All about India’s blue economy
Blue economy essentially refers to the multitude of ocean resources available in the country that can be harnessed to aid the production of goods and services because of its linkages with economic growth, environmental sustainability, and national security. The blue economy is a vast socio-economic opportunity for coastal nations like India to utilise ocean resources for societal benefit responsibly. India’s blue economy is a subset of the national economy comprising the entire ocean resources system and human-made economic infrastructure in marine, maritime, and onshore coastal zones within the country’s legal jurisdiction. With some 7,500 kilometres, India has a unique maritime position. Nine of its 29 states are coastal, and it’s geography includes 1,382 islands. There are nearly 199 ports, including 12 major ports that handle approximately 1,400 million tons of cargo each year. Besides, India’s Exclusive Economic Zone of over 2 million square kilometres has a bounty of living and non-living resources with significant recoverable resources such as crude oil and natural gas. Also, the coastal economy sustains over 4 million fisherfolk and coastal communities. Why has the Government come out with a draft Blue Economy Policy? Given India’s vast maritime interests, the blue economy occupies a vital potential position in India’s economic growth. It could well be the next force multiplier of GDP and well-being, provided sustainability and socio-economic welfare are centred. Therefore, India’s draft blue economy policy is envisaged as a crucial framework towards unlocking the country’s potential for economic growth and welfare. What are the important elements of this policy? According to the draft policy, the blue economy is one of the ten core dimensions for national growth. It dwells on policies across several key sectors to achieve the holistic development of India’s economy. The draft document focuses on seven thematic areas such as national accounting framework for the blue economy and ocean governance; coastal marine spatial planning and tourism; marine fisheries, aquaculture, and fish processing; manufacturing, emerging industries, trade, technology, services, and skill development; logistics, infrastructure and shipping including transshipment; coastal and deep-sea mining and offshore energy; security, strategic dimensions, and international engagement. Has India fully leveraged this part of its overall economy? India has tapped its vast coastline to build ports and other shipping assets to facilitate trade, but the entire spectrum of its ocean resources is yet to be fully harnessed. Several countries have undertaken initiatives to utilise their blue economy. For instance, Australia, Brazil, the United Kingdom, the United States, Russia, and Norway have developed dedicated national ocean policies with measurable outcomes and budgetary provisions. Canada and Australia have enacted legislation and established institutions at federal and state levels to ensure progress and monitoring of their blue economy targets. With a draft blue economy policy framework of its own, India is now all set to harness the vast potential of its ocean resources.
Ukraine crisis to give India crude jolt
Fuel prices are poised to go up by Rs 7-8 per litre as Brent, the global benchmark crude, raced towards the $100 per barrelmark on Tuesday as the Ukraine crisis spooked the oil market already struggling to meet rising demand. As Brent hit $98/barrel, the mix of crude bought by India, otherwise known as the Indian Basket, too rose to $93. 6, marking a $10 increase since November 4 when the Centre cut excise duty by Rs 10 on a litre of diesel and Rs 5 on petrol to give relief from high oil prices ahead of the state polls. Pump prices have remained unchanged since then under an informal government diktat. The sharp in- crease has widened the gap between the actual cost and retail prices of petrol and diesel, leading to under-recovery for retailers. According to ballpark, every $1 increase in crude price impacts retail rate by 70-80 paise. The freeze on price revision, as seen after previous polls, is expected to be lifted once the last ballot is cast on March 7 and the retailers will start raising the prices. They, however, may not get to recoup the past under-recovery fully, which will impede profit of companies such as IndianOil, Hindustan Petroleum and Bharat Petroleum. But on the flip side, high oil prices will buoy the bottom lines of domestic producers such as ONGC and Oil India Ltd. The Ukraine crisis will keep oil on the boil in the coming months to keep fuel prices in focus, unless a breakthrough in the US-Iran talks brings Iranian oil to the market. But there will be no hiccup on supplies since India barely imports oil from Russia through the western route. But the Ukraine crisis will pinch India in gas prices too. India meets half its gas needs through imports by way of LNG, or liquefied natural gas. Though India hardly imports LNG from Russia, the crisis has pushed up the fuel’s prices. This will raise the cost for industry. Rising fuel costs will jack up inflation and may prompt hardening of monetary policy by the RBI, raising the cost of living.
LNG majors spy fivefold growth prize in emerging India, Asia
ustralia, one of the world’s biggest exporters of liquefied natural gas, aims to target a forecast boom in demand in India and across emerging Asia as nations shun dirtier coal. The supplier, which vies with Qatar and the US as the top LNG shipper, should step up efforts to win deals in seven markets — also including Indonesia, Bangladesh and Vietnam — that are projected to boost demand from 40 million tonnes in 2020 to 255mt by 2050, according to a government report. “A strong LNG demand outlook in our region will allow Australia to capitalise on the growth of global spot markets and meet unexpected demand,” said Keith Pitt, Minister for Resources and Water. Mr Pitt has called for the development of more production capacity, and last year backed Woodside’s approval of the $US12 billion ($16b) Scarborough project off WA. Established LNG markets in China, Japan, South Korea and Taiwan are expected to lift imports from 200mt in 2020 to about 243mt by 2050, according to the report. Australia earned $32b from LNG exports in the year to June 30, and forecasts the value of gas production will rise through 2050, while coal earnings tumble, as developing nations, particularly in Asia, switch to the less-polluting fuel. Climate campaigners, however, advocate a faster shift from fossil fuels to renewable energy, arguing that wider adoption of LNG will only stall efforts to tackle planet-warming climate change.
India’s fuel demand to touch record high despite soaring crude oil prices
India, the world’s third-biggest oil user, expects consumption of petroleum fuels to touch a record next year even as crude prices move toward the $100-a-barrel mark. Demand has been pegged at 214.5 million tons in the year starting on April 1, according to predictions by the Indian oil ministry’s Petroleum Planning and Analysis Cell. If achieved, that would be an all-time high and an increase of 5.5% from a revised estimate for 2021-22. Local sales of gasoline, diesel and other fuels have started picking up after being whipsawed by several virus waves and tax-inflated pump prices in the past two years. However, the nation is yet to recoup the losses caused by the pandemic that had decapitated consumption by as much as 70% at one stage following the world’s strictest lockdown in 2020. Any rise in consumption in India, the third-biggest crude oil buyer that relies on the global market for about 85% of its requirements, would raise the country’s import bill at a time when the South Asian nation is facing one of the deepest budget deficits among major economies. The government may focus on converting more sugar and grains into biofuel to reduce its dependence on overseas supplies and cut bulging sugar stockpiles. The timing is not in India’s favor. Oil prices hovered near their highest level in seven years after Russian President Vladimir Putin signed an order to send what he called “peacekeeping forces” to the two breakaway areas of Ukraine that he officially recognized on Monday. The world’s largest independent oil trader Vitol Group expects oil prices to be above $100 for a “prolonged period” over the next six to nine months. That would inevitably increase pump prices in India. Why green hydrogen is the future of energy High oil prices pose a challenge to India’s demand recovery. When crude oil traded around $100 a barrel in 2013-14, the country’s annual consumption growth of petroleum products slumped below 1%. Consumption has been lower than initial projections by the oil ministry’s agency during the past three years.
Russia-Ukraine conflict: Moody’s says global oil, natural gas prices may see sharp rise
Global oil and liquified natural gas (LNG) prices are likely to see a sharp rise in the event of a Russia-Ukraine conflict, which would have negative implications for net energy importers, Moody’s Investors Service said on Wednesday. Moody’s Investors Service Managing Director Michael Taylor said trade effects are likely to arise from import diversion and diversification, although there may be opportunities for commodities producers in Central Asia to increase supply to China. Supply chain bottlenecks will also be aggravated, adding to inflation pressures in the region. Tensions have been escalating between Ukraine and Russia in recent weeks, and on Monday Moscow decided to recognise two separatist regions of eastern Ukraine as independent and deployed Russian troops there. “The global price of oil and liquified natural gas (LNG) is likely to rise sharply in the event of a conflict, which will be positive for the relatively few exporters in the Asia Pacific region and negative for the substantially greater number of net energy importers. “However, a mitigating factor is that several Asian economies have long-term supply contracts in place for LNG, which will limit the impact of fluctuations in the spot price,” Mr Taylor said. Global crude oil benchmark Brent neared the $100 per barrel on Tuesday amid rising threat of invasion in Ukraine and fears of sanctions on Russia, the largest exporter of natural gas and second-largest oil exporter. India imports about 85% of its crude oil needs and about half of its natural gas requirement. While the imported crude oil is turned into fuels such as petrol and diesel, gas is used as CNG in automobiles and fuel in factories. In a statement, Moody’s said its rated issuers in the Asia-Pacific have limited direct exposure to Russian or Ukrainian entities. Nonetheless, issuers in APAC may not be immune to second-round effects of a conflict. Among the possible transmission channels are commodities prices, trade effects and financial market disruption. “Financial market effects will have the largest near-term impact: for example, if a conflict gives rise to widespread risk aversion, funding conditions for high yield issuers, some of which are already experiencing constrained access to finance due to other factors, will deteriorate further,” Moody’s said.