India Wants to Change the Global Energy Landscape

According to a recent report by Indian newspaper "Business Standard", Indian Oil and Natural Gas Corporation may soon bid $2 billion to acquire part of Russia's Yugansk Petroleum Company. This is another major energy move by India in recent times. India’s energy strategy is even more pressing and has aroused tensions in Japan and the United States. Observers believe that India’s energy strategy will create new energy giants and may change the world’s energy landscape.

India will reportedly launch high-level talks with Myanmar and Bangladesh this week aimed at approving a multi-billion-dollar natural gas pipeline project to meet India's rapidly growing energy needs. For many years, many people in Bangladesh have opposed the export of the country's natural gas resources to neighboring India. Therefore, Bangladesh has been lukewarm on the issue of building natural gas pipelines to India. Analysts believe that Bangladesh’s agreement to hold talks with India on this issue means a major change in the country’s attitude.

Indian Petroleum Minister Aiyar recently stated that India’s negotiations with Myanmar and Bangladesh on the construction of natural gas pipelines have now entered a substantive stage. Some Indian officials said Bangladesh's interest in the pipeline was spurred in part by India's improving ties with Myanmar.

Last year, a new gas field was discovered in a gas field offshore Myanmar's Andaman Sea. Experts pointed out that the newly discovered natural gas reserves in this gas field are as high as 14 trillion cubic feet. Currently, India is negotiating with Myanmar to build a natural gas pipeline. It is reported that the proposed pipeline may either traverse Bangladesh or bypass the country entirely. India is currently evaluating an undersea pipeline across the Bay of Bengal in case Bangladesh disagrees with the gas pipeline project.

There are also diplomatic reasons why India is keen on the project. "This gas pipeline will significantly strengthen India's relationship with its eastern neighbor, a country that has been largely neglected," Aiyar said.

On January 8, the Indian government announced that it had signed a petroleum cooperation agreement with the National Iranian Oil Company. Under the 25-year agreement, India will import 750 tons of LNG from Iran annually for 25 years starting in 2009. India's Oil and Natural Gas Corporation (ONGC) will also help Iran build two oil fields and one natural gas field, thereby receiving 90,000 barrels of Iranian crude oil per day in return. It is reported that the agreement is worth approximately US$40 billion. In addition, the Indian Oil and Natural Gas Corporation will also acquire a 20% stake in an offshore oil field in Iran.

In addition to the impressive achievements in energy cooperation with Iran, Iran’s energy cooperation with Russia is also the envy of other countries. Officials from the Ministry of Petroleum of the Indian government recently disclosed to the Indian newspaper "Business Standard" that Indian Oil and Natural Gas Corporation may soon bid $2 billion to acquire shares in Yugansk Petroleum Company. Neftneft said it wanted to take a stake in Yugansk Neftneft.

Separately, Indian Oil and Natural Gas Corporation said it is in talks to invest in part of the Russian oil group Yukos' business. India's long-term energy security will be guaranteed through a similar agreement with Russia.

Clearly, India is now working on a coherent long-term energy plan. Analysts say that in this long-term plan, India regards Iran and Russia as its two key energy partners.