Hormuz Crisis and Energy Security

The Hindu, Page 6, Editorial - The case for building India’s coal chemistry capability - GS-3-Economy

Why in News: The Strait of Hormuz crisis highlighted India's energy security challenges and renewed focus on coal gasification and Dimethyl Ether (DME) as alternatives to LPG imports.

India's Response to the Strait of Hormuz Crisis

• India managed the energy shock through diplomacy, diversification, and fiscal measures.
• Indian refineries demonstrated exceptional technical flexibility in adapting to crude supply disruptions.
• Indigenous scientific capability and technological self-reliance emerged as key strengths.
• The crisis reaffirmed the importance of research and development, process innovation, and workforce training.
• India has not yet reduced its underlying dependence on imported energy.

Refinery Flexibility

• India's supplier base for crude has nearly tripled over the past two decades.
• Indian refineries developed the capability to process crude with different density, sulphur content, and viscosity.
• During the Strait of Hormuz disruption, refineries processed crude from the Americas, Atlantic Basin, West Africa, Russia, and West Asia.
• Non-Hormuz sourcing increased from 55% to 70% of India's crude intake within weeks.
• This capability was built through sustained investment in indigenous R&D, metallurgical advances, and process engineering.

LPG Supply Management

• India's LPG import infrastructure had roughly doubled over the preceding decade.
• Under the LPG Control Order, refineries were directed to maximise LPG yields. Domestic LPG production increased from 35 Thousand Metric Tonnes (TMT) per day to 54 TMT per day within five days. Engineers achieved this by adjusting fractionation and cracking units.
• The response combined technical capability with disciplined demand management.

Coal Gasification and DME

• Dimethyl Ether (DME) is a clean-burning gas that can be blended with LPG.
• DME can be produced through coal gasification.
• India possesses some of the world's largest coal reserves.
• The Bureau of Indian Standards (BIS) has approved blending up to 20% DME with LPG. A 20% DME blend could displace about 6.3 million tonnes of LPG imports annually. It could save nearly ₹34,000 crore in foreign exchange every year.

Government Initiatives

• Scientists at CSIR-National Chemical Laboratory (NCL) developed an indigenous technology for converting methanol into DME.
• The Centre for High Technology approved scaling up the indigenous pilot technology.
• The Union Cabinet approved a scheme to promote surface coal and lignite gasification. The scheme targets 100 million tonnes of coal gasification annually by 2030. It provides incentives of up to 20% of plant and machinery costs. It extends coal linkage tenure to 30 years.

Challenges

• Indian coal has a higher ash content than the coal used in China's coal-to-chemicals industry.
• Domestic gasification capacity remains below the targeted level.
• Closing the gap requires industrial discipline and investment.
• The article states that the remaining challenge is execution, not policy intent.

Global Energy Security

• Qatar halted LNG production after a drone strike. Qatar supplies about half of India’s LNG imports. Refineries in Saudi Arabia and Iraq suspended operations.
• Oil and gas prices surged following tensions and the closure of the Strait of Hormuz. More than 20% of global oil and gas shipments pass through it. Nearly 40% of India’s oil imports pass through the strait.
• About 30% of India’s natural gas is used for fertiliser production. About 60% of India’s LPG comes from imports upstream of the strait.
• The region accounted for 31% of global oil production (2024) and included Saudi Arabia, UAE, Iraq, Iran, and Kuwait among the top producers. West Asia accounted for 38% of global oil exports (2024).

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