New energy alliances in the East

New energy alliances in the East

Emilio Fabio Torsello
New Delhi moves closer towards agreements with Iran for the construction of a 1,400-Km gas pipeline and with Russia for the exploitation of oil fields in Siberia, bypassing Islamabad. In this way, the energy scenario is advancing, creating new balances that are yet to be put to the test

The geopolitical balances between India and Pakistan also pass the way of energy. New Delhi is in fact about to sign an agreement with Iran for the construction of an underwater gas pipeline that will connect the 2 countries without passing through Pakistan. It will be one of the most significant energy structures in the area. For now, these are rumors but it has been discussed for some time and the confirmation has come - unofficially - from a senior Iranian government official: "The agreement for an Iran-India underwater pipeline will be reached, everything has become easier with the lifting of the sanctions imposed by the US." Although the international sanctions played a limited role in the agreements between the 2 countries, given that India was one of the few nations authorized to purchase oil from Iran during the period of the sanctions. Confirming that the news is much more than just a rumor, technical details of the project have been disclosed by certain international media. The structure will in fact be 1,400 Km long (with an estimated cost of $4.5 billion), it will transport 31.5 million cubic meters of gas per day to India and - crucial detail - will bypass the Pakistani exclusive economic area.

India and agreements for the exploitation of oil fields in Siberia

But that’s not all: India has, in fact, recently signed a series of agreements that see the major energy companies in New Delhi - Oil India, Indian Oil Corporation and Bharat PetroResources – collectively purchase significant shares of 2 oil fields controlled by Rosneft in Siberia: this involves the Taas-Yuryakh project and the Vankor oil field. In total, the agreement is worth $4.2 billion.

Present at the ceremony for signing the agreements was Rosneft chief, Igor Sechin, a close ally of President Vladimir Putin and India’s oil minister, Dharmendra Pradhan. "The signed documents literally mark the opening of a new page in the cooperation between Russia and India in the energy sector", emphasized Sechin in a statement. “It is primarily important that the cooperation is long term and that it results in multiple, significant effects for the economies of both countries", declared Pradhan, defining the agreements "a remarkable achievement".

Still within this agreement, a non-binding memorandum of understanding was also signed for the purchase of 23.9% of Vankorneft, a subsidiary of Rosneft that operates the huge Vankor oil field. Another 15% of Vankorneft will then be purchased by India's Oil and Natural Gas Corp, which has an option to increase this to 26%.

Russia escapes from the energy crisis with the US and Europe

The agreement between India and Russia, however, not only reinforces New Delhi but is also useful for Russia which - grappling with the crisis in Ukraine, Syria and with far from idyllic relations with Europe and the US, also in terms of energy - has found, in India, the -important support of one of the largest investors in the world. Suffice it say that India imports 80% of the oil it consumes.