Indian Energy Market Opportunities for the US

The US has the largest known deposits of shale oil in the world with an an estimated 2.175 trillion barrels (345.8 km3) of potentially recoverable oil

India’s energy market that covers three sectors—Crude Oil, Shale Gas and Civilian Nuclear Reactors and nuclear fuel supplies, offers a tremendous opportunity for the US to milk.

In the past, India was mostly importing oil and gas from the West Asian countries—Saudi Arabia, Iraq, Iran, the UAE and Kuwait. And, for civilian nuclear reactors initially from Canada and later from Russia.

India provisionally imported 91.24 million tonnes of crude oil in April-August 2019, down from 93.91 million tonnes a year back. Data of suppliers of crude oil include Iraq from April to August – 21.24 million tonnes; Saudi Arabia from April to August 17.7 million tonnes; and Nigeria, the UAE, Mexico and Venezuela.

India stopped importing crude oil from Iran following the reimposition of economic sanctions in May by the US – just 2 million tonnes in 2018-2019 from 13.3 million tonnes in the previous year.

Supplies from the US jumped more than four-fold to 6.4 million tonnes in the 2018-19 fiscal year. In 2017-18, the first year of imports from the US, the supplies were at 1.4 million tonnes.

The US has the largest known deposits of shale oil in the world with an estimated 2.175 trillion barrels of potentially recoverable oil. Its oil output from seven major shale formations is expected to rise from about 29,000 barrels per day (bpd) in January to a record 9.14 million bpd. Thus, the Indian market offers “great” opportunity for the US to export oil.

Next, the US estimated technically recoverable shale gas reserves was 827 trillion cubic feet in 2011. But, in 2012 the EIA lowered its estimates to 482 tcf. Yet, for the US, it is yet another opportunity for export of gas to India. Even in the civilian Nuclear field also, the US-India Civil Nuclear Agreement offered India to carry out trade of nuclear fuel and technologies with the US companies to significantly enhance its power generation capacity.

As of March 2018, India has 22 nuclear reactors in operation in 7 nuclear power plants, with a total installed capacity of 6,780 MW. Due to low capacity factors only supplied to 3.22% of Indian electricity in 2017.

In October 2010, India drew up a plan to reach a nuclear power capacity of 63 GW in 2032. By 2020, India’s installed nuclear power generation capacity was expected to increase to 20 GW by 2020. But the 2020 capacity will not exceed 7 GW, as the 2018 operating capacity is 6.2 GW, and only one more reactor is expected on line before 2020.

Russia has an ongoing agreement of 1988 vintage with India regarding establishing of two VVER 1000 MW reactors (water-cooled water-moderated light water power reactors) at Koodankulam in Tamil Nadu. A 2008 agreement catered for provision of an additional four third-generation VVER-1200 reactors of capacity 1170 MW each. In October 2018, India and Russia signed an agreement to construct 6 nuclear reactors.

India enacted the 2010 Nuclear Liability Act that stipulates that nuclear suppliers, contractors and operators must bear financial responsibility in case of an accident.

Following 2011 Fukushima nuclear disaster there have been numerous anti-nuclear protests at proposed nuclear power plant sites—Jaitapur Nuclear Power Project in Maharashtra and the Kudankulam Nuclear Power Plant in Tamil Nadu, and a proposed large nuclear power plant near Haripur was refused permission by the Government of West Bengal.

After the Nuclear Suppliers Group agreed to allow nuclear exports to India, the French President Nicolas Sarkozy signed framework agreements for the setting up two third-generation EPR reactors of 1650 MW each at Jaitapur, Maharashtra by the French company Areva. The deal caters for the first set of two of six planned reactors and the supply of nuclear fuel for 25 years.

The nuclear agreement with USA led to India issuing a Letter of Intent for 10,000 MW from the USA – 6 reactors of 1650 MW each. However, the 2010 Nuclear Liability Act has deterred foreign players like General Electric and Westinghouse Electric, a US-based unit of Toshiba, to establish reactors in India.

Let me highlight nuclear technology developments in very broad outline. Generation 1 and II reactors of 1950-1960s are almost obsolescent. Generation III (and 3+) are the Advanced Reactors are today in operation or under construction or ready to be ordered.

And, Reactor suppliers in North America, Japan, Europe, Russia and elsewhere have a dozen new nuclear reactor designs at advanced stages of planning, while others are at a research and development stage. Vastly improved simpler designs of Generation IV advanced reactors are now being developed internationally, which are inherently safer: Gas-cooled fast reactor system, (GFR); molten salt reactor system, (MSR); sodium liquid metal-cooled reactor system (SFR); lead alloy-cooled fast reactor system, (LFR); supercritical water-cooled reactor system, (SCWR) and very high-temperature reactor system (VHTR).

India’s three-stage nuclear power programme was formulated by Homi Bhabha in the 1950s to secure the country’s long term energy independence, through the use of uranium and thorium reserves found in the monazite sands of coastal regions of South India.