India grapples with energy
issues By Siddharth Srivastava
NEW DELHI - India's hopes of tapping into
Myanmar's gas resources might have hit a dead end,
with Yangon pitching for China instead. India's
problems with Myanmar follow US moves to strangle
the US$7.4 billion Iran-Pakistan-India pipeline.
Reports of the meeting between Indian
officials and Myanmar suggest that Yangon has
refused to export gas to India or other contenders
such as South Korea and instead would prefer a
pipeline to China to export
gas found offshore.
Myanmar has reportedly
told an Indian delegation that it wants to sell
gas from offshore Block A-1 and potential
discoveries in Block A-3 to China. The Shwe
natural-gas field was discovered by Daewoo on the
Western Arakan coast of the Bay of Bengal.
While there is still confusion over how
matters stand, with Daewoo, the South Korean
company that operates the gas fields, denying the
claims, nobody doubts that India's position is
weak.
Meanwhile, Washington has told India
it is opposed to the gas pipeline from Iran, US
Energy Secretary Samuel Bodman, who has visited
New Delhi, has said.
"During my trip, I
have made it clear at the highest levels of the
Indian government that the United States opposes
the development of the Iranian pipeline to India,"
press reports quoted Bodman as saying. "We believe
that Iran is seeking to develop nuclear weapons,
and anything that will support that endeavor is
something that we oppose."
A prominent US
legislator, Congressman Tom Lantos, who is head of
the House of Representatives' Committee on
International Relations, has introduced a bill
that, if passed, will ensure that India and
Pakistan are not able to proceed with their gas
pipeline connecting to Iran.
The
legislation, the Iran Counter-Proliferation Act of
2007, seeks to target companies investing in
Iran's energy sector by ensuring that deals with
Iran worth more than $20 million will bring the
investors under US sanctions.
According to
reports, the US government has been quietly
warning foreign energy companies, including
Europe's Shell and Repsol and Malaysia's SKS, as
well as the governments of China, India, Pakistan
and Malaysia, that penalties are possible if they
pursue energy deals with Iran.
As for
Myanmar oil and gas, Indian intelligence agencies
recently cautioned New Delhi about the possible
shut-out of Indian interests by Russian and
Chinese oil firms. The agencies argued that the
decision by oil-business-savvy Russia and China to
veto a US-led move in the United Nations Security
Council to address the Myanmar junta's
human-rights violations was a critical juncture in
the evolving relationship with Russian and Chinese
companies now well established in the country.
The agencies highlighted the recent award
of three deepwater offshore blocks - AD-1, AD-6
and AD-8 - along Myanmar's western Rakhine coast
and adjacent to India's territory - as a possible
quid pro quo by the ruling State Peace and
Development Council to China's China National
Petroleum Corp.
Russia has also stolen a
march over the Indian contingent, with the
Republic of Kalmykia (RoK) of the Russian
Federation recently acquiring its first
oil-and-gas exploration and production asset in
Myanmar - the B-2 onshore block.
India's
ONGC Videsh Ltd and Gas Authority of India (GAIL)
have a 30% stake in A-1 and A-3 blocks, while
South Korea's Daewoo is the operator with a 60%
stake. South Korea's KoGas has the remaining 10%
interest.
According to a report by news
agency Press Trust of India, "China has told
Myanmar that it will lay about 900 kilometers of
pipeline in Myanmar to transport the gas from the
offshore area to the Myanmar-China border. The
distance from the gas field to the India-Myanmar
border is 290km, making it the most economical
export option, but Myanmar's military leadership
prefers to go with China.''
Perhaps
sensing India's situation, Silver Wave Energy Corp
of Singapore - a privately owned company headed by
the well-entrenched Minn Minn Oung, which has
helped India's state-run gas utility, GAIL, access
three offshore blocks in Myanmar - seems to have
given its relationship with GAIL a low priority by
signing a tripartite agreement with the RoK and
the Myanmar Oil and Gas Enterprise for oil and gas
exploration.
Recently, more gas was
discovered off Myanmar's coast, further enhancing
the Southeast Asian nation's position as one of
the richest countries in the region for
hydrocarbons. The latest find was made by
Thailand's PTTEP, the exploration arm of the Thai
state-controlled oil-and-gas company PTT, in the
Gulf of Martaban.
According to recent
reports, Dhaka is now reportedly keen to renew
discussions with the Indian government on the
three-nation gas pipeline involving India, Myanmar
and Bangladesh, which has failed to take off
because of Dhaka's linking the pipeline and trade
issues with India.
In this context, India
has sought the inclusion of transnational oil and
gas pipelines in the World Trade Organization's
trade-facilitation measures, which aim to cut red
tape and other obstacles to the flow of goods
across borders.
"Countries like Bangladesh
have shown a lack of commitment in entering into a
treaty for providing a transit route [for] Indian
goods, including the Myanmar-India gas pipeline,
through their land, forcing India to consider
other circuitous and uneconomical options,'' says
an Indian government submission.
It now
seems too little, too late. The solace for India
is that in the recent past, massive gas reserves
have been found in the rich Krishna-Godavari basin
and elsewhere that should meet some of the rising
demand for energy sources. India is also exploring
the option of nuclear power after a historic deal
with the US.
Looking to meet its growing
energy requirements from every source, India
recently mooted the concept of a "South Asian
Energy Ring'', which would comprise transnational
energy lines in electricity, gas and oil that
would facilitate trade in energy in South Asia.
Speaking at the South Asia Energy Dialogue
in New Delhi, under the aegis of the South Asian
Association for Regional Cooperation (SAARC),
Indian Power Minister Sushilkumar Shinde said this
country already has grid interconnection with
Nepal and Bhutan and feasibility studies are under
way in Sri Lanka and Bangladesh.
The
SAARC, for which energy is a very high priority
for cooperation, comprises Afghanistan,
Bangladesh, Bhutan, India, Maldives, Nepal,
Pakistan and Sri Lanka.
Key SAARC nation
Pakistan has welcomed the energy-ring concept.
Amanullah Khan Jadoon, minister for petroleum and
natural resources, said Pakistan is a strong
advocate of energy cooperation in South Asia.
Speaking at the meeting of SAARC energy ministers,
Jadoon said high economic growth demands high
energy inputs.
India needs to act fast.
More than half of its power plants are either shut
or running at half their capacity because of a
coal shortage. Most of India's power plants are
coal-based.
According to government
estimates, India's dependence on crude-oil import
will rise by 86.3% by 2011-12 from 78.3% at
present (2006-07).
New Delhi has estimated
a loss of 400 million units of power from 43
gas-based plants, due to an acute shortage of gas,
which could be addressed once pipelines are in
place from the Krishna-Godavari basin, the site of
several recent gas finds. India's power industry
suffers an average shortage of 8% and a peak
shortage of 13%.
India, Asia's
third-biggest oil market, is promoting exploration
to reduce dependence on imports as prices rise to
record levels and output from aging fields drops.
India's current gas supply of 85 million
cubic meters a day, including imported liquefied
natural gas, falls short of the potential demand
of 170 million cubic meters, according to
estimates by the Oil Ministry. Gas consumption may
rise to 400 million cubic meters a day by 2025 if
the economy grows at the projected rate of 7-8% a
year.
Siddharth Srivastava is a
New Delhi-based journalist.
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2007 Asia Times Online Ltd. All rights reserved.
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