Notwithstanding the recent oil and gas discoveries in the Krishna-Godavari basin and Rajasthan, India will still need to import large amounts of hydrocarbons to meet its growing demand. So far, the bulk of the country’s energy imports are sourced from the Gulf states because of locational advantages and refining complementarities. However, for long-term security reasons, there is now a growing realisation that India must not only diversify its sources of supply, but also its refinery locations, with more refineries in the east and south. Although Africa is fast emerging as an important supply source, there are several others closer home in its eastern neighbourhood.
Till recently, Bangladesh was being looked at as a potential source of supply.
However, Dhaka has more or less removed itself from India’s list of probable energy sources for now due to its domestic compulsions, with Unocal, the main advocate of Bangladeshi gas exports to India, even closing its Delhi office.
However, India does have other eastern options, namely Vietnam and Burma.
The latter, in particular, has substantial proven and recoverable reserves of hydrocarbons, particularly natural gas, with estimates ranging from 12 trillion cubic feet of gas onshore and three to four times more offshore.
As in Sudan, Indian oil companies like Gail India and ONGC Videsh have already taken up stakes in its Rakhine offshore oil and gas block, with encouraging results from initial recoveries. However, the issue of transporting gas from Burma still remains unresolved, and pricing could emerge as a potential stumbling block.
While Bangladesh could once again emerge as a hurdle on the cheapest pipeline route option, as against a sub-sea line or through India’s north-eastern states, the LNG route is also open, although Rangoon’s offer price, at $4.5 million btu, is far above India’s LNG imports from West Asia.
But with western-imposed sanctions on the military junta discouraging several MNCs from investing in its energy sector, the carrot of a large Indian market could yet prove to be sufficient incentive for Rangoon to arrive at a mutually agreed settlement.
There are other options as well, such as exporting power instead of gas via inter-state grids through India’s north-eastern region. But the point is that with Burma’s strategic location emerging as a magnet for other regional powers, India must ensure its presence there, both in strategic and economic terms.