Author : Manish Vaid

Originally Published 2014-05-27 06:17:01 Published on May 27, 2014
For Russia and even Central Asian countries, China can act as a catalyst to market their hydrocarbon resources to South Asia and beyond, opening an opportunity for gas exports too. Russia's $400 billion gas deal with China is a case in point.
Cooperation with China important for India's Eurasian energy policy
"India, which imported 62.2 percent of its total oil needs from the Middle East during April 2013 to January 2014, is diversifying from this region largely due to vulnerable and unsteady conditions, so as to mitigate its security risks.

With robust increasing energy demand and a shortfall in domestic energy production, particularly hydrocarbons, India is gazing toward energy-rich countries like the US and of late Russia for energy imports.

While on the one hand, if approved, India will join with Cheniere Energy Partners to import liquefied natural gas from the US, the Ukrainian crisis seems to have opened a door for India to further diversify its energy procurements from Russia.

Russia too is ready to embrace the opportunity to diversify its hydrocarbon exports beyond Europe and enter the South Asia market.

A $30 billion oil pipeline proposal from Russia to India through China is an important step forward in this regard.

The pipeline, starting from the Russia's Altai Mountain region, would reach northern India after going through China's Xinjiang Uyghur Autonomous Region.

India and Russia have launched a joint study into the possibility of direct ground transportation of such oil. This project was first discussed in 2005 by India's Oil and Natural Gas Corporation (ONGC). Talks on the project should conclude by mid-2014, according to an ONGC official. The project is expected to be completed by 2020-22.

India's domestic hydrocarbon production is consistently falling, making oil, natural gas and coal imports increase. Given that India must consistently confront the challenging geopolitical terrains from where such energy is imported, the Eurasian energy outlook appears most promising, particularly at a time when China has agreed to the proposed oil pipeline. This would provide considerably better leverage for India's energy policy.

The unstable political environment in Pakistan and Afghanistan has been a choke point preventing India importing hydrocarbons from either Russia or even Central Asia.

However, with China willing to open its door to Russian oil to flow through its territory, this creates an opportunity via this important route for India to even pursue its "Connect Central Asia" policy.

For Russia and even Central Asian countries, China can act as a catalyst to market their hydrocarbon resources to South Asia and beyond, opening an opportunity for gas exports too. Russia's $400 billion gas deal with China is a case in point.

Furthermore, a Turkmenistan-Afghanistan-Pakistan-India gas pipeline could soon involve China as one of its partners.

These developments, which have already surprised the US, have provided a strategic win for Russia, India and China, particularly in Central and South Asia.

With India's plan to join the Shanghai Cooperation Organization supported by Russia so as to help it gain a strategic presence in Central Asia, this would in return strengthen India's strategic partnerships with Russia and China in South Asia, particularly after the US military withdrawal in Afghanistan after 2014.

Thus China holds the key to India's pipeline diplomacy through Eurasia facilitating Russia and Central Asia to market its energy exports to South Asia as well. This would offer India and China a chance to revive their energy cooperation in hydrocarbons, which so far has remained on paper only.

Notably, both countries haven't actually moved forward beyond agreements signed in 2006 and 2012. The commencement of pipeline diplomacy through Chinese territory could end their traditional rivalries over acquiring worldwide hydrocarbon resources.

In a way, the Ukrainian crisis has therefore come as a blessing in disguise for both India and China to gear up to tap the Russian and Central Asian energy markets, creating overall economic growth for Eurasia while strengthening mutual energy security.

China can facilitate India's energy security goals by providing a gateway through its territory to Russia, concurrently opening possible avenues for India's Eurasian energy policy including Central Asia.

With China expressing hope for better ties with India under the new government, one can expect improved energy diplomacy through this energy corridor.

(The writer is a Junior Fellow at Observer Research Foundation, Delhi)

Courtesy: The Global Times, Beijing

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Manish Vaid

Manish Vaid

Manish Vaid is a Junior Fellow at ORF. His research focuses on energy issues, geopolitics, crossborder energy and regional trade (including FTAs), climate change, migration, ...

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