India on the front line in energy war

Energy cooperation among Russia, Iran and India has a much wider backdrop than business opportunities. Energy security, inevitably, is a subject where politics mixes with economics. India is keenly watching the tectonic shifts in the Eurasian gas market. Iran has proven gas reserves of about 28 trillion cubic meters, while its gas output increases by 10% annually. At present, Iran uses almost its entire gas production in its domestic market. About 100 billion cubic meters (bcm) is supplied to domestic consumers, including 35bcm for power plants, while 40bcm is pumped into the country’s oil beds for maintaining the well flow rate. In other words, Iran’s export capacity is poised to grow dramatically in the near term.

New Delhi is aware that many of Europe’s plans to diversify its gas supply involve Iran. In other words, a competitive struggle for Iranian gas between the European market and the Asian market is becoming inevitable in the near future as Europe faces an acute gas shortage by 2015, even if Russia keeps up its supplies and the Northern Gas Pipeline becomes operational.
India has been watching with interest Ahmadinejad’s proposal to Putin on the sidelines of a Shanghai Cooperation Organization (SCO) summit last June that Iran is prepared to determine gas prices jointly with Russia and the main routes of gas pipelines. The Russian-Iranian energy dialogue has significantly advanced since then, culminating in the proposal by Iranian Supreme Leader Ali Khamenei to Putin on January 28 that the two countries must cooperate along the lines of the Organization of Petroleum Exporting Nations. To be sure, New Delhi has taken careful note that the prospects for the merging of Russian and Iranian gas-transportation networks have distinctly brightened.

Taking matters further, the Iranian Supreme Leader’s adviser on international affairs, Ali Akbar Velayati, visited Moscow last week and held discussions with Putin. Velayati said on his return from Moscow that Tehran sees the present juncture as a “turning point” in Iran’s strategic cooperation with Russia. He alleged that Washington is trying its utmost to disrupt the emerging Russian-Iranian strategic cooperation in the transit of energy, as it will impact phenomenally on the correlation of forces internationally.

With Russia controlling 27% of the world’s gas reserves and Iran 15%, cooperation between these countries is bound to have huge potential in terms of global gas distribution. It is only natural for a major potential gas consumer like India optimally to exploit the opportunities arising out of the matrix of energy cooperation between these two countries with which it has traditionally enjoyed close and friendly relations.

From the Indian perspective, Russia’s resurgence as an assertive player on the global scene and Iran’s preference to foster energy cooperation with the Asian market open up the prospects of a unified Asian market for gas, involving the Central Asian countries as well.

Asia Times