India is increasingly looking to develop energy links with its neighbouring countries. The Indian Prime Minister Narendra Modi while attending the 16th International Energy Forum has informed, “At 4.3% Compounded Annual Growth Rate (CAGR), India is the fastest growing energy consuming nation and will be a key driver of global energy demand over the next 25 years.”
The Modi government is focusing on two main strategies to strengthen the country’s energy sector. First, India is looking to boost alternative energy sources to reduce its dependence conventional power. Secondly, it is looking to forge new relations with neighbouring countries like Mauritius, Indonesia and Sri Lanka to reduce its dependency on the OPEC for oil. The Indian government has recently launched the International Solar Alliance (ISA). During its launch, Modi stated that the launch of this programme is a step towards fulfilling the commitment of curbing emissions and climate change in India. According to the IEA, “India's reliance on oil imports may rise above 90% by 2040, requiring constant vigilance as to the implications for energy security.”
Recent Indian energy tie-ups
India already supplies petroleum products to Mauritius and an Indian oil refinery company, Indian Oil has a retail network in Mauritius. India is focusing on Mauritius as it can be a feasible location for India to store petroleum. The island nation is on the international trade route and will simplify the process to reach the African markets. India has helped Mauritius through its oil and gas infrastructure development.
The first Indonesia – India Energy Forum was recently held in Jakarta. The two countries decided to work hand in hand in areas including oil, electricity and energy efficiency. India is also sharing its knowledge on renewable energy with Indonesia. Suhil Nathani, the Managing Partner of the Economic Laws Practice, remarked regarding this bilateral agreement, “It is a win-win situation for India to share its technology with an oil and coal surplus country like Indonesia. This alliance will also restrict China's role in the energy markets of Indonesia.”
India has also unveiled a road map for economic cooperation with Sri Lanka. The energy sector has been given primary importance. This plan is likely to assist India’s varied energy needs and will prove lucrative for India. Dharmendra Pradhan, Union Minister for Petroleum and Natural Gas recently remarked on the new international tie-ups, “We are trying to use energy as a means of diplomacy and not only to find overseas sources of hydrocarbons.”
Stressing the new policy taken by the Indian government, Nathani informed, “There is a global demand for refined petroleum products and India’s diplomacy will come in handy on this front.” India seems to be opening new frontiers in the energy sector but that is by no means, underplaying India’s relations with its traditional energy partners like the UAE and the US.
India and the United States has decided to increase its co-operation in oil and gas, power, renewable energy and coal sectors during the first meeting of the US-India Strategic Energy Partnership. US President Donald Trump and Indian Prime Minister Narendra Modi had announced this partnership on June 26, 2017 in Washington, D.C.
On October 17, 2017, the American oil tanker New Prosperity carried the first shipment of crude oil to India’s Paradip port from the US in more than four decades. In November, the US, India, Japan and Australia held their first quadrilateral meeting to discuss the prospect of a ‘Free and Open Indo-Pacific’. This is expected to develop new opportunities for India in the global scenario.
India's public sector firms have already signed contracts for 7.8 million barrels of US crude oil. More than 1.6 million barrels have already been delivered to India and the rest is also scheduled to reach Indian shores soon. Reliance Industries' refining complex in Gujarat has ordered one million barrel of US crude oil. This is an indicator of the growth of India’s energy sector. The US has recently signed a 20 year contract to export liquefied natural gas to India and Japan in commercial services.
Rick Perry, the US Secretary of Energy and Dharmendra Pradhan, the Union Minister for Petroleum and Natural Gas, recently co-chaired the inaugural meeting of the US-India Strategic Energy Partnership held on April, 18. Pradhan stated, “The United States and India will pursue four primary pillars of cooperation. They are oil and gas, power and energy efficiency, renewable energy and sustainable growth and coal. Additionally, both parties may consider establishing additional pillars of cooperation based on mutual agreement.”
The US Secretary General speaking on the recent tie-up with India informed, “As a growing supplier of energy resources, technologies and services around the world, the United States will help our allies and partners to become more resilient against those that use energy to coerce.” India and the United States are also working on the implementation of the 2008 Agreement for cooperation concerning peaceful uses of nuclear energy. There had been political difference on this issue and the present Indian government is planning to approach this matter diplomatically.