India’ energy diplomacy initiatives range from cross-border electricity trade to supplying petroleum products and setting up LNG terminals (Reuters file)
India’ energy diplomacy initiatives range from cross-border electricity trade to supplying petroleum products and setting up LNG terminals (Reuters file)

US ambassador cautions India against China, Iran on energy security

  • The statements come in the backdrop of 14 September drone attacks on Saudi Aramco’s facilities
  • India and China are working towards establishing a buyers’ bloc to bargain collectively for crude oil purchases amid escalating tensions in the Persian Gulf

New Delhi: US ambassador to India Kenneth Juster on Monday cautioned India against a range of issues including “managing the rise of China" and “securing energy supplies."

While speaking India Energy Forum by CERAWEEK, he also cautioned India against “state-sponsored terrorism by Iran that is affecting the security of India’s energy supplies," and pitched US as a dependable partner “across the entire spectrum of energy issues."

These statements came in the backdrop of 14 September drone attacks on Saudi Arabian Oil Company or Saudi Aramco’s facilities that caused the biggest ever-disruption in global crude oil supplies. Also, India and China are working towards establishing a buyers’ bloc to bargain collectively for crude oil purchases amid escalating tensions in the Persian Gulf. China and India are the world’s second and third largest crude oil importer, respectively.

“A rising China under any scenario poses challenge to India and the Indo-Pacific. India, US and like-minded countries such as Japan have thought about the future of this region. They have articulated a vision and a set of principles for a free and open Indo-Pacific," Juster said.

To counter Beijing, the US is seeking a bigger role for India in stabilising and maintaining the rule of law in the Indo-Pacific region–a large swathe of land and sea stretching all the way from the west coast of the US to the shores of east Africa.

Juster explained these principles for Indo-Pacific as; “a rules based regime which respects sovereignty and territorial integrity for all countries", “freedom of navigation, over-flight and commerce", “free and fair trade and a free flow of goods, services, capital and data", “resolution of territorial and maritime disputes peacefully in accordance with international law", and “transparent commercial practices and secure supplies of energy."

A pushback against China’s ambitious Belt and Road Initiative (BRI) is taking place in the Indo-Pacific region with a grouping also known as the “Quad" of India, the US, Australia, and Japan. India has also been critical of China developing the China-Pakistan Economic Corridor (CPEC), cutting through Gilgit and Baltistan areas of Pakistan-occupied Kashmir (PoK). The showpiece One Belt One Road (OBOR) infrastructure initiative, first unveiled by Chinese president Xi Jinping in 2013, aims to put billions of dollars in infrastructure projects, including railways, ports and power grids across Asia, Africa and Europe.

Juster also spoke about creating a supporting architecture for Indo-Pacific, the Asia-Edge initiative by enhancing development and growth through energy and rules based and transparent energy markets.

India is also working towards to successfully conclude the Regional Comprehensive Economic Partnership (RCEP) that would help New Delhi integrate into the economic landscape of the Indo-Pacific. It is playing a key role in creating a new energy ecosystem with some of its neighbours and has been supplying power to Bangladesh and Nepal and has also been championing a global electricity grid that may initially aim to link countries such as Myanmar, Thailand, Cambodia, Laos, and Vietnam with the sub-continent.

India’ energy diplomacy initiatives range from cross-border electricity trade to supplying petroleum products and setting up liquefied natural gas (LNG) terminals. Apart from building power projects in Bhutan, Nepal and Bangladesh, India already has power grid links with Bhutan, Nepal, Myanmar and Bangladesh, and plans to develop power transmission links with Sri Lanka.

Indi has also been expanding on its energy partnership with the US that includes increase in quantum of energy imports and US help in building its strategic petroleum reserves. India is the sixth-largest buyer of US LNG and has been sourcing the cleaner fuel and crude oil from the US, with Indian companies investing $4 billion in US shale gas assets. The US shale oil exports to India increased by six times to 55.1 million barrels in 2018 from 9.1 million barrels in 2017.

US secretary of state Mike Pompeo on his part has promised India of adequate crude oil supplies even as the world’s third-largest oil importer has been trying to buffer its consumers from fluctuations in global prices. India’s exports to the US in 2017-18 stood at $47.9 billion, while imports were at $26.7 billion.

“Iran’s recent attacks on refineries in Saudi Arabia and shipping in the gulf present a new threat and it is in the interest of US, India and others to address it," Juster said.

India and US plan to strengthen their strategic energy partnership launched in New Delhi in April last year. US’Tellurian Inc. has also signed a $7.5 billion agreement for India’s Petronet LNG Ltd to buy a stake in its proposed LNG terminal in Louisiana, in what could potentially be one of the largest foreign investments in the US for shipping shale gas abroad.

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