By Sadananda Mohapatra, Senior Business Journalist
India-Japan Summit: Building Energy Buffers Against the Next Hormuz Shock
Two of Asia’s largest energy consumers outside China, Japan and India, import over 85% of their needs and were both hammered by the February 2026 Strait of Hormuz closure. Until the 16th India-Japan Annual Summit in New Delhi on July 2, they lacked formal bilateral architecture for energy resilience. That gap is now closing with ambitious agreements on stockpiling, clean energy, and maritime security.
Japan brings particular credibility to this partnership. After the 1973 oil shock left its economy devastated, Japan spent five decades building one of the world’s most sophisticated strategic stockpiling systems: mandatory reserve requirements, government-held crude buffers, and deep institutional expertise in emergency energy management. India, by contrast, is still in the early stages of building its strategic petroleum reserve capacity relative to its import dependence. The asymmetry is precisely what makes this partnership consequential rather than merely ceremonial.
The backdrop is instructive. India lifted its emergency LNG and LPG curbs on July 5 after Hormuz reopened following a ceasefire. The Natural Gas (Supply Regulation) Order introduced on March 9 under the Essential Commodities Act was amended, withdrawing priority allocation rules that had curtailed gas to petrochemical plants and power stations while protecting households, fertiliser producers and city gas networks. LPG consumption fell 8% year-on-year in the first half of 2026, at 14.74 million tonnes against 15.95 million tonnes in the same period last year, driven by supply constraints rather than weaker demand. The acute phase is over. But both countries used the summit not to declare victory, but to ask a harder question: what happens the next time?
The most consequential energy commitment is the strategic petroleum reserve cooperation framework. India’s Ministry of Petroleum and Natural Gas and Japan’s Ministry of Economy, Trade and Industry agreed to share knowledge on stockpiling systems and reserve mechanisms for crude oil and petroleum products, with Japan’s Organisation for Metals and Energy Security and the Japan Bank for International Cooperation working directly with Indian national oil companies and Indian Strategic Petroleum Reserves Limited.
Beyond reserves, the two sides launched the Japan-India Cooperative Biogas for Growth initiative targeting 1,000 biogas and organic fertiliser plants across India, confirmed cooperation on batteries, green hydrogen and nuclear energy, and agreed to explore joint investments across the maritime energy transport value chain, covering ships, logistics, insurance and routing. Together these commitments address both the structural root of import dependence and the operational vulnerability of relying on a single chokepoint. The India-Japan Joint Working Group on Petroleum and Natural Gas will serve as the implementation platform across all three areas.
Whether the architecture they are now constructing together can be made operational before the next supply shock arrives is the only question that matters.
Joules Capsule
India Eyes Indonesia’s Nickel and Rare Earths to Reduce China Dependence
India will invest in manufacturing steel, nickel and rare earth permanent magnets in Indonesia, Prime Minister Modi announced during his July 2026 visit to Jakarta. The initiative targets materials critical to electric vehicles, renewable energy equipment and defence manufacturing, sectors where India currently depends heavily on Chinese supply chains. Indonesia holds the world’s largest nickel reserves, making it a strategically significant partner for India’s clean energy transition. The partnership focuses on downstream processing and joint ventures, moving beyond raw material extraction toward value-added manufacturing that serves both countries’ industrial ambitions.
PFC and REC Boards Approve Merger Scheme
The boards of Power Finance Corporation and REC Limited have approved a scheme of merger under which REC will be absorbed into PFC as the transferee company, subject to shareholder, creditor and regulatory approvals under Sections 230 to 232 of the Companies Act, 2013. The combined entity would create one of India’s largest infrastructure financing institutions, with a loan book spanning power generation, transmission, distribution and renewable energy. The merger is expected to reduce duplication, improve capital efficiency and strengthen the combined entity’s ability to fund India’s accelerating energy transition at scale.
Monsoon Brings Relief to India’s Grid as Peak Demand Sheds 20 GW
India’s power grid has entered a seasonal easing phase as monsoon rains reduced cooling demand. Peak demand dropped from 241 GW in the July 1-3 period to 235 GW on July 4 and further to 224 GW from July 5, shedding nearly 20 GW over the week. The retreat follows a demanding June: total generation rose 10.4% year-on-year, coal output hit a near three-year high at 14% above year-ago levels, and renewables achieved a 19% share of the generation mix. Spot power prices have also moderated, providing relief to distribution companies that faced elevated procurement costs through the summer peak.
About the Author:
Sadananda Mohapatra is a veteran business journalist with decades of experience covering India’s energy, industry, and economic landscape. With stints at reputed financial news publications like The Business Standard & NewsWire18, he reported extensively on India’s power sector, minerals policy, coal and energy regulation, and industrial developments — building a deep, ground-level understanding of the global energy economy. His work spans corporate affairs, infrastructure, and policy analysis, with a particular focus on eastern India’s resource-rich industrial corridor. He currently writes on the global energy landscape through his newsletter, The Joule’s Stack.
