The Well Runs Dry India and China’s Evolving Strategic Difficulties in Obtaining Fossil Fuels Jack Magill

OVERVIEW China and India are the world’s two most populous nations, accounting for more than 2.5 Billion people and approximately 36% of the entire Earth. By 2030, the population of India is projected to grow by 24% to 1.6 Billion, with China projected to grow to 1.4 Billion. Coupled with the massive populations and growth of these two nations, the last several decades have seen tremendous economic

and industrial growth. Despite these two nations holding the two largest oil reserves in the Asia-Pacific Region, the energy consumption has been drastically outgrowing the production, such that both nations have a growing energy deficit. It is clear that the short-term industrial and economic growth necessitates continued importation of fossil fuels for both nations, considering that despite having large hydroelectric and wind-power producing facilities, India and China rely upon fossil fuels for more than 70% of their energy consumption. However, with large growth projections and insufficient domestic reserves to support the growth, both India and China need to secure means by which to obtain fossil fuels, which is both difficult and essential to the future success of their economies. RESERVES Being significantly large countries, both India and China have relatively large fossil fuel reserves. India has the 5th largest coal deposits on Earth, causing India to utilize it for 40% of its consumption. However,

it ranks 19th in oil reserves. Similarly, China ranks 12th in oil reserves and 3rd in coal reserves. Both nations levels of production are leveling off to some degree, with the rate of production increase being far superseded by the growth rate of consumption and importation. INDIA Although it only accounts for 30% of its energy usage, India imports 80% of the oil it consumes. This makes India and the value of the Indian Rupee (INR) relatively dependent upon oil prices, which they incidentally have very little control over. Consequently, low oil prices are beneficial to India whilst high prices are harmful. This had led India to expand its renewable energy sources, making it 5th in wind power generation, 15th in nuclear power generation, and 6th in hydroelectric power. Still, state-owned Oil and Natural Gas Corporation has been persistently searching specifically Northern India for hidden oil reserves underground. The main challenge for India is to decrease its dependence on foreign oil, specifically from OPEC countries. India also intends to become part of the Iran-Pakistan Oil Pipeline and extend it to Delhi as a direct source of oil from Iran and the Middle East. With such an increasing demand, it will be difficult for India to be able to continue importing copious amounts of fossil fuels without significantly harming the value of their currency or economy.

CHINA China is heavily reliant upon fossil fuels, which account for more than 90% of its energy consumption. China is the largest importer of fossil fuels nationwide. China’s main interest is in securing defensive oil reserves, which began in 2004, a program that involves creating massive oil reserves that would theoretically fuel China for 90 days. Also, China has begun to drill in the South China

Sea. However, it is clear that regardless of their success in such endeavors, importing fossil fuels is inevitable for such an industrial and expansionary country. In fact, China had shown increased interest recently in extracting gas from shale deposits, which requires the use of hydraulic fracturing, commonly known as ‘fracking’. There has been some controversy about the dangers of hydraulic fracturing which essentially uses water/chemicals to crack the shale deep underground and release the embedded natural gas, as it could possibly trigger earthquakes or other seismic activity. However, this may be a solution for China to reduce its dependence upon the traditional oil producing powers and prevent it from future difficulties. OVERVIEW India and China are two of the most energy hungry states in the world, and their demands and consumption are expected to grow continually throughout the 21st century. They are both currently heavily and increasingly dependent upon importing their fossil fuels, a prospect that they would both prefer to avoid. With more than 70% of their consumption derived from fossil fuels, both nations are investing heavily in renewable sources of energy, specifically hydroelectric, wind, and nuclear power. Despite their efforts, they will still us a significantly larger amount of fossil fuels, a resource that even with relatively large reserves will never be able to be produced domestically to a sufficient level. India is continuing to search for hidden reserves in the rural areas of Northern India and China is exploring hydraulic fracturing to produce natural gas. Regardless of their success in these ventures, fossil fuels will continue to flow into these nations and this reliance may have significant consequences in the future.