INDIA’S QUEST FOR CENTRAL ASIAN ENERGY

India, the world’s second fastest growing economy, relies on oil and gas imports for its economic development. And, as Prime Minister Manmohan Singh observed, it can no longer remain complacent in the face of China’s global campaign to acquire reliable energy supplies. Thus India has launched an aggressive campaign to secure its own dependable supplies of both oil and gas. While India’s campaign is global in scope, a major focus is clearly on Gulf, Russian, and Central Asian supplies. Therefore, India is negotiating with Iran to obtain equity access to blocs of Iranian oil and gas and to build a series of oil and gas pipelines. Among the latter are gas pipelines from Iran to Afghanistan, Pakistan, and then India, and a second one from Turkmenistan through Afghanistan, Pakistan, and then to India. This latter pipeline, known as the “TAP line” denoting the three states besides India, represents an attempt to revive a proposal that was discussed in the middle 1990s only to fall apart due to the advent of the Taliban.

However, India is no less active in Russia and Central Asia as a whole, not just in Turkmenistan. At the December 3-4, 2004, summit with Russia, India announced a $3 billion investment in the Sakhalin-3 oil field and the joint Russian-Kazakh Kurmangazy oil field in the Caspian. India’s Energy Minister, Mani Shankar Aiyar, has stated, “What I am talking about is the strategic alliance with Russia in energy security, which is becoming, for India at least, as important as our national security.”

Indeed, India’s quest for energy is so driving a factor in its foreign policy that it agreed to have the national Oil and Natural Gas Company (ONGC) enter what is a transparent dummy bid for the remnants of Yukos in Russia, the efficient energy producer that was destroyed by Russian President Vladimir Putin and his government for political reasons, in order to gain favor in Moscow’s eyes by legitimating this phony auction. Presumably this favor will lead to enhanced access to Russian energy and heightened cooperation with Russian energy firms.

Since then, the pace of Indo-Russian and Indo-Kazakh discussions has only quickened. India has announced that it will seek more investments in Russia and is pursuing new deals with Moscow that could amount to $20 billion. Russia, for its part, is open to considering deals that would bring Indian firms, particularly India’s national ONGC, into fields in the Far East, Eastern Siberia, the Barents Sea, and the Timan-Pechora region. India would participate with Gazprom, Rosneft, and Transneft and these deals could include parts of the former Yukos and was suggested earlier. Altogether, it appears that ONGC has been offered holdings in a total of 11 different Russian energy projects, including Yuganskneftgaz, the core asset of Yukos. ONGC, acting with state support, will also loan Rosneft $6 billion to help it acquire a 76.79% stake in Yuganskneftgaz. But if ONGC’s efforts to gain equity there fail, Russia has promised it an alternative stake in the Vankorskoe oil field in Eastern Siberia and 4-5 million tons of crude oil annually. Aiyar also reiterated that Russia is India’s single most important ally in the energy sector, because their strong supply matches India’s strong demand.

India is also active in Kazakhstan. It has formally bid for immediate participation in the Tengiz and Kashagan oil fields and the Kurmangazy and Darkhan exploration blocs. India is also interested in nine other exploration blocs in and around the Caspian Sea. Aiyar also offered the services of India’s Gail Ltd., a gas infrastructure firm, as a project consortium partner in Kazakhstan’s three pipelines with China. Gail is also eager to invest in gas processing and petrochemical plants in association with other Indian public-sector companies in the Kazakh towns of Atyrau and Akhtau and to improve oil recovery in older fields in Kazakhstan. In order to promote this comprehensive plan of Indian participation in all aspects of Kazakhstan’s oil and gas projects, both sides agreed to establish a joint working group to examine and develop various projects for cooperation.

India’s aggressive oil and gas diplomacy hardly stops here and is global in scope. India has also sponsored energy roundtables with OPEC and with Russia and CIS governments. Its diplomats are also pushing a plan for an Asian oil market and gas grid, essentially some sort of consumers’ club in what is already the fastest growing energy market and what will be the largest one. All these signs of activity denote India’s rising capabilities, demands, and ability to satisfy them. Henceforth India, no less than China, will be a major player in Central Asian and Russian energy issues. As it is equally interested in Central Asia for strategic reasons, India will be a factor to be reckoned with on those issues too.

(The Hindu, November 14, 2004; Vedomosti, December 8, 2004; Energy Compass, February 11; webindia123.com, January 7, February 14, 19, and 23; The Telegraph [Calcutta], February 18; thestar.com, February 23; aljazeerah.info, January 7; Moscow Times, January 11 and February 22; Nezavisimaya gazeta, February 22).