India starts getting its hands oily

Energy security is a welcome new mantra

Mani Shankar Aiyar has already begun to redefine the role of the Ministry of Petroleum and Natural Gas, leveraging on his background as a foreign service officer to morph himself into India’s ‘first oil diplomat‘.

As N Chandra Mohan writes, there are signs that the India has finally entered the ‘great game in search of long-term energy security’. The biggest deal yet is India’s $3 billion investment in Russian oil and gas fields, split about equally between Sakhalin in the Russian Far East, and Kurmangazy in the Caspian. Aiyar also successfully negotiated with the Iranians for India’s ONGC Videsh to take a stake in the Yadarevan oil fields as part of a larger deal to purchase natural gas. There are a handful of similar but smaller deals with other countries.

Pushing to take equity in foreign oil and gas fields marks the biggest shift in the manner in which India is pursuing its energy security interests. This is a step in the right direction, although Aiyar would do well to co-opt private-sector oil companies instead of championing state-owned ONGC Videsh as the vehicle pushing India’s energy interests.

But Aiyar’s enthusiasm for a Iran-India pipeline that would run across Pakistan’s breadth is misplaced — currently such a project would rightly belong in the domain of an energy insecurity policy. He would do well to keep that dream piped for now.

9 thoughts on “India starts getting its hands oily”

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  2. While oil diplomacy is wellcome, ONGC videsh is playing a high risk game. Some of its investment are in war torn Africa and is very risky.

  3. I was wondering why Pak was over-enthusiastic about this pipelne from Iran. They should be afterall its 600 million per yr as royalties and this Indian taxpayers’ money is more than enough to underwrite/sustain the proxy war in JK.

  4. My initial reaction to the pipeline (when I first heard about it years ago) was this:
    1. With the pipe in place Pak could effortlessly step up the proxy war without fear of an all-out Indian reprisal – the perfect lure into “the death by a thousand cuts” paradigm.
    2. The transit fees that we pay to Pak would have to be multipied a few times to come up with the actual cost – u give $600m to Pak, greased palms later $400m reaches militants, we need to spend 8 times that amount to contain the enhanced militancy – $3.2b (based on the assumption that counter-insurgency forces should have an 8:1 majority). Our savings were supposed to be just $2b.

    Since then I have sobered up – especially when Pak linked the pipeline to Kashmir. With enough International guarantees in place (and also the assurance that any cuts in supply to India would result in an equal cut in supply to Pak) the pipeline seems really feasible.

  5. Kiran,

    Relying on ‘international guarantees’ on something of vital importance to India is not a very good idea. The parties who provide these guarantees are more likely use this as leverage over India. In a way, its like Nehru taking the Kashmir issue to the UN…

    The fact is, even with a military government in place (and perhaps because of it), Pakistan has not been able to ensure the security of its own gas pipelines. Baloch tribals take potshots at them every so often. This is not likely to resolve itself until such a time that there is true national reconciliation in Pakistan — it has too many divides today.

    In my view, it is not possible for Pakistan to ensure the safety of the pipeline — even if it abandoned its hostile intentions, which it has’nt. And even if international guarantees can enforce the deal, which they cant because of the first argument, they ultimately will end up as tools of leverage in the hands of other countries.

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