. India stands to gain because oil producers need to generate revenues necessary to maintain the investment levels to ensure steady oil supply. India’s relations with the largest oil producers, notably the Persian Gulf monarchies and Russia, also increasingly revolve around them ploughing their earnings into India’s oil and gas sector. India’s ambitious plans for energy transition partly depend on the financial status of the largest OPEC members — a partnership OPEC acknowledged at the recent India-OPEC institutional dialogue.
Despite OPEC’s earlier production cuts and its projected increases, global prices have remained in the $40 to $50 a barrel range. Thanks to record foreign exchange reserves, India today can absorb somewhat higher global oil prices, and shift focus on attracting the massive investments needed for its natural gas and renewable energy plans. Implicit is the recognition oil is rapidly ceasing to be a strategic commodity. The real challenge for India’s energy diplomacy is preparing the ground for a post-oil future in a manner that ensures oil markets abet rather than disrupt this larger transition.
Challenges of Global Energy Transition
Challenge For Oil Producing Countries
The global energy transition represents a challenge for oil- and gas-producing countries, and in particular for those with a less diversified economy more dependent on oil revenues. If the global energy transition were to take place more quickly than expected, and if these countries were to remain unprepared, the consequences could be serious from both the socio-economic and geopolitical points of view.
Threats Emanating From Energy Integration
The spread of renewable energies will increase electrification and stimulate cross-border trade in electricity. For example, India’s call to establish “one sun one world one grid system (OSOWOG)”. The digitisation of electricity grids presents security risks, as terrorist groups or hostile countries could seek to either enter the systems to extrapolate information, or to disrupt them to cause economic and social damages.