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The Well Runs Dry

India and Chinas Evolving Strategic Difficulties in Obtaining Fossil Fuels


Jack Magill

OVERVIEW
China and India are the
worlds 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 5
th
largest coal
deposits on Earth,
causing India to utilize
it for 40% of its
consumption. However,
it ranks 19
th
in oil reserves. Similarly, China ranks 12
th
in oil reserves and 3
rd
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of production increase being far superseded by the growth rate of consumption and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 5
th
in wind
power generation, 15
th
in nuclear
power generation, and 6
th
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. Chinas 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 21
st
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.

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