Blitz India Business
NEW DELHI: India rerouted its crude in a year: 40 suppliers, 70 per cent of barrels arriving outside the Strait of Hormuz. Gas has proved stubborner — and the structural reason is not diplomacy. It is that a molecule of gas is far more expensive to move than a barrel of oil.
The distinction is worth setting out precisely, because it governs how India’s energy security will develop over the next decade. Crude oil is a global commodity carried in ordinary tankers to ordinary ports. If one supplier becomes unavailable, a refiner can buy from another, adjust for grade, and take delivery within weeks — which is exactly what India did, expanding to roughly 40 supplier countries and shifting about 70 per cent of its crude imports outside the Strait of Hormuz, on the Petroleum Ministry’s own account. Natural gas cannot do this. To travel by sea it must be chilled to liquid at a purpose-built liquefaction terminal, carried in a specialised cryogenic vessel, and returned to gas at a purpose-built regasification terminal at the other end. Each of those three assets costs billions and takes years, and each is typically financed against a long-term contract signed before construction begins. That is why India’s gas companies procuring cargoes from new sources counted as news this year, while crude cargoes from new sources did not.
The last mile of the energy question: a kitchen cylinder is the point where a global gas market becomes a household budget.
Oil travels in any ship to any port. Gas travels only between two pieces of infrastructure that had to be built for each other. That is the whole difference.
At a Glance
• India’s crude suppliers: about 40 countries
• Crude arriving outside the Strait of Hormuz: about 70 per cent
• Gas supply: LNG cargoes procured from new sources during the crisis
• Why gas is harder: liquefaction, cryogenic shipping and regasification are all purpose-built
• Typical structure: long-term contracts signed before terminals are financed
• Fitch’s framing: India is a large net energy importer; that is the residual risk on the rating
• Crude import bill, April–June: about $49.8 billion, up 61.2 per cent
• Domestic levers: ethanol blending, electrification of transport, efficiency, renewables
• The variable India owns: the quantity consumed, not the price paid
What follows from that engineering fact is a policy sequence rather than a single decision. The first element is optionality in contracts — destination flexibility, shorter tenors and a portfolio that mixes term and spot, so that a buyer is not locked to one seller for twenty years at a formula written in a different decade. The second is regasification capacity in more than one place, because a country with terminals on both coasts can take a cargo wherever it can get one; capacity that sits idle in a calm year is the price of being able to buy in a difficult one, and that is a cost worth naming honestly rather than treating as inefficiency. The third is the domestic pipeline grid, which is what converts an imported cargo into gas a factory in central India can actually burn. The fourth is domestic production and, over a longer horizon, the substitution of gas demand itself — electrification of cooking and industrial heat, and the renewable build-out that displaces gas from power generation.
The encouraging part is that each of those four is already national policy in outline, and the crisis year has supplied something a planning document cannot: evidence about which parts of the system bend and which parts break. India has now demonstrated, under genuine stress, that it can re-source liquid fuel at national scale without a shortage — a capability that did not exist at this scale before and that ought to be recognised as an achievement of the ministries and the oil marketing companies that executed it. The gas system was tested in the same window and held, with cargoes secured from new sources, but it held with less slack. The constructive conclusion is not that one system is good and the other bad. It is that supply diversification has now been proved as a tool and has a known limit — it protects availability, never price — and that the next decade of energy security will be bought with terminals, pipelines, contract structures and demand substitution rather than with additional supplier relationships. Those are capital-expenditure decisions with fifteen-year payback periods, which is precisely why they are best taken in a year when the reason for them is still fresh.