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SPEAKING
FREELY
India, China and energy
security
By Nandakumar J
Speaking Freely is an Asia Times Online
feature that allows guest writers to have their say.
Please click here if you are
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NEW DELHI -
India and China have been witnessing a steady increase
in their energy consumption for many years. Increasing
economic growth characterized by high industrial
activity has been the main reason behind it. Though
consumption of coal accounts for a major share of the
total energy use, imported petroleum takes an
irreplaceable position in the energy mix of both India
and China.
Until 1993, China was the world's
fifth-largest oil producer and was a net exporter.
Driven by a surge in economic growth, however, China's
growth in oil consumption is now running close to 8
percent a year and, as a result, that country is now a
major importer. (1) Meanwhile, India, the world's
second-most-populous country, is also experiencing
year-over-year consumption growth in excess of 8
percent, and has recently replaced France as the
sixth-largest oil-consuming nation in the world. (2)
The key energy-related issues for these two
countries are increasing energy dependency on imported
oil, growing environmental concerns due to the
dependency on coal, transportation and supply problems,
and regional geopolitics.
China is the
second-largest energy consumer in the world after the
United States. A study projects that China's energy
consumption will equal that of all the Organization for
Economic Cooperation and Development (OECD) countries
combined by the year 2020.
The geographic
position of China is an advantage for its energy
strategy. China borders Russia and the energy-rich
Central Asian states on one side, and on the south it
has the South China Sea, which is the main energy
transportation route to Korea and Japan. Though China is
planning to maintain production of about 3.1 billion
barrels a day to limit its energy imports, depending
only on domestic oil reserves will not be a long-term
practical option. Moreover, China's plans for the
establishment of strategic reserves to store up to 18
million tons of oil will keep its energy imports on for
the near future. The west-east pipeline, which is to be
built from Kazakhstan to Xinjiang and then to Shanghai,
will bring the energy from Kazakhstan to the east coast
of China.
Asia-Pacific: Nearly a third of
world energy demand
The total Asia-Pacific energy
demand is expected to be 31.4 percent of total world
demand by 2005, and India and China will have the lion's
share in it. While China has managed to spread its
tentacles in the energy-rich regions of the world, India
has been less successful in this regard. The main reason
for this difference is the long-term political and
economic policies of these countries toward their
neighbors. Though China had border problems and
political differences with Russia, now it is trying its
level best to rope the Russians into building an oil
pipeline to Chinese markets. China's interest in the
Russian weapons trade is also a part of its long-term
strategy to improve the strained relationship with the
aim of accessing the energy market.
India is
comparatively in a weaker position regarding these
aspects. Russian and Central Asian energy is important
for the Asian region, but the geographic position of
India does not provide an opportunity to tap this
source, as does China's. Even a direct pipeline from
Iran to the northwest coast of India through Pakistan's
coastal area has not been put into practice because of
Pakistan's opposition to it. The pipeline plan from
Central Asia faces similar problems, Pakistan being a
geographic barrier to India.
The Indian energy
sector is mainly dependent on coal; imported petroleum
and other energy resources include nuclear and renewable
resources. Petroleum products were introduced as an
alternative to the less efficient, more polluting coal
energy. Petroleum products are thus strategically
important. Though natural gas is India's most important
potential alternative to coal, the effective exploration
and distribution infrastructure is yet to develop. As
per the present situation, oil is the main
imported-energy source.
Estimates indicate that
oil imports to India will meet 75 percent of total
oil-consumption requirements in 2006. (3) Since the
energy import is mainly from the Middle East, volatility
in that region's political situations will have a great
influence on supply vulnerability. This vulnerability in
the supply of energy resources affects energy security
and thereby weakens national security at large. In this
regard China has been in a much more advantageous
position than India. It has been successful in
diversifying energy resources, as well as developing a
network of energy suppliers in spite of their foreign
ventures and investments.
Though the economic
growth rates of China and India are different, their
energy-consumption growth is almost same. Moreover, as
mentioned, both are imported-energy dependent. The
energy strategy of these two countries will have a
crucial role in their energy security. A Strategic
Petroleum Reserve (SPR), which China is planning, alone
may not provide any tangible relief to any energy
shortage or oil shock. Developing alternative energy
resources will have a greater importance than an SPR.
India and China have great potential for renewable
energy, nuclear energy, hydrogen energy etc. It is
important to promote investment in these areas so as to
avoid the fear of any supply shortage from abroad. While
privatization of the energy field is promising, for an
efficient domestic production and supply of oil the role
of external and internal pressure groups in controlling
the oil market should be carefully watched.
Kazakhstan: China's entry to Central Asian
energy
China has been keen to develop its access
to Central Asian energy resources, especially focusing
on deepening relations with Kazakhstan. Since Kazakhstan
is China's major entry point to access Central Asian
energy, this region is of special importance to China.
Moreover, China has been working very hard in Xinjiang
(East Turkestan) to suppress ethnic or insurgency
movements that might otherwise cause disturbances in the
region in future.
There is vast potential for
regional energy cooperation in South Asia. Subregional
cooperation among the contiguous countries - Bangladesh,
Bhutan, India and Nepal - is more promising. (4) While
India has a huge market for energy, these neighboring
states could be potential energy suppliers. Nepal and
Bhutan have good hydroelectric potential and Bangladesh
has natural-gas resources. If the political atmosphere
is favorable, and other issues such as production,
development, transportation etc are taken care of, these
resources can be of much more use to the Indian energy
sector than any other foreign energy import. These
energy resources along with Myanmar's resources can be
extremely important, and the northeastern states of
India will chiefly benefit from it.
The politics
of the world's energy sector has been witnessing the
United States' attempt to dominate it for the past few
years. The Gulf wars have sent a strong message to
developing countries such as China and India of the
danger of their heavy dependency on Middle East oil and
the growing influence of Western powers in that region.
This development has tremendous influence in shaping the
energy policy of India as well as China.
China
and India, as two big powers in Asia, will be the main
energy consumers of the region. Burgeoning industrial
growth and other energy-consuming activities are part of
their economic development. As both these countries have
similar patterns of energy use, their energy strategies
may also have similarities. Any traditional approach to
attain energy security may not be a solution to any kind
of forthcoming energy shock or shortage of supply. That
requires a comprehensive plan to act in a
multi-dimensional way - investing in energy resources
abroad, developing existing domestic energy resources,
inviting foreign direct investment to develop renewable
resources, and above all creating a well-structured
network of regional energy cooperation.
Both
India and China should look forward to creating an
"Asian Union", ie, a Greater Asia that is economically,
technologically and politically competent in the world,
where the "energy security" of the Asian region will be
free from the clutches of any political volatility of
any region or any Western power.
Notes
(1) Published on the
Obele Oil Corp's
website.
(2) TERI, India's energy security,
New Delhi, 2000.
(3) Ibid.
(4) Regional
Energy Cooperation in South Asia, published in the World
Energy Council Report, 2003.
Nandakumar
J is a PhD scholar in the Department of Chinese and
Japanese Studies, University of Delhi.
Speaking Freely is an Asia Times Online
feature that allows guest writers to have their say.
Please click here if you are
interested in contributing.
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