Much has been said and written about
the movement of the unrecognized state and active jihadist militant group-ISIL
(Islamic State in Iraq and the Levant) also called as ISIS (Islamic State in
Iraq and Syria) and its advances across Northern Iraq which by now has control
over large part of Central Iraq.
ISIS is
targeting Iraq’s oil fields as part of its plan to raise revenue and build its
caliphate infrastructure. Although
there are few fields (Ajeel and Hamrin) in the territory captured by ISIS, its
advance has disrupted the operation of pipelines and a refinery.
But what does this means for India? Do
we need to worry about this unrest? Is this war an issue of concern for us?
The answer would always be a yes, considering
today’s globalized economies. The increase in International crude prices due to
this war has threatened to increase the burden of the fuel subsidy and widen
the Current Account Deficit as India imports more than 75% of its crude. This
will further put more pressure on our plan for earlier economic recovery.
If crude prices increase further or sustain at elevated levels for
the rest of the current fiscal, the fall in gross under-recovery from INR
139,869 Crore in 2013-14 to the projected INR 91,665 Crore for 2014-15 may not
take place according
to ratings agency ICRA in a report.
There was some initial surge in oil prices in
the immediate aftermath of breakout of violence in Iraq due to speculations. However, at the moment the prices are stabilizing.
India has been unlucky
in Energy Investments overseas largely because it has invested majorly in a
highly volatile Middle East. ONGC Videsh's holdings in Block VIII of Iraq may be under
threat. But as per some experts this conflict is unlikely to directly threaten the
major southern oilfields, but it might cause delays in oilfield development.
As per Petroleum Ministry,
the Crude oil supplies to India come from Iraq's Basra oilfields which are far
from the conflict zone in the northeast of the country and so the supplies have
not been disrupted yet. Iraq is India's second largest crude oil supplier after Saudi Arabia, supplying about 25 million
tonnes (MT) in 2013-14, to meet over 13 per cent of India's oil needs. So we
will be at a great loss if the situation in Iraq worsens.
As per the Indian Petroleum official
the disturbed situation in Iraq may not affect India's oil imports at the
moment. But just in case, the ministry has asked OMCs to prepare a contingency
plan to meet any supply disruptions from Iraq, by exploring other suppliers in
the Middle East and elsewhere.
India for its future energy security should
explore more options for uninterrupted supply of Oil and Gas by shifting its
Energy Investment from Middle Eastern countries to other areas which are more
stable socially & political.
All said; we hope that the situation in Iraq
would improve for a better future for the people of that nation and for
humanity.
By
InfralineEnergy Oil & Gas Knowledgebase Team
Disclaimer
The views expressed here are solely those of the author
in his private capacity and do not in any way represent the views of the Infraline
Technologies (India) Pvt. Ltd. (organization). The organization is not liable
for any use that may be made of the information contained therein and any
direct/indirect consequences resulting therefrom
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