West Asia War: Fracturing world order raises energy risks for India, ONGC chief warns

New Delhi: The global order is set to become even more fractured, with rising risks for India’s energy supplies, Oil and Natural Gas Corporation chairman Arun Singh has warned, adding that the country’s long-held comfort, anchored in its proximity to the resource-rich Middle East, has been upended.

To guard against future disruptions, India will need to build large oil and gas storage capacities, regardless of the cost involved, and step up domestic output as much as possible, Singh said at a conference on energy security. India is already planning something substantial on strategic reserves, he later added, without sharing details.

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Singh also flagged the diminishing utility of investing in overseas oil and gas fields, as host countries increasingly offer financial returns instead of equity oil. “No country wants you to take away its oil. It wants you to take away its money, not oil,” he said.

India and others have historically invested in overseas assets to secure a share of production as part of their energy security strategy.

Recent developments have overturned earlier assumptions of deepening globalisation and a more stable global order, Singh said. “And if the world gets more and more deglobalised, we have more and more problems,” he said.

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The era of a single dominant superpower is drawing to a close, and the world is likely to be shaped by four to five major powers in the coming decades, with significant implications, Singh said. “If there is one dominant power in the world, the society remains very orderly, but if you have multiple dominant powers, there is a war for supremacy.”

The belief that proximity to the oil- and gas-rich Middle East gives India a structural advantage is now being tested, Singh said. “The thinking that the Middle East is nearest to us and therefore all their resources are with us…that assumption should be taken with a pinch of salt.”

The Iran war is likely to weigh on future investments in the Gulf region, he said.

“Who will invest in the above-ground facilities (in the Middle East)… because you are a sitting duck,” Singh said, pointing to the rising vulnerability of oil and gas infrastructure, which can become easy targets and quickly turn dysfunctional during attacks, putting billions of dollars of investments at risk.