India: India and Energy: A New Great Game


Auriol Weigold

India's slippery oil diplomacy' headed a mid-June article and suggested that India's recognition by the United States as a future nuclear-powered nation will not quickly ease its thirst for oil.

Projected pipelines, port facilities and new highways being developed by India and China cooperatively or individually point to an increasing convergence of interests, meriting revisiting my article in the September 2005 issue of Asian Analysis. There I argued that it makes sense for India to cooperate with China in meeting their huge energy needs. India imports close to 70% of its oil needs and consumes more than 2 million barrels a day while China draws 40% of its oil supplies from foreign producers and consumes more than 3 times India's total amount.

Since India's strategic energy move in January 2005, hosting the first meeting of oil energy ministers from the major Asian oil importers and the Middle Eastern exporters, and gaining endorsement for its proposed Asian oil market, the countries have signed an India-China Strategic and Co-operative Partnership for Peace and Prosperity. They are committed to exchanging bidding information on overseas oil and gas projects and identifying further opportunities for partnership in exploration and value-adding.

The Indian state-owned Oil and Natural Gas Commission has a second arm to its strategy, to invest in the production and export of oil and gas in overseas fields. Its 'slippery' oil diplomacy has led to criticism for investing in nations in conflict with the United States (International Relations and Security Network, 16 June 06).

China and Russia are each investing in such states too including Vietnam, Myanmar, Sudan, Libya, Syria, the Ivory Coast and Iran where the much publicised pipeline, the 25 year oil and gas agreements and the levels of defence cooperation, involving India and China, are causing sabre-rattling by the United States.

The apex of the new great game, however, would appear to be the Shanghai Co-operation Organisation (The Weekend Australian Financial Review, 9-12 June 06), established by China and Russia in 2001 with Central Asian States Uzbekistan, Kazakhstan, Kyrgyzstan and Tajikistan. India, Pakistan and Iran, originally granted observer status, were alerted in April 2006 that an invitation to become full members would be issued.

Whatever the initial purpose in setting up the Shangahi Co-operation Organisation, it is now clearly an economic giant with shared interests in energy acquisition and delivery programs, this latest version of the great game, including India as a team member, is being played for rich reserves of oil and gas.

WATCHPOINT: There may be economic opportunities for Australia with the Shanghai Co-operation Organisation members, collectively or individually, in the supply of oil, gas and technology. As with the 'slippery' notion that Australia might supply uranium with US support to India, could Australia become a player in the new economic great game clearly not in the interests of its major ally?


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