BackIndia’s energy pipeline diplomacy back into play
Proposed lifting of Iran sanctions expected to help revival plans for gas pipeline from Iran to India via Pakistan
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New Delhi: India’s energy pipeline diplomacy is back into play with the National Democratic Alliance government working on simultaneous plans for constructing transnational crude oil and gas pipelines to India from Turkmenistan, Russia and Kazakhstan.
In addition, the proposed lifting of sanctions on Iran are expected to help the revival plans for a gas pipeline from Iran through Pakistan to India.
This comes in the backdrop of subdued international energy prices, with producing countries seeking buyers as their respective economies are heavily dependent on exports for revenues. A case in point is Russia, which is particularly affected due to the twin onslaught of low oil prices and Moscow facing Western sanctions for the annexation of Crimea and its support for rebels in neighbouring Ukraine.
India’s pipeline project plans come in the backdrop of the International North-South Transport Corridor that promises to cut the costs involved in transporting goods to Central Asia by 30%. The proposed pipeline projects include the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline, the Iran-Pakistan-India pipeline, and crude and gas pipelines from Russia and Kazakhstan.
“There are several projects in various stages of planning and discussions. They are very important from the viewpoint of India’s growing demand for energy and also energy security. Vladimir Shkolnik, Kazakhstan’s energy minister, had recently visited India, wherein a joint working group was set up to examine the possibilities of such a pipeline from Kazakhstan," an Indian government official aware of the developments said, requesting anonymity. “Similarly, efforts are being made with Russia for transportation of both oil and gas to India. The pipeline from Turkmenistan is a serious proposal with plans with Russia and Kazakhstan in advanced stages of discussions."
State-owned TurkmenGaz is to lead the multinational consortium with a majority investment in the $9 billion, 1,814km pipeline project, which is expected to have a capacity of 90 million standard cu. m per day (mscmd) of gas from Turkmenistan’s Gunorta Yoloten-Osman fields. Of this, 38 mscmd is planned for supply to India.
The International North-South Transport Corridor was first agreed upon between India, Iran and Russia in 2000. The route connects Mumbai in India to Bandar Abbas port in Iran and then Bandar-e Anzali in northern Iran on the Caspian Sea coast. From there, goods are expected to be transported to Astrakhan in Russia and then to Central Asia.
India sees this route as shorter than the current one that goes through the Suez Canal and the Mediterranean Sea. While the Suez Canal route takes 45-60 days, the North-South Corridor will take 25-30 days. From India’s point of view, the North-South Corridor will help India bypass Pakistan to reach out to Central Asia.
Speaking at Mint’s annual energy conclave on Friday, Soumen Bagchi, joint secretary, energy security, at India’s ministry of external affairs, said the country’s energy pipeline diplomacy was back with “positive developments".
After India and the US signed a civil nuclear deal in 2008, several Iran-related Indian projects have either been put on hold or dropped. India decided to focus on the TAPI gas pipeline instead of the Iran-Pakistan-India pipeline project. India’s petroleum minister Dharmendra Pradhan met with Iran’s petroleum minister Bijan Namdar Zangenah in June at Vienna, where the “possibility of building gas pipeline from Iran to India through various alternate routes" was discussed.
Experts welcomed the move.
“India’s pipeline diplomacy should get back into play. I have been a strong votary that we should work with Iran for an undersea pipeline. For our energy security, we are going to be dependent on gas. So it is important that we work on pipelines from the West and the East and from the land as well as the sea routes. It is of course a matter of feasibility and availability of gas from these diverse sources," said Anil Razdan, former additional and special secretary in India’s petroleum ministry.
India is also looking at a second route through Iran’s Chabahar port that will help it join another transit corridor linking Iran and Oman with several Central Asian republics.
Also, when Prime Minister Narendra Modi visited the Central Asian nations of Uzbekistan, Kazakhstan, Kyrgyzstan, Tajikistan and Turkmenistan in July, energy security was a key theme. The TAPI pipeline project was also discussed during Modi’s visit to energy-rich Turkmenistan.
Queries emailed to India’s petroleum ministry remained unanswered at the time of going to print. However, in a 17 June statement, the ministry said: “Both sides are keen to expand our cooperation in the area of hydrocarbons. Various proposals are currently under discussions between the two sides. We also agreed to conduct a feasibility study on transportation of crude oil and gas from Kazakhstan to India via pipeline or as LNG (liquefied natural gas)."
India follows the US, China and Russia in total energy usage, accounting for 4.4% of global energy consumption. India imports 80% of its crude oil and 25% of its natural gas requirements. Petroleum product consumption in India has also been growing. According to the oil ministry, it grew 3.14% to around 163.17 million tonnes (mt) in 2014-15. India also sourced 189.43 mt of crude oil last year.
The price of oil in the Indian energy basket has been around $50 per barrel, starting 4 August. The Indian energy basket represents the average of Oman, Dubai and Brent crude. The price rose to $49.37 per barrel on Tuesday.
“India’s emergence as the fourth largest consumer of energy in the world has coincided with a collapse in global oil prices. The resulting buyer’s market has only strengthened India’s negotiating power," added Pradhan at Mint’s annual energy conclave on Friday.
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