Dimensions and Dynamics of Delhi's Diversified Energy Pursuits in the Persian Gulf

Abstract

The anticipated growth in the Indian economy in the coming decades will engender an increased dependency on imported energy supplies. A considerable portion of these will be shipped through the Persian Gulf. Delhis demands in the next decades will reconfigure the multifaceted dynamics between India and the Gulf States as suppliers with India being required to secure and diversify its long-term energy imports from existing suppliers. For that purpose, it will need: (1) to increase its imports through conventional shipping lines; (2) to explore how additional supplies could come from Iran and Oman through the Middle-East to India Deepwater Pipeline (MEIDP) to import gas; (3) to explore linking Irans Chabahar port to Kandla on Indias west coast; (4) to arrange supplies of Liquefied Natural Gas from Russias Vladivostok to Chennai on the Indian east coast. Recent energy negotiations with Tehran reflect Delhis desire to seek a wider coordination of Irans future energy supplies to meet India's energy needs. At a time when Iran is under "incessant pressure' , Delhi is aspiring to procure sizeable energy supplies in exchange for its support in building the terminals at Chabahar port. India is prepared to compete with China to secure a sizeable share of Irans energy supplies. In offering material support to Iran, India is seeking not only to deter prospect of China purchasing the lions share of the gas supplies, but also to defer, at least in the short term, Chinese investment in Iranian oil and gas projects. The Indian Prime Ministers recent UAE visits were aimed at increasing bilateral trade by 60% over the next five years and attracting $75 billion of UAE investments into Indias infrastructure development, spanning ports, airports, highways and petrochemical projects. Another step towards meeting future energy needs is securing the $15 billion investment from Saudi Aramco for Indian Reliance Industries Limiteds oil-to-chemicals business. It is expected that gas output from that integrated development will contribute to meet the country's growing gas needs by 2022. In revenue terms, this will help India save $20 billion through LNG import substitution. The potential advantages this could bring to India include: (a) expanding its ports capacity; (b) diversifying suppliers; and, (c) reducing supplier dependency. This paper will also the three perennial dilemmas Delhi faces, namely, domestic deficiency, external dependency and the persistent discrepancy (between growing demand and available supplies) although the Indian leadership ranks energy security as second only to food security. The paper will conclude by identifying four factors which will drive the strategic partnership between India and the Persian Gulf states, namely: (1) the race for energy resources; (2) the role of remittances; (3) regional ambition; and (4) regional rivalry. Hence each side has its own geopolitical objectives where alliance-making is driven by rising commercial maritime interests, and the imperative to counter traditional enmities is driven both (a) by the Sino-Indian competition as well as (b) by the Saudi-Iranian rivalry in the Gulf.