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As other world regions look to diversify their power sources, India's biggest energy flaw may be its transmission and distribution network. Estimates put average annual electricity losses at 27%; losing that much power off the grid costs India billions of dollars a year, and ultimately inhibits the country from moving forward in its energy development. Power outages and blackouts are frequent, and 400 million people, about one-third of the population, live without electricity.
The world of renewables is pretty small in India. The country accounted for just 4.7% of consumed renewable energy in 2011, its consumption largely comprised of biofuels and wind.
The government plans to increase India's renewable power generation, specifically hydro power, which currently provides 12% of the country's electricity. But as the EIA notes, the country's transmission and distribution capabilities are limited, making renewable expansion that much more of a challenge.
India has 20 power plants that generate about 4.4 GW of electricity. The country has seven more plants currently under construction that will more than double that output. The country's goal is to generate 50% of its electricity from nuclear power by 2050. Fossil fuels currently provide 80% of the country's electricity.
India produced 622 million short tons of coal in 2010, but, similar to essentially all of India's energy sources, the country consumes more coal than it produces. India consumed over 721 million short tons in 2010. Both of India's top coal suppliers, Coal India and Tata Power, regularly import millions of tons of coal to cover the shortfall.
And yet, the country has had to deal with power deficits as high as 4.3 GW because of coal shortages. In fact, there is one going on right now! Some analysts expect it to be double what it was two years ago. As a result, Indian coal companies are scrambling to secure coal assets abroad.
India's oil reserves stand at about 5.7 billion barrels. In 2010, India produced 750,000 barrels of crude per day, but consumed 3.2 million bpd, once again relying heavily on imports to make up the difference. It was the world's fifth largest importer of oil in 2010, with the majority of supply coming from Saudi Arabia and Iran.
In an effort to ramp up production, the Indian government has attempted to deregulate the oil industry and encourage foreign investment. Nevertheless, the dominant player is the state-owned Oil and Natural Gas Corp., which was responsible for three-quarters of India's oil production in 2010.
Also of note: At 4 million barrels of crude per day, the country has the fifth largest refining capacity in the world.
Estimates for India's natural gas reserves range from 38 trillion cubic feet to 44 TCF. The EIA estimates that the country produced 1.8 TCF in 2010, but consumed around 2.3 TCF. India made up the difference with 429 BCF in imports that year. In fact, the country has been a net importer of natural gas since 2004. The majority of the country's LNG comes from Qatar into two LNG import terminals. Two more terminals are scheduled to come online this year.
Unlike many governments worldwide that are tightening restrictions on exploration and production, India is paring back regulation to encourage foreign investment. BP (NYSE: BP ) signed up, but so far that investment hasn't been worth the price tag. India's domestic assets are not the most sought-after to begin with.
Companies that rely on India as an export market also need to be very careful. Though the country looks poised to remain completely dependent on imports for the near future, any economic collapse will drive down the demand for foreign energy.
Additionally, the country's emphasis on building a nuclear power program, and possible electricity imports from Iran, may contribute to weaker demand for imported energy.
Peabody Energy (NYSE: BTU )
Peabody coal fuels 2% of the world's electricity. India was the fastest-growing coal importer in 2011, and the two seemed to be destined for each other, though perhaps they will never be as close as India might like: Coal India was in talks to establish a joint venture at a Peabody mine in Australia last year, but negotiations fell through.
Total (NYSE: TOT )
Total has a 26% stake in the Hazira regasification LNG terminal. The import facility has a capacity of 177 billion cubic feet of natural gas per year. Total also agreed to provide 26% of the LNG for Hazira.
Reliance is part of parent conglomerate Reliance Group, and is India's largest private company. Most of the company's business is focused on domestic offshore blocks, but in recent years, the company has made more of an effort to build up an international presence. It is currently working with three companies in two U.S. shale plays. It is partnered with Chevron (NYSE: CVX ) and Carrizo Oil & Gas (Nasdaq: CRZO ) on two separate projects in the Marcellus shale, and Pioneer Natural Resources in the Eagle Ford shale.
Oil and Natural Gas Corp
As stated earlier, ONGC is the dominant player on the Indian oil and gas scene. How much longer there will be an Indian oil and gas scene is becoming an increasingly pertinent question. Oil production has been declining for years, and the company has not brought any new fields on line. In May, the company's production declined 4.1% on the year to 452,300 barrels per day.
Last year, BP coughed up $7 billion for a 30% stake in several of Reliance Industries' offshore natural gas blocks. Over one year later, its partner Niko Resources announced the reserves at block D6 -- the only producing block -- are probably two-thirds smaller than originally anticipated.
Suggestions for further reading:
- Is India the Next Hot Spot for LNG?
- Here's What the Death of Coal Looks Like
- Is India the Next Russia of Natural Gas?
Get more region-specific analysis on energy investing using the Fool's world map.