BANGALORE - India's quest for energy
security has received a boost, with neighboring
Myanmar signaling its willingness to sell it
natural gas. But even as the modalities of the
deal are being worked out, their common neighbor
Bangladesh is upset over having been dropped from
a pipeline proposal to bring the gas to
energy-hungry Indian markets.
Myanmar has
agreed to sell India gas from the A-1 block in the
Shwe field off the coast of Arakan state. The Shwe
field comprises several blocks of gas of
unconfirmed size. Of these, A-1 block is estimated
to be the largest, containing 2.88 trillion to
3.56 trillion cubic feet of gas.
South
Korean giant Daewoo International is the largest
stakeholder (60%). The remaining 40% is divided
between the
state-owned Korean Gas
Corp (10%) and India's state-owned ONGC Videsh Ltd
(20%) and the Gas Authority of India Ltd (10%).
(ONGC Videsh Ltd is the overseas arm of the Oil
and Natural Gas Corp, and GAIL is India's largest
gas transmission and marketing company.)
Until early this year, it was assumed that
gas from the A-1 block would go to India
exclusively. India, Bangladesh and Myanmar had
been deliberating and had even reached agreement
in principle regarding an overland pipeline that
would run through Myanmar's Arakan and Chin
states, then through Bangladesh into India.
But even as deliberations over that
pipeline ran aground, India's desire to slake its
thirst for gas through sourcing Myanmar's gas
fields received a blow when in December Myanmar
signed a memorandum with PetroChina, an oil and
gas company based in Beijing, for the sale of gas
from the A-1 block.
"That agreement with
China was perceived as a serious setback to our
quest for energy security," an official in the
Indian Ministry for Petroleum told Asia Times
Online, recalling that it wasn't the first time
that India's failure to be proactive had resulted
in the country losing out on other blocks in the
Shwe field. This apparently prompted Delhi to
pursue its goals more aggressively in recent
months.
That approach has borne fruit.
Myanmar is now willing to supply gas to India as
well as China. Allaying Indian apprehensions that
the sale of gas to China would affect its
availability to India, Myanmar's ambassador in New
Delhi, U Kyi Thein, said his country had enough
gas supplies to meet the demands of both
countries.
India's efforts at accessing
Myanmar's gas have paid off, but they come at a
high price. To offer Myanmar a better deal than
the Chinese, India has agreed to buy gas on a
"take or pay" basis. Under this arrangement, India
will give Myanmar guaranteed earnings for its gas
every year even if it is not able to access the
gas.
Indian officials might be patting
themselves on the back for their success with the
gas deal, but it is Myanmar that has once again
displayed shrewdness in its diplomacy with its two
giant neighbors India and China. This is not the
first time that Myanmar has come out the winner in
the Sino-Indian battle for influence in the
country.
For decades, India and China have
kept a wary eye on each other's influence in
Myanmar. Their battle for influence in Myanmar
heated up significantly over the past decade, with
India too beginning to court the generals who rule
the country after scorning them for years. China,
in contrast, was always happy doing business with
them.
When the international community
condemned Myanmar's junta for its ruthless
suppression of student protests in 1988 - India
was among the most vocal of the junta's critics -
China stood by the generals. Myanmar's generals
returned the favor a year later when China was in
the doghouse for the massacres of students at
Beijing's Tiananmen Square. Sino-Myanmar relations
grew from strength to strength thereafter.
For India, the costs of spurning the
generals became apparent, prompting a rethink of
its Myanmar policy. This resulted in a switch from
overtly backing the pro-democracy movement to
toning down that support and engaging the
generals. The threat to India's security that the
Sino-Myanmar military and economic cooperation
posed - there is concern that China's "listening
post" on the Coco Islands is aimed at monitoring
Indian naval activity and its missile program -
was perhaps the main factor that spurred the
Indian rethink.
But there were other
reasons, too. India realized that it needed the
cooperation of the junta if it was to be able to
tackle insurgency in its northeastern states.
There were also economic considerations - India
sees Myanmar as its land-bridge to Southeast Asia.
India needed Myanmar to boost its "Look East"
policy.
The generals were quick to sense
opportunity in India's anxieties. While they are
keen to be seen shaking hands with India, which
gives the junta the stamp of approval of the
world's largest democracy, they also recognize
that India, anxious to keep the Chinese away from
its doorstep, will go the extra mile to keep the
generals happy.
Myanmar is aware that
China too will accommodate the generals to ensure
that they continue to provide Beijing access to
the Bay of Bengal. The generals have not been
averse to playing on the anxieties and ambitions
of their two giant neighbors. The junta has
bargained skillfully. From China they get military
supplies, including lethal equipment. From India,
they get help in developing infrastructure.
It is in this context that the recent
deals with China and India should be seen. Myanmar
decided to sell gas to China, as it was not keen
to set aside the gas exclusively for India and to
wait forever for the India-Bangladesh tangle over
the pipeline to get resolved. It wasn't looking to
shut out India, though. It was aiming for a better
price by stepping up the competition. This
resulted in China's entry into the picture.
And Myanmar is not done with the hard
bargaining yet. "Talks are on with both the
countries. We are still in the negotiation stage
and have not finalized with either India or
China," Myanmar's envoy to India said.
The Bangladeshi route India,
meanwhile, is still exploring options to bring in
the gas. The pipeline through Bangladeshi
territory has now been dumped. Although Dhaka
stood to gain significantly from transit fees, it
was not satisfied with those alone. It had
demanded major trade and transit concessions from
India for allowing the pipeline to be laid through
its territory. The demands were unacceptable to
India, prompting it to shelve the proposal.
But a miffed Bangladesh is now raising
objections to a direct Myanmar-India pipeline. It
has also accused the two countries of encroaching
into Bangladeshi territorial waters - the maritime
boundary is not demarcated yet - to explore
hydrocarbon deposits.
But a pipeline from
Bangladesh through the sea to India is just one of
the options on the table. In a recent presentation
to its A-1 and A-3 block partners, India put
forward eight alternative routes - three via land
and three undersea, besides bringing the gas as
liquefied natural gas and compressed natural gas
by tanker.
At that meeting, India
indicated its preference for a land route via its
northeastern states. The proposed route runs along
Myanmar's west coast into the Indian state of
Mizoram, through Assam and into West Bengal. Gas
from India's fields in Tripura will also flow into
this pipeline. The proposed pipeline through
India's northeastern states is 500 kilometers
longer than the pipeline that would have run
through Bangladesh's territory. This could hike
costs by about US$300 million.
But a
pipeline through Indian territory is well worth
the additional investment, reason officials, as it
would transform the economies of the states it
passes through. Since the gas from Myanmar is
expected to flow over a period of 15-20 years or
even longer, the additional expenses of laying the
pipeline are well worth it, the officials say.
India is hoping that the gas pipeline and the
consequent economic transformation could help
quell the insurgencies in this strife-torn region.
The Myanmar junta and energy-hungry India
and China are looking to gas from the Shwe fields
with heightened expectations. The junta could earn
as much as $3 billion annually. This is expected
to strengthen its grip on power.
Pro-democracy activists are critical of
the gas deal and are calling on India to call it
off. They are reminding India of its commitment to
democracy in Myanmar, but they may be whistling in
the wind.
Sudha Ramachandran is
an independent journalist/researcher based in
Bangalore.
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