According to India’s Planning Commission, the country faces formidable hurdles in meeting its current and future energy needs, if it wants to maintain its current 8 per cent per year economic growth rate.
Over the next 25 years, the Indian government’s priority is the eradication of poverty. To get there, however, India will need to keep growing by 8 per cent a year for the full quarter-century. There is a fear that this noble goal is going to generate huge energy shortages, as India has been less successful in securing energy supplies from its neighbours or from Central Asia than China has been.
The troubles of the energy sector in India are compounded by state control over the import, production and distribution of oil and gas products, which are coordinated by 4 different ministries. More than half of India’s electricity is generated by burning poor-quality d°rnestic coal, which is expected to run out in about 40 years.
Further, a third of India’s oil is imported from countries the US is at Odds with, such as Sudan, Syria or Iran, whilst the gas is imported mainly from Iran, Bangladesh or Burma.
generation sector in order to diversify away from coal. Its two projects are the IPI (Iran–Pakistan-India) pipeline, also dubbed “the peace pipeline”, and the TAPI (Turkmenistan-AfghanistanPakistan-India) pipeline.
Due to practical difficulties( as pipe was supposed to pass through restive Baluchistan province of Pakistan) and US opposition to the project determined India to recently abandon IPI, of which only the Iran-Pakistan stretch, or about 1,100 km, is going ahead with construction.
The failure of the IPI project has recently determined India to enter fresh negotiations with the Teheran regime for the construction of an undersea gas pipeline, which could cost 9 billion dollars. This would have the advantage of bypassing Pakistan and doing away with transit fees. Again, the project’s chances of success are slight, given the US’ opposition to investments in developing Iran’s energy sector.
India, the 4th largest consumer of energy in the world (on the verge of becoming third largest may be by the end of this year), desperately needs to exponentially increase its imports of oil and gas. Consequently, it has token an option to develop, at an estimated cost of 8 billion dollars, the Farzad-B area of the Pars gas field at the Persian Gulf, again running into some opposition from the US. Already, the Iran Sanctions Act (ISA) which slaps fines on foreign companies that invest in Iran’s energy sector, has been invoked by American officials against Indian companies. As Indian companies are the biggest foreign subcontractors of IT services to US corporations, India stands to lose vital data processing business, as well as foreign currency earnings. Meanwhile, much better capitalised Chinese state oil and gas companies are aggressively investing some 20 billion dollars in the development of the South Pars gas block.
India’s ever-growing appetite for energy is quietly reshaping the way it operates in the world, changing relations with its neighbors, extending its reach to oil states as far flung asISudan and Venezuela, and overcoming Washington’s resistance to its nuclear ambitions.
Hovering over India’s energy quest is its biggest competitor: China, which is also scouring the globe to line up new energy sources. The combined appetite of the two Asian giants is raising oil prices and putting greater demands on world oil supplies.
Already India’s energy ambitions have led to developments unthinkable just a couple of years ago: a proposed pipeline to ferry natural gas from Iran across Pakistan; a new friendship with the military government in gas-rich Myanmar, formerly Burma. “Mutual dependencies” is the buzzword of the day, signaling the way oil and gas links among South Asian countries stand to rewrite the enmities of the past. The foreign policy of India will have a lot to do with energy. That vision is not without its challenges.
On the one hand, India seeks to cast itself as the model of democratic pluralism, as in its bid for a permanent seat on the United Nations Security Council. On the other, its hunt for fuel is pushing it to reach out to authoritarian governments like those of Sudan and Myanmar, which the United States has sought to isolate. In both of those countries, China’s weight is also keenly felt.
But India is quickly making inroads. It has persuaded a wary Bangladesh to agree, at least in principle, to a pipeline that would ship gas from Myanmar to India Indian government has also sought to lure foreign investors to explore for reserves in the Bay of Bengal, off India’s eastern coast.
India’s basic approach to energy diplomacy, both oil and gas, has been y potential to develop as man