The recent India-Pakistan tensions have highlighted significant energy security vulnerabilities for both countries, though with asymmetric impacts. While intra-regional energy trade offers theoretical benefits, the current geopolitical reality makes implementation challenging in the short term. Strategic petroleum reserves emerge as a critical focus area for both countries.
India imports approximately 88.8% of its crude oil requirements, which amounted to 234.26 million tonnes in 2023-24. India’s natural gas import dependency stands at 47.1%, with 31.80 BCM imported last year. Even for coal, where India has substantial domestic production, it imported 263.56 million tonnes, representing about 21.3% of India’s consumption.
Pakistan's situation is similarly challenging. They import around 78% of their crude oil requirements, with imports of 6.151 million tonnes between July 2024 and January 2025. Their RLNG (imported LNG) consumption is about 695 MMCFD, which is 21.7% of their total gas consumption. They also rely significantly on imported coal for power generation, though they are making efforts to substitute this with indigenous coal.
What's particularly concerning is how these dependencies translate into vulnerabilities during conflicts. The recent tensions demonstrated the fragility of maritime shipping routes in the Arabian Sea, which both countries rely on for energy imports. We also saw how border closures can disrupt any cross-border energy infrastructure and how energy facilities could potentially become strategic targets in a prolonged conflict.
Intra-regional energy trade between India and Pakistan makes economic sense but faces significant political barriers. India's diverse electricity generation mix could complement Pakistan's generation profile, which faces shortages. India's expanding natural gas infrastructure could potentially serve regional needs, and its substantial refining capacity creates potential for petroleum product exports. The economic benefits would include cost savings, enhanced energy security through diversification, and better integration of renewable energy. However, implementation faces major obstacles: the recent Kashmir crisis has damaged prospects for cooperation; both countries have security concerns about energy infrastructure becoming strategic targets; limited cross-border infrastructure exists; and regulatory frameworks would need harmonization. Potential pathways forward include an incremental approach with small-scale projects, embedding bilateral trade within broader regional frameworks, and third-party facilitation by international organizations.
Strategic petroleum reserves should be a critical focus for both countries, though with different priorities. India currently maintains reserves sufficient for approximately 74 days of consumption (through IOC, ISPRL, and other state-run retailers), but this falls short of the international standard of 90-120 days recommended by the IEA. India has allocated funds to expand these reserves in the 2025-26 budget. Pakistan, however, lacks formal strategic petroleum reserves entirely, maintaining only commercial stocks sufficient for approximately 20 days. This absence represents a significant vulnerability, as demonstrated during the recent conflict when panic buying occurred even in India despite its reserves. For India, priorities should include expanding reserves to international standards, enhancing geographic diversification, and developing protocols for addressing panic buying. For Pakistan, establishing basic strategic reserve capacity is an urgent priority, potentially through a phased approach starting with 30 days of reserves. While costly, strategic reserves represent an essential insurance policy against supply disruptions that could have devastating economic and security implications
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