India Energy Market Opportunities for the US

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(Brig (retd) GB Reddi)

India energy market that covers three sectors to include Crude Oil, Shale Gas and Civilian Nuclear Reactors and nuclear fuel supplies, offers tremendous opportunity for the US to exploit.

The 2019 edition of BP’s Energy Outlook projected India’s energy consumption rising by 156% between 2017 and 2040. It predicts that the country’s energy mix will evolve slowly to 2040, with fossil fuels accounting for 79% of demand in 2040, down from 92% in 2017.

In the past, India was mostly importing oil and gas from the West Asian countries: Saudi Arabia, Iraq, Iran, UAE and Kuwait. And, for civilian nuclear reactors initially from Canada and later Russia.

India provisionally imported 91.24 million tons of crude oil in April-August 2019, down from 93.91 million tons a year back.

Data of suppliers of crude oil include: Iraq from during April to August – 21.24 million tons; Saudi Arabia from during April to August 17.7 million tons; and Nigeria, UAE, Mexico and Venezuela.

India stopped importing crude oil from Iran following the reimposition of economic sanctions in May by the US – just 2 million tons in 2018-2019 from 13.3 million tons in the previous year.

Supplies from the US jumped more than four-fold to 6.4 million tons in the 2018-19 fiscal year. In 2017-18, the first year of imports from the US, the supplies were at 1.4 million tones.

The US has the largest known deposits of oil shale in the world and holds an estimated 2.175 trillion barrels (345.8 km3) of potentially recoverable oil. Its oil output from seven major shale formations is expected to rise about 29,000 barrels per day (bpd) in January to a record 9.14 million bpd. Thus, Indian market offers “Great” opportunity for the US to export Crude Oil.

Next, the estimated technically recoverable shale gas reserve in the US was 827 trillion cubic feet in 2011.   But, in 2012 the EIA lowered its estimates to 482 tcf. Yet, for the US, it is yet another opportunity for export of gas to India.

Even in the Civilian Nuclear field also, the U.S.-India Civil Nuclear Agreement offered India to carry out trade of nuclear fuel and technologies with the US companies to significantly enhance its power generation capacity.

Let me highlight the nuclear technology developments in very broad outline. Generation 1 and II reactors of 1950-1960s are almost obsolescent. Generation III (and 3+) is the Advanced Reactors today in operation or under construction or ready to be ordered.

Vastly improved simpler designs of Generation IV advanced reactors are now being developed internationally, which reduce capital cost, more fuel efficient with significant advances in sustainability, safety, reliability, proliferation resistant and physical protection and are inherently safer: Gas-cooled fast reactor system, (GFR); molten salt reactor system, (MSR); sodium liquid metal-cooled reactor system (SFR); lead alloy-cooled fast reactor system, (LFR); supercritical water-cooled reactor system, (SCWR) and very high temperature reactor system (VHTR).

In October 2010, India drew up a plan to reach a nuclear power capacity of 63 GW in 2032. The 63 GW expected by 2032 will be achieved by setting up 16 indigenous Pressurized Heavy Water Reactors (PHWR), of which ten is to be based on reprocessed uranium. Out of the 63 GW, about 40 GW will be generated through the imported Light Water Reactors (LWR), made possible after the NSG waiver.

As of March 2018, India has 22 nuclear reactors in operation in 7 nuclear power plants, with a total installed capacity of 6,780 MW. Due to low capacity factors only supplied to 3.22% of Indian electricity in 2017. However, as on date the capacity cannot exceed 7 GW, as the 2018 operating capacity is 6.2 GW and only one more reactor is expected on line before 2020.

First pair of indigenously designed 700 MW PHWRs at Kakrapar in Gujarat, second pair at Rawabahata in Rajasthan and second pair of LWRs at Kudankulam (2×1000 MW) are under various stages of construction. 10 PHWRs are planned.

In Stage 2, the Fast Breeder Reactor technology developed by IGCAR – 500 MWe Prototype Fast Breeder Reactor (FBR) based on liquid sodium cooled, pool type reactor using mixed oxide of uranium and plutonium as fuel is coming up at Kalpakkam.

In Stage 3, nuclear power employing closed fuel cycle will use Thorium, widely viewed as the “fuel of the future’. BARC has been developing a 300 MWe Advanced Heavy Water Reactor (AHWR) fuelled by Thorium and using light water as coolant and heavy water as moderator.

Russia has an ongoing agreement of 1988 vintage with India regarding establishing of two VVER 1000 MW reactors (water-cooled water-moderated light water power reactors) at Kudankulam in Tamil Nadu. A 2008 agreement catered for provision of an additional four third generation VVER-1200 reactors of capacity 1170 MW each. In October 2018, India and Russia signed an agreement to construct 6 nuclear reactors.

India enacted the 2010 Nuclear Liability Act that stipulates that nuclear suppliers, contractors and operators must bear financial responsibility in case of an accident.

Following the 2011 Fukushima nuclear disaster there have been numerous anti-nuclear protests at proposed nuclear power plant sites – Jaitapur Nuclear Power Project in Maharashtra and the Kudankulam Nuclear Power Plant in Tamil Nadu, and a proposed large nuclear power plant near Haripur was refused permission by the Government of West Bengal.

After the Nuclear Suppliers Group agreed to allow nuclear exports to India, the French President Nicolas Sarkozy signed framework agreements for the setting up two third-generation EPR reactors of 1650 MW each at Jaitapur, Maharashtra by the French company Areva. The deal caters for the first set of two of six planned reactors and the supply of nuclear fuel for 25 years.

The nuclear agreement with USA led to India issuing a Letter of Intent for 10,000 MW from the USA – 6 reactors of 1650 MW each. However, the 2010 Nuclear Liability Act has deterred foreign players like General Electric and Westinghouse Electric, a US-based unit of Toshiba, to establish reactors in India.

Thus, even in the civilian nuclear reactors field, there are tremendous opportunities available for the US to offer Advanced Generation III and Generation IV reactors to India.

In sum, the opportunities for the US to enter into “Great Deals” is available in the Energy Sectors what with India’s energy market demand growing exponentially in decades ahead.

 

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