Despite the fact that India is struggling hard to put her economy back on the 9 percent growth trajectory, it has remained the second fastest growing economy and energy market in the world. While domestically it needs to address both efficiency and fiscal prudence, its international strategy involves a relentless push to diversify suppliers, increase its equity take overseas and try to avoid destructive politico-economic competition or even conflicts with China. Most of the estimates have expected that India’s demand for energy will double by 2025 and by then, 90 percent of India’s petroleum will be imported from the current level of about 70 percent. According to the Carbon Sequestration Leadership Forum, India’s coal reserves will last for more than 200 years, but its oil and gas reserves are not sufficient.

Across the globe, a number of observers have also suggested that the most effective way to meet this growing demand is to reform the energy sector. Leaving aside the need for technical modernisation of the industry, discussions on reforms tend to revolve around three policy areas: bringing prices closer to world market levels, putting the energy industry and especially the state electricity boards on a sound fiscal footing and creating a greater space for the private sector. Each of these will meet with ferocious resistance from constituents accustomed to subsidised energy – politicians who fear the consequences of reducing subsidies, and those who currently have the responsibility for running the public sector energy organisations. Expanding the energy sector to meet India’s future needs will also be expensive. The International Energy Agency estimates that India will need to spend approximately $800 billion on its energy sector by 2030.

India’s basic approach to energy diplomacy, both oil and gas, has been to develop as many potential supply arrangements with as many potential suppliers as it possibly can, and to try to neutralise its potential competitors, principally China, with cooperation agreements. Against this backdrop, India has engaged itself in almost all regions in the world that are rich in oil and gas reserves, namely the Gulf, Central Asia, South America, Africa and even a few of the neighbours like Bangladesh and Myanmar. Let’s discuss some of these examples to understand the emerging demands for Indian diplomacy.

The bilateral trade between India and the Gulf Cooperation Council (GCC) reached about $100 billion in 2009 . Similarly, in 2008-09 India imported more than 92 million metric tonnes (MMT) of crude from the Gulf region against the requirements of about 128 MMT. Given the absence of pipelines, these imports use the sea lanes to reach the Indian shores. However, the emerging maritime security environment has made it imperative to protect the country’s Exclusive Economic Zone of about 2 million square km against attacks through the sea and enhance the country’s close relations with the Gulf.

The rising energy security needs set the pace for India to leave no stone unturned to pursue a hard diplomacy for a very warm relationship with Central Asian states. As the Middle East appears to be in a state of permanent turmoil, attention of the world has certainly shifted towards Central Asia. Very recently, during External Affairs Minister S M Krishna’s visit to Kazakhstan steps were taken particularly in the hydrocarbon sector and civil nuclear energy. It is really encouraging that about 170 projects have been launched by Kazakhstan seeking foreign investments including from the Indian companies.
Another major recent step was the signing of an agreement by ONGC Videsh Ltd (OVL) and its partners with Petroleos de Venezuela (PdV), a leading petroleum company of Venezuela, and Petronas of Malaysia to set up a joint venture oil project worth $20 billion named Petro Carabobo SA in the Orinoco region. Eyeing Venezuelan oil may be considered a right and logical eco-diplomatic step, however, of late it is pertinent to further explore the possibility of maximising the number of suppliers or project deals across the Latin America.

Last but not the least, India’s proactive step to improve its economic and diplomatic ties with Myanmar as a policy initiative must be praised. However, considering the rich deposits of natural gas in Myanmar (roughly about 89.722 tcf, including 18.22 tcf of proven reserves) it needs to speed up its endeavours not only for the benefits of the two countries but also for paving the way towards a power link of the Saarc nations. To recall here, the Saarc grid has already envisaged meeting electricity demands and boosting economic and political ties in the region.n