Amid Middle East Tensions, Vedanta’s Anil Agarwal Calls India ‘The Next Big Opportunity’ In Oil and Gas

The Israel-Iran conflict has driven the focus towards the possible blockade in the Strait of Hormuz, a waterway that connects the Persian Gulf to the Gulf of Oman and from where a third of the world's liquefied natural gas and nearly 25 per cent of total global oil consumption passes through.

The chances of an indirect revolt to the U.S involvement in this West Asia conflict by choking the Strait of Hormuz would be a threat to India given it reportedly imports nearly 85 per cent of its crude oil requirements, and majority of it flows via Strait of Hormuz.

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However, Vedanta's Anil Agarwal eyes opportunity in this adverse situation. He said," We can change this permanently. Let us put all our energies into raising domestic production. We have tremendous reserves. We have best-in-the-world policies. Government has done a lot of work. Allowing more and more self-certification of clearances can lend the much-required speed."

"India is the next big opportunity in oil and gas," he mentioned.

To mitigate the adverse effects of this risk, India also relies on Strategic Petroleum Reserves (SPR) which essentially are large underground storage units that store crude oil and are meant to be used can be used during emergencies.

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"For India, which imports around 90 per cent of its requirements, including 40 per cent from the Middle Eastern countries, this becomes a challenge," Anil Agarwal said.  

As of now, India follows two strategies to protect itself from supply disruptions: diversification and financial hedging.

India imports oil from many countries, not just from the Middle East. A big share of recent imports has come from Russia, even after the Ukraine conflict began.

“A key positive is that India has diversified its import sources. We now import nearly half of our oil from Russia, and the supply from Russia continues even when geopolitical conditions are tense. Besides Russia, we also source crude oil from the U.S., Iraq, Saudi Arabia, and other countries. These supply lines can continue even if there is a disruption in the Strait of Hormuz.