Shift of energy consumption from non-renewable fossil sources to renewable and green sources like wind and solar underscore the question of viability and sustainability of India’s investment move in hydrocarbon sector in African continent
Positives of such move:
1. It provides African exporters with a foreign market
2. Such trade and investment by India could support Africa’s economic development
3. It can meet India’s future petroleum and energy needs
4. African continent will provide alternative platform for oil import apart from west Asia
5. It will also provide favourable condition for Indian giant companies like ONGC and IOCL to expand their business activity
6. India has expertise in field of oil refining and recent capacity expansion has been done at Paradeep plant. Along with this move availability of crude oil will help in better export of petroleum product in international market
Demerit of this move:
In short term this move seems to be viable and cost effective but in long there are vulnerability of sustenance because
1. The accelerating rate of technological advances and cost-competitiveness of alternative renewable energy options;
2. The increasing number of countries and cities adopting a “carbon tax” and other regulations and restrictions on carbon emissions;
3. “Diminishing returns” problem that is afflicting fossil fuel production.
4. Stricter provision and penalty of carbon emission in new environmental law
5. Problem of global warming attribute to reduction in fossil fuel consumption
6. Continuous diminishing value of energy return on energy investment (EROEI) which make exploration of oil less cost competitive
CONCLUSION:In view of above point investment in fossil resource exploration seems to be nonviable, unsustainable, and loss making move. India should explore other dimension such as IT, Traditional Medicine, Wind and Solar energy sector, Ayurveda and Yoga etc for foreign investment.
