Singapore—The S&P Global Platts India CEO Series is a compilation of exclusive interviews with the leaders of top oil and gas companies in India. Get insights on how they are planning their growth roadmap at a time when energy transition is changing the industry's landscape, how companies are finding their way through the COVID-19 pandemic, as well as solutions needed to meet the country's insatiable appetite for energy.
With every crisis comes an opportunity. The chief of Shell in India believes the economic rebound following the coronavirus pandemic will offer a window to accelerate the company's push into the clean fuels space and help support one of Asia's leading energy consuming countries to "recover cleaner and faster."
Nitin Prasad, chairman of Shell Companies in India, told S&P Global Platts the pandemic had neither altered the country's long-term robust energy fundamentals nor Shell's commitment to expand its footprint.
"Perhaps a post-pandemic economic recovery anchored around sustainability and climate action could well be the prudent way," he said in an exclusive interview to Platts. "We also believe that there are opportunities to accelerate our activities to help the country 'recover cleaner and faster,' which we are actively encouraging the government to consider."
He said that the pandemic had encouraged Shell to shift the role of its fuel stations -- converting them into safe havens by ensuring proper sanitization, social distancing and contactless transactions across India.
"My vision for India is one with a clear focus on decarbonization and climate action, but in a fair and equitable way. India has an opportunity to adopt lower-carbon sources of energy to deliver economic growth, energy self-reliance and improved standards of living," he added.
Prasad said India was progressively increasing the share of renewable in the energy mix, while striving to reduce its energy import dependence.
"Our approach is to provide our customers with a range of cleaner energy products and services they want and need, giving the flexibility of choice to the end consumers," he said, adding that Shell in India was looking at expanding its business footprint in biofuels and renewables, such as solar and wind.
Changing landscapeHighlighting some key points from a study that Shell in India jointly conducted along with The Energy and Resources Institute, Prasad highlighted how the energy system would evolve as energy demand in India is set to almost double by 2050.
He said that in order to transition the energy system into a net-zero future, the share of electricity needs to grow to more than 50% of energy use, while there should be rapid electrification of energy services, primarily from renewables.
Fuels, as molecules -- such as crude oil, natural gas, coal, hydrogen, biofuels and biomass -- would meet the remaining energy consumption basket. In addition, liquid biofuels need to surpass petroleum products by 2040 in fueling industry and transport, including hard-to-abate sectors, such as aviation.
"We believe that hydrogen will play a key role in the net-zero emissions journey of India's energy system," Prasad said, adding that Shell was looking forward to support India's National Hydrogen Energy Mission.
While the technologies to deliver a green hydrogen economy exist according to Prasad, scaled deployment into a viable operating network is yet to take place anywhere in the world, and India could very well take the lead.
"Shell would be happy to collaborate with like-minded partners for demonstration of pilot projects that could eventually be expanded to build a country-wide capacity for hydrogen," Prasad said.
He added that an integrated and consistent approach to the energy transition requires an integrated energy policy and carbon pricing policy mechanism to reduce emissions and direct investment towards lower-carbon technologies.
New pockets of demandPrasad said India's gas utilization would not only continue to grow on the back of the government's ambition to raise its share in the energy mix to 15% from the current level of less than 7%, but also due to diversification into areas beyond the traditional sectors, such as power and fertilizers.
The new sources of demand would be mobility solutions, industrial clusters and city gas distribution networks, or CGD, he added.
India gas demand
Shell recently inaugurated a truck loading facility at its LNG terminal in Hazira, Gujarat, Prasad said, adding that it would provide Shell an opportunity to meet future demand for cleaner transportation and accelerate switching away from fuels like furnace oil and light diesel oil in the industrial segment.
"While gas customers in industrial clusters are expected to be the primary beneficiaries, small-scale LNG will also support the market seeding and development of the recently licensed CGD geographical areas, not yet connected by pipelines," Prasad said.
Over the past few years the Indian government has announced a series of initiatives, such as introducing a unified pipeline tariff, expansion of pipeline and CGD networks, as well as open access to CGD networks.
"The implementation of all these policies and regulatory initiatives is critical for the development of gas markets in the country and will help in enabling customers to procure gas at the most competitive rates," Prasad said.
Finally, natural gas needs to be brought under the ambit of the goods and services tax, which will enhance its competitiveness.
"Needless to say, to truly deliver the aspired 15% vision as outlined by the prime minister, India cannot piecemeal the solutions and needs to deliver all of the policy changes in an integrated and consistent manner bringing clarity and certainty for all players in the gas industry including the key demand sectors," Prasad said.
As the spread of COVID-19 across India continues to intensify, local communities are critically in need of resources and support. S&P Global has announced USD $1M in grants from the S&P Global Foundation to directly support India relief efforts, which will be allocated to Médecins Sans Frontières (MSF), Direct Relief, Nirmaan Organization and Project HOPE. These funds will support their efforts to strengthen healthcare centers and emergency response, as well as distribute critically needed oxygen supplies across India. Click here to learn more about the S&P Global Foundation.
