India’s Oil and Gas Companies Scramble to Decode the Electric Vehicle Threat

Indian policymaking over the strong support being given for the development of Electric Vehicle and its associated infrastructure is worrying the Indian oil and gas industry. India is one of the largest markets for the oil and gas industry and very important as it is one of the few markets which is growing. Besides foreign companies such as Shell and BP, there are a number of large oil and gas companies in India’s private and government sectors.

These companies have hundreds of billions of dollars in assets and are also investing in new fields and infrastructure, given the strong long term growth projected for the Indian economy. However, India’s policy to push EVs means that these companies could be faced with massive stranded assets unless there is a cohesive policy for all sectors in the transportation and the power sectors. The Indian government has in recent times strongly pushed the gas sector after bidding out a large number of cities for developing natural gas pipelines and stations. India wants to increase the share of natural gas to 15% of its energy mix by 2030 from a low percentage currently.

Also, read Key Questions about the Indian EV Ecosystem that remain Unanswered 

However, all these investments would come to zero if India’s EV growth trajectory comes to fruition. On one hand, India wants to make all vehicles fully electric by 2030, while on the other hand, it wants to aggressively expand CNG gas stations and pipeline gas networks all over the country. Both of these objectives cannot be met at the same time. The oil and gas industry is already facing upheaval along with the auto industry as it moves to BS-VI standards from next year, skipping BS-V. While this will result in a sharp reduction in pollution, it will also mean increased costs throughout the supply chain from auto manufacturers to oil refineries. The oil and gas industry wants gas to coexist along with EVs and has also supported LNG powered trucks which could be a good alternative to electric trucks.

My two pence is that over the long term, oil and gas will have no play in the transportation matrix as electric gradually takes over two-wheelers, then three-wheelers, four-wheelers, trucks, then planes and ships. Only in the intermediate-term will gas have a play as diesel recedes due to its polluting characteristics.