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Oct
11

Energy cooperation between India and Russia: Policy and approach

From: Russia & India Report

Russia, New Delhi’s trusted strategic partner is destined to play a vital role in ensuring India’s energy security in the coming decades.

Energy cooperation between India and Russia: Policy and approach

Photo: Free Source

 India and Russia established a deep-rooted friendship and diplomatic relationship on April 17, 1947, marking the beginning of cooperation and friendship. The civilizational links, spiritual and cultural affinities of both the nations forms the basis of deep understanding between each other and the mutually beneficial relationship, which has always defined India-Russia cooperation as time-tested and rock solid. As the saying goes that an “old friend is worth two new ones,” India and Russia follow similar feelings.

 

Russia, New Delhi’s trusted strategic partner is destined to play a vital role in ensuring India’s energy security in the coming decades. India’s imports, mostly from the volatile region of Middle East, account for 75 percent of the country’s energy needs, and it is likely to grow to 85-90 percent. To sustain the current high rate of growth, India needs secure and diversified sources of energy import.

According to the International Energy Agency, India would be the third largest energy consumer in the world by 2025 after the US and China. Indo-Russian energy cooperation is expected to get a boost in the coming years.

 

The former Soviet Union played a major role in building India’s energy sector by building tens of hydropower stations, developing India’s coal industry, finding oil in Indian soil and helping in setting up India’s energy major ONGC. Indo-Russian energy cooperation acquired new dimensions in the post-Soviet period, particularly in the hydrocarbon and nuclear sector. India has invested $2.8 billion in the Sakhalin-1 project, controlling 20 percent stakes in the venture and has purchased Imperial Energy, a London-listed oil major in the Tomsk region. These are India’s largest investments abroad. (Nord Imperial, a subsidiary of Imperial Energy, has been among the companies that submitted applications to bid for developing Russia’s Trebs and Titov oil deposits in the Arctic). India has been eying energy projects at Timon Pechora basin and Vankor in the East Siberia.

 

India is also considering an option to invest around $1.5 billion for an opportunity in Yamal peninsula that houses one-fifth of global natural gas reserves, offered by Russian firm Navatek. Russia’s ‘Project Yenisey’ involves an upstream hydrocarbon block-linked natural gas liquefaction project and liquefied natural gas marketing. The Indian state-run energy majors that are exploring the possibility of having a strong footing in Russia’s energy sector include ONGC, GAIL & Petronet LNG. GAIL plans to invest up to Rs 8000 crore (around $1.5 billion) in the Yamal-Nanets region and has the option to market that LNG or even bring it back to India. Novatek has a 51 percent stake in OAO Yamal LNG, which has the licence for exploration and development of the South Tambeyskoye field located in the northeast of the Yamal peninsula.

India is an energy deficient country and Russia has an energy surplus and therefore, a mutual interest lies in this sector. India’s policy makers are trying to promote energy cooperation based on political understanding. The Indian side feels that there is a clear compatibility between India’s needs and Russia’s resources. The Indian side is adopting a policy to implement the experience of Sakhalin-1 to other oilfields in Russia.

 

India’s policy is to promote the idea of its willingness to offer Russian companies the opportunity to participate in Indian oil and gas projects, both upstream and downstream, as well as to undertake joint exploration in other countries too. India has geared-up its energy diplomacy and is moving quickly to penetrate in the Russian energy market.

The Indian side feels that though these two countries are not geographically contiguous it is not a hindrance for cooperation since the international oil and gas trade is not based on contiguity. India’s interest in the Russian energy sector has already been proved by the country’s investment in Sakhalin-1. While public sector energy companies from India have already made considerable investments in Russia, now India is also promoting its private sector companies for investments in downstream petroleum units in Russia in return for a stake in petroleum refineries there. India has proposed an exploration venture with Russian gas majors Gazprom and Rosneft and sought a stake in the Sakhalin-III oil and gas project in the Far East. The Indian side has proposed joint venture to work on gas liquefactions projects in Russian offshore fields for Shipment to India. Indian companies are being welcomed due to Indo-Russian strong strategic ties.

India is also looking for options for transporting Russian crude to India through a pipeline link from Xinjiang to India. But this depends on a joint agreement between Russia-Kazakhstan-China-India. The proposal is such, where crude from Russia could be transported via 1,240 kilometre-long pipeline from Atasu in northwest Kazakhstan to China’s Xinjiang province. Depending on the robustness of multilateral initiatives, a pipeline could be constructed to connect China’s Xinjiang province to India. This pipeline could enter the Xinjiang province in China at Altai, climb the Tian Shan Mountains and extend southward to the Kunlun Mountains in India.

 

India’s ONGC has proposed another energy highway to construct a Russia-China-India (RCI) pipeline. The RCI is supposed to stretch from Russia through Turkmenistan, Uzbekistan, Kazakhstan, to Kashgar in Chinese Xinjiang. It will enter India via Laddakh, crossing the Siachen glaciers and the India-China Line of Control or alternatively through Himachal Pradesh to supply gas to Northern India.  According to ONGC (India) officials, the economic and technical aspects of the proposal remain undetermined. The proposed pipeline would extend over an extremely long stretch of varied terrain (construction of the pipeline may cost somewhere up to $15 Billion, or slightly less if connected through already operating pipelines).

 

Tatarstan, one of the most economically developed regions in Russia, is now making news in India’s corporate circles due to Reliance Industries Limited’s (RIL) petrochemical plans. Tatarstan and RIL have agreed to set up a joint working group of specialists to develop strategic partnership in petrochemical and oil refining sectors, especially in crude oil refining. The agreement was reached during the visit of a high-profile delegation led by Tatarstan’s President Rustam Minnikhanov to Jamnagar in Gujarat (India) on March this year.

 

The Russia’s energy strategy towards Asia clearly mentions India as one of the important target countries along with Japan, China, and Korea. India is carefully taking note of Russia’s hydrocarbon vision, as now India wants to have a strong presence in Russia’s massive energy sector that can help ensure India’s vital energy security. All these indicate that both the nations can expand the cooperation in the energy sector too as they did in the defence sector. Amidst all these developments there is a hope that India-Russia energy cooperation will scale towards new heights.

 

1 comment

  1. hem raj jain says:

    Sub:- Putin harmed Russia by not mentioning Crimea / Ukraine in Press Statement and not addressing Parliament in India

    Ref:- (i)- Putin also, like cold war Russian leaders, doesn’t know how to use Indian friendship (ii)- Putin’s confused policy on Crimea / Ukraine will further cause unnecessary bloodshed & killing of Russian speaking Ukrainians (iii)- Putin doesn’t understand that without addressing Ukraine crises Russia wouldn’t achieve anything anywhere

    Dear All

    The recent visit by Russian President V. Putin to India was a flop-show as given below:-

    (1)- Putin doesn’t understand that without bringing marital matters under control, economic deals do not take any country much further. Without addressing Ukraine crises, Russia wouldn’t achieve anything anywhere (even over-hyped Russia – China $ 400 Billion 30 years contract will not matter much unless China supports Russia militarily and diplomatically about Ukraine crises). During just concluded India visit of Putin, 20 government pacts and business agreements were signed but they do not mean much in view of what, in the backdrop of Ukraine crises, leader of militarily powerful NATO, the USA has said that “now is not the time for business as usual with Russia”.

    (2)- Russia is the only country which was prepared to shed its blood for India during 1971 war with Pakistan (when USSR declared that it would send its war ships if USA brought its warship in Bay of Bengal and which decided Bangladesh war in India’s favor). India was under moral obligation to pay-back but India failed to do it during cold war in Afghanistan in eighties when India did not take POK militarily which could have eased pressure on USSR especially from Pakistani side. But India preferred to ditch not only USSR but people of J&K and even territorial integrity of India. – [Though this wouldn’t have averted the dismemberment of USSR as it was following wrong economic policies by squandering State Capital, but at-least India (as a trusted military ally) would have paid-back and which would have brought many reliefs to USSR]. Putin also, like cold war Russian leaders, doesn’t know how to use Indian friendship.

    (3)- Putin could not understand that if idea of RUSIND is published in Russia in its leading newspaper Pravada then people and establishment of Russia want India with Russia in every matter and in every way http://english.pravda.ru/opinion/columnists/10-12-2014/129261-russia_india-0/

    (4)- Russia is not at fault as it assimilated Crimea only after West (USA & its European Allies) supported violent protest by rebels and engineered military coup against democratically elected President. Therefore Putin has harmed Russia by not mentioning Crimea / Ukraine in Press Statement and by not ensuring that he addresses Indian Parliament (which was much publicized before he came to India). Putin should have also made the presence of Crimean leader Aksyonov as part of Russian official delegation. Putin in this way should have made Russian case (about Ukraine) clear on the soil of India that Crimea is now a part of Russia and if Ukraine does not stop bloodshed & killing of Russian speaking Ukrainians (including in Donetsk and Luhansk region) then Russia will be constrained to intervene militarily and assimilate these and some neighboring regions too in Russia.

    (5)- Nothing less than such clear foreign policy will help Russia. Because the presence of President of Russia was not needed merely for ‘Annual India – Russia Summit”, therefore only such clear enunciation / articulation of foreign policy of Russia (about Ukraine) would have made any sense of Putin’s visit to India. Putin should have left it to India to decide whether it supports such foreign policy of Russia or not and to what extent. Putin grossly failed to understand that – had he articulated his foreign policy clearly as mentioned above then most of India (including its political parties, media, political / strategic commentators etc ) would have shown their support to it in many ways. But Putin has missed this golden opportunity

    Putin’s confused and apologetic policy on Crimea / Ukraine is now bound to further cause unnecessary bloodshed & killing of Russian speaking Ukrainians (and further global humiliation and emaciation of Russia through sanctions etc).

    Regards

    Hem Raj Jain

    (Author of ‘Betrayal of Americanism’)

    Bengaluru (Karnataka), India

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