are being taken but that has to continue.
In our IHS survey, India ranks very low, at 51, in terms of attractiveness for investment into India. India has to come up in that ranking and that can only happen through realistic market linked prices.
What is your view on gas prices in India?
Fifteen years back it was unimaginable that Indian gas prices could be linked to US prices. But now they are. India has done the right thing as this hike in gas price through a formula removes the arbitrary nature of price fixing and sends a very important message that there is going to be clarity in pricing and returns.
Do you think India will have a realistic gas price through the Rangarajan formula?
I haven?t seen the formula but from what I understand it takes in consideration all the important markets of US, UK and Japan and this mechanism will help reach a reasonable market price.
Shale gas has been successful only in US because of certain specific policies there. But is it possible that a shale gas revolution can happen in India too?
Shale gas exploration in India is just the beginning. As of now, everyone has an estimate. Whether it will be successful and viable can only be said through actual production experience and that can only be gained through drilling. You have to drill a lot of wells and gain a lot of experience.
Even in US people didn?t know that shale will be so huge unless drilling was done.
What are the major trends in the oil and gas sector that will govern the energy dynamics in the coming years?
There are three main trends that have emerged in the last few years and they will be the driving force of the oil and gas market in the coming years. First, is a growing energy demand of the emerging market, driven largely by of India and China. They will continue to be the main consumers of energy for several years from now and carve the energy picture in the coming years.
Secondly, the entire revolution that is happening around unconventional resources, especially shale gas and oil, and third is the growing importance of natural gas. With these three points, I will add one more and that is re-balancing the flows of oil and gas in the world.
