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India has passed legislation intended to encourage oil and gas exploration to help meet its energy needs, a move that highlights the difficulty of persuading the world’s most populous nation to phase out fossil fuels.
“[It’s a] historic day in India’s quest towards energy security and energy self-sufficiency,” oil minister Hardeep Singh Puri said after the lower house of parliament on Wednesday approved a bill amending the country’s 1948 law on oil extraction.
India’s dependence on imported crude oil has been rising due to increasing energy demand and lagging domestic production, with imports accounting for almost 90 per cent of consumption between April and December 2024.
Puri said the new legislation, which was passed by the parliament’s upper house in December, would make it easier for companies to explore for oil and gas by ensuring policy stability, allowing international arbitration and extending lease periods.
The “far-reaching” amendments would “further strengthen and propel India’s energy sector”, the oil minister said.
India is the world’s third-largest carbon polluter after the US and China, according to the International Energy Agency, and has faced increasing pressure from abroad to move faster to reduce emissions.
However, Indian officials say developed nations are responsible for historical emissions and countries such as India are morally justified to use whatever energy source is readily available to catch up economically.
“By virtue of the fact that we are going to rely on conventional energy for some time, we need to step up our exploration and production activities,” Puri said, adding that India currently consumed 5.5mn barrels of crude oil a day, up from 5mn three-and-a-half years ago.
“If we continue to grow at the rate at which we are, we will go up to 6.5mn-7.0mn barrels per day,” he said.
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Arvinder Singh Sahney, chair of the state-run Indian Oil Corporation, told the Financial Times last month that lack of exploration in India was partly due to a “lack of investment”.
“We want to explore to the maximum,” he said.
Energy supply is an acute issue for India as it industrialises its economy, subsidising both carbon-heavy businesses and renewable sectors in an attempt to become a manufacturing hub that can win global market share from its Asian rival, China.
During a meeting last month, India’s Prime Minister Narendra Modi and US President Donald Trump, agreed to increase American oil and gas exports as part of efforts to rebalance the countries’ trade relationship.
Russia is currently the main supplier of crude to India, while Qatar is the biggest provider of liquefied natural gas. Last month, Oil India signed an agreement with Brazil’s national oil company Petrobras to jointly bid for oil and gas exploration blocks in India.
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