Recent policy announcements by incoming US President Donald Trump signal a significant shift in the US energy landscape, with a focus on increasing oil and gas production. These moves, aimed at reducing regulatory burdens and promoting energy independence, offer valuable lessons for India, which faces high import dependency amid geopolitical turmoil.

Trump’s establishment of the National Energy Council, led by North Dakota Governor Doug Burgum, aims to coordinate federal energy-related agencies, reduce regulations, encourage private investments, and promote innovation. Additionally, efforts to streamline and accelerate the approval process for drilling permits on federal and Indigenous lands are underway, reducing bureaucratic delays to facilitate quicker project initiation. The administration’s plans to dismantle regulations that limit fossil fuel production, including those targeting methane emissions, further underscore its commitment to boost the sector. The revival of the Keystone XL Pipeline project is another significant move, aimed at enhancing oil transportation infrastructure from Canada to the US. 

Moreover, Trump’s executive order to open federally held waters in the Atlantic and Arctic for oil and gas exploration, along with the relaxation of rules limiting methane emissions from oil and gas operations, highlights a comprehensive approach to expanding fossil fuel extraction. These measures are poised to significantly boost the U.S. oil and gas sector, making it more competitive and self-reliant.

India, faced with a high import bill amidst a strengthening dollar, can draw valuable insights from these policies to boost domestic production. Despite importing approximately 90% of its oil, 70% of India’s oilfields remain unexplored. This heavy reliance on imports exposes the country to geopolitical shocks and price volatility. Against this backdrop, India’s underexplored hydrocarbon basins allow policy reforms more lucrative for global players to harness the full potential of oil and exploration to increase domestic production.

Streamlining regulatory processes, like the US, would expedite the approval process for drilling permits, reducing delays and encouraging quicker project initiation. India needs a balanced approach that allows for increased exploration and production activities while keeping the decarbonisation goals in sight. As the Hon’ble Minister of Petroleum and Natural Gas, Shri Hardeep Singh Puri remarked earlier this year, E&P in India holds investment opportunities worth 100 Bn by 2030. By reducing regulatory hurdles, India can attract more private investments in the oil and gas sector, promoting innovation and technological advancements. With a significant portion of its oilfields unexplored, India must prioritise exploration activities, facilitated by policies that incentivise exploration and production.

“India currently imports almost 90% of its crude oil needs and this dependency is expected to increase with an expected steady rise in the country’s fuel demand. A rise in oil production in the US and other countries will increase supply in the global market and might benefit India in the short term. However, this might not be a viable and sustainable solution for the country in the longer run. With only 10% of the country’s sedimentary basin under exploration, it is imperative for India to fast-track upstream investment to exploit the remaining potential for its energy security,” said Vandana Hari, Founder, Vanda Insights

India has started taking steps in the right direction to unlock its hydrocarbon potential. The scrapping of SAED (Special Additional Excise Duty) imposed in 2022, earlier this month was a welcome step. The recent passage of the Oilfields Act in the Rajya Sabha marks an important policy milestone for India. This act is vital for strengthening India’s energy security and safeguarding it from geopolitical shocks. Key provisions of the act include an enhanced regulatory framework, streamlining processes, providing financial and regulatory incentives for exploring new oilfields, and implementing advanced monitoring and mitigation measures to protect the environment. By adopting these provisions, India can bolster its energy security, reduce its dependence on imports, and ensure a stable and sustainable energy future.

The direction of announcements by the incoming US Administration offers cues for India to reform its oil and gas sector. The US, which was a net importer of oil until just a few years ago, has turned the corner to become a net exporter with the right policy measures on shale. By streamlining regulatory processes, reducing environmental burdens, and encouraging private investment, India too can unlock its vast untapped potential. It is time for decisive action to secure India’s energy future.