Indias Energy Security Concerns and Its Implications

Indias Energy Security Concerns and Its Implications CHAPTER-I INTRODUCTION 1. Indias economy undeniably, is on a roll. However the parallel energy discourse, sadly, moves at a slow pace, lacking in requisite agility and momentum. If India is to secure its interests in a more healthy manner, its energy discourse must keep pace qualitatively and quantitatively, in concept and in execution, with its economic flight. There is indeed a need to take an analytical look at the entire paradigm of Indias energy security and critically examine whether or not it is appropriately poised and try and to identify the necessary correctives that will help propel the Indian economy along its growth trajectory. 2. A UNDP report defined energy security as the continuous availability of energy in varied forms, in sufficient quantities and at reasonable prices. For India, the Parikh Committee report stated that a country is energy secure when it can supply energy to all its citizens and meet their demand for safe and convenient energy at affordable costs, at all times, with a set confidence level, considering shocks and disruptions that can be expected. It is the, affordable rather than reasonable source of energy that any country would like to have. While describing the concern over Energy Security three major reasons come to mind as far India is concerned: (a) To achieve the aimed domestic economic growth rate of 7-9% energy security is an absolute necessity. (b) High overall global demand and limited supply constraints are continuously pushing up oil and gas prices to higher and higher limits. (c) With Energy supply constraints, there is tremendous international competition to secure the scarce energy resources. 3. Energy is paramount for the sustained economic growth of our country and to fulfil our aspirations of becoming a true Global Power. High projected economic growth rate call for greater availability of reliable and cheaper energy. India and Chinas energy demand growth is unfolding in the midst of a perfect storm: economic, geopolitical, and environmental factors are combining to create new challenges, pressures, opportunities and alliance. Furthermore economical per capita energy consumption (through better governance and distribution mechanism) and access to cheaper energy will help in reduction of energy poverty which is a key development goal for any country. In search of oil and gas these, countries are exhibiting a hunger for energy resources, which has resulted in establishing new ties in South East Asia, in Africa and in Central Asia. 4. It has been seen on various occasion, that these countries are been pitted against each other and this competition has given rise to concerns about the potential for re-emergence of conflict over energy resources. A fallout of this has been a realization by the West of the new geopolitics that endangers the global security and a realization by South Asian, Middle East and Africa countries of the attractiveness of Asia as an alternative market to Europe and the US. On another front, climate change and the links it has with energy and energy choices are also creating significant pressure for low-carbon economy paths for these emerging new economies, adding yet another restraint to energy choices and a new geopolitical dimension. METHODOLOGY Hypothesis 5. China has sought to gain strategic advantage over India in South Asia not only militarily but also through securing energy recourses by progressively making Indias neighbors dependent on China to a large extent for their defence supplies and other economic goodies . Chinese aid to Islamabad , Bangladesh , Sri Lanka and Myanmar is designed to lock India in a low-level deterrent relationship with its immediate neighbors and keep India confined to the sub-continent. The expansion of Chinese influence into Myanmar provides China, the potential to deploy their sea power in the Bay of Bengal, in Indias sensitive areas of maritime interest and to eventually pose a direct threat to Indias eastern seaboard. Also, China is competing for foreign investments and markets in these countries for their products in the next 15 to 20 years to achieve economic marginalization of India. The close relations between China and Myanmar also pose a threat to overall Indian security and economic interests in the Bay of Bengal region. 6. China has been providing military, economic and infrastructure support to these South Asian countries with a long term interest in mind. By providing this support, China aims to secure energy resources for its growing economy, build better relations with its neighbours, and gain a foothold in the South/South East Asian region. 7. Another aspect of Chinas interest in Indias neighbors could be simply be to support to its growing economy. China is aiming to quadruple its per capita GDP by 2020. This would imply an average annual economic growth of 7.2% till 2020. In order to attain this, China will have to keep meeting the enormous appetite of its energy. Thus, the Chinas interest may purely be to strengthen its economy with or without any malicious intentions towards India. However India can afford not be complacent with Chinas intentions if she wants to maintain a safe and secure scenario in South Asia for its own economic and social development. Statement of Problem 8. Are Indias future energy need concerns justified and what is its affect on the South Asias overall security scenario in the backdrop of Chinas aggressive quest for energy in the South Asian region . Justification of the Study 9. Energy crisis is a situation in which the nation suffers from a interruption of energy supplies, coupled by rapidly increasing energy prices that threaten economic and national security. The threat to economic security is represented by the possibility of declining economic growth, increasing inflation, rising unemployment, and losing billions of dollars in investment. The threat to national security is represented by the inability of the government to exercise various foreign policy options, especially in regard to countries with substantial oil reserves. 10. China and India are two rapidly growing economies. Chinas real GDP growth has shown a sustained growth of 8-9%. India too has shown an impressive growth. Both these countries are also one of the most populous in the world. China is the third largest importer of oil behind US and Japan whereas India is the fifth largest consumer in the world. The Energy hunger of India and China is already pushing oil and gas resources to its limits its their own countries. Both these countries also cannot afford any disruption to their energy supplies. 11. India, will face an energy crisis, if there is any disruption in the energy flow, either by war, terrorist strikes on oil production platform or blockage of SLOCs, resulting in increasing oil price. It is therefore imperative to understand the steps taken by India to ensure Energy security, especially in the backdrop of Chinas aggressive quest to secure its energy supplies in the South / South East Asian region and the growing ties between China and Myanmar. Scope 12. The study will discuss the energy forecast of India and China up to 2030 and the availability of energy resources in the world and South /South East Asia( With special reference to Myanmar ) . Having considered the energy resources available, it will explore the way and means adopted by both these countries to secure their energy resources and transportation without challenging each other and affecting the overall security scenario in South Asian region. Method of data collection 13. The source of data collection is Defence Services Staff College Library and Internet . The bibliography is appended at the end. Organisation of Dissertation 14. The study is carried out in the following sequence: (a) Energy requirements for India and China. (b) Indias efforts to secure energy supplies and the importance of Myanmar (China – Myanmar relations). (c) Indias initiatives in Bay of Bengal region to secure energy sources and maintain regional harmony. (d) The way ahead (Importance of cooperation with neighbouring countries for regional peace in South Asia). (e) Conclusion. CHAPTER-II ENERGY REQUIRMENT F OR INDIA A ND CHINA Indias Energy Quest 1. The Hydrocarbon Vision 2025, published by the Government of India in the month of February 2001[1], set out in very clear terms, Indias energy security dilemma : its crude oil self-sufficiency declined from 63% in 1989/90 to 30% in 2000/01. In 2024/25, crude oil self-sufficiency was expected to be a mere 15%. The situation relating to gas was equally grim. From 49 BCM (billion cubic metres) in 2006/07, Indias demand for gas is expected to rise to 125 BCM in 2024/25. As against this, production from existing fields and discoveries was 52 BCM, leaving a gap of 75 BCM to be filled through new domestic discoveries and from imports. The electric power sector was projected to account for 71% of the total incremental growth in Indias natural gas demand from 2000 to 2025. Indias installed power capacity at present is based on coal (59%), hydropower (26%), gas (10%), and nuclear (2%). In the period up to 2025, the share of gas in the energy mix would be 20%. The Integrated Energy Policy (I EP) document prepared by the Planning Commission, in August 2006, under the Chairmanship of Mr Kirit Parikh, takes a holistic view of Indias energy requirements up to 2031/32. The report postulates that, in order to reach growth rates of 8% per annum up to 2031/32, the country needs to do the following: (a) Increase primary energy supply by three to four times. (b) Expand electricity generation capacity by five to six times from the 2003/04 levels, that is, power generation capacity must increase from the current 160,000 MW (megawatt) to nearly 800,000 MW by 2031/322[2] . 2. Taking into account power and other commercial requirements, the report suggests that Indias primary commercial energy requirement (in million tonnes) would be as given in as following[3] : (a) Primary commercial energy requirement (million tones) . 3. The place of gas in the energy mix between 2006/7 and 2031/32 is projected as given as following[4]: (a) Energy mix (million tones) . 4. To reach its growth targets, India would need to hunt all available fuel options and energy sources, conventional and non-conventional. However, the current position with respect to specific energy resources is also to be noted. Presently, Indias energy mix is: coal and lignite 50%; oil and gas 45%; hydropower 2%, and nuclear 1.5%. In 2022, fossil fuels will continue to dominate Indias energy mix to the extent of 75%, with hydropower providing 14%, and nuclear power 6.5%. Even the proponents of nuclear power have noted that, most optimistically, nuclear energy will provide only 8.8% in Indias energy mix in 2032, as against 76% for fossil fuels, and 12% for hydropower. In 2052, when nuclear energy is likely to be 16.4% of our energy mix, coal is expected to be 40%; hydrocarbons 35%; and hydropower 5.1%[5] . 5. The IEP report has looked at different international scenarios pertaining to coal and gas. Its conclusion is unambiguous. Any supply strategy over the coming decades will have to emphasize Indias major resource, that is, coal. Coal is the most abundant domestically available primary energy resource other than thorium and solar. In the coal-based development scenario, the total demand for coal increases from 172 MTOE (million tonnes of oil equivalent) in 2004/05 to 1022 TOE in 2031/32. Measured in MT of Indian coal with 4000 kcal/kg (kilocalories per kilogram), the requirement of coal will thus increase from 406 MT in 2004/05 to 2555 MT in 2031/327 [6]. Chinas Energy Requirments 6. Before analyzing the Chinese forays in Energy markets South Asia , a basic question needs to be answered ,Why China? .The answer lies in the fact that India and China share many similarities. The countries are located in the same geographical area and are amongst the worlds most populated countries. They are the fastest growing economies in the world and are dependent on oil imports to fuel their economic growth. The way China has jump started its economic growth holds some important lessons that can be learnt. 7. The main reason fuelling Chinas aggressive forays into the energy markets are Chinas economic growth which has led to a near doubling of oil consumption in China. The average growth rate has been between 8-10% in the last decade . At this pace of economic growth, the Gross Domestic Product is expected to reach four times of its present value to 4.7 trillion dollars by year 2020 [7] . This high rate of growth has been fuelled by growth in heavy industries which will increase the demand for energy by 150% in the next decade. The near doubling of oil consumption is also partly fuelled by the fact that there is a high requirement of petro-chemical products in heavy industries and an increase in automobile growth in China. This has led to an increase of 7.5% in oil demand every year. Competition to Access Oil Resources in South / South East Asia 8. The oil situation emerging in South/ South East Asia is further complicated by the ongoing tussle between China and India to secure their own energy supplies in this region. The stiff competition is mainly because of two reasons, firstly the countries are amongst the fastest growing economies and secondly they lack in sufficient domestic energy sources and are net importers of oil. The two nations are resorting to efforts, both in the diplomatic and economic spheres. These efforts include forging new diplomatic alliances, high profile diplomatic visits, financial aid to the South Asian countries and investments in economic sectors like infrastructure, telecom and mineral extraction and resource development etc. 9. The state oil companies at the same time, are involved in deals in the oil and gas sectors purchasing stakes in oil fields which are already producing oil or are being explored, exchanging the know how in return for oil and participating in exploratory efforts to discover new oil and gas finds in the region . India is learning from the Chinese efforts in these fields as they have a head start over us in this area and have been quite successful in their efforts to secure their energy supplies. Both India and China are looking towards SriLanka, Bangladesh and Mayanmar for oil and Gas. Chinese Forays 10. China is not only a major energy consumer, but also a major producer with a high degree of self-reliance. In 2008, Chinas energy production reached 2.06 billion tonnes of standard coal and the consumption was 2.22 billion tonnes, ranking the second both in terms of production and consumption with a self-sufficiency of 93%. Coal is the primary source of energy for China and oil comes the second. While meeting the domestic demand, China exports 60–80 MT (million tonnes) of coal every year and is a main exporter of coal and charcoal in the world (even to India). Chinas power generation capacity in 2008-09 was the second largest only after that of USA. China produced over 182 MT of petroleum and 54 BCM (billion cubic metres) of natural gas. 11. To fulfil its growing appetite for energy, China is aggressively pursuing various energy resources. Chinese companies are involved in acquisition of oil companies, buying oil fields and purchasing partnerships in oil fields that are being developed. China is pursuing a multi dimensional approach which is a mix of diplomatic and economic efforts. One of the main thrust of Chinas oil policy is towards Asia and Africa. The importance of Africa countries to China can be appreciated from the fact that the trade between these is expected to rise many fold by the years to come . As part of its Go West policy, China is also accessing the Central Asian Region. It has plans to build pipelines from Tarim Basin in China to Kazakhstan and Turkmenistan in order to import oil and gas. In 2004, construction began on a pipeline from North West Kazakhstan to Xinjiang to carry oil. Chinese influence in the Central Asian Republics can be gauged from the fact that these republics now subscribe to the Chinese view on a multi polar world, and its views on various regional and international issues like Tibet, Taiwan etc. CHAPTER-III INDIAS EFFORTS TO SECURE ENERGY SUPPLIES AND THE IMPORTANCE OF MYANMAR 1. India Hydrocarbon Vision 2025 document as discussed earlier had given considerable importance to the role of gas in the energy mix to realize the projected national growth rates. This may be is primarily because though we may be having a large deposits of coal however the domestically produced coal has very high ash and sulphur content and is of very low calorific value . The coal utilized in the country has 4000 kcal/kg as against 6000 kcal/kg available in imported coal. In fact, the coal used in the Indian power plants has a calorific of value 3500 kcal/kg. Large estimates of total coal reserves do give a false sense of security because current and future technologies will convert only a small portion of the total reserves into a mineable category. Owing to all these reasons the govt has started looking towards new sources of energy supply so as to have a requisite amount of strategic energy reserve [8]. 2. There have been several large natural gas finds in India over the last five years, predominantly in the offshore Bay of Bengal (Krishna Godavari region). The discoveries also fit into the recent trend of large upstream developments in the Bay of Bengal, especially in the Krishna Godavari basin. Gujarat State Petroleum Corporation (GSPC) holds an estimated 20 Tcf of natural gas reserves in the Krishna Godavari area [9]. ONGC has worked to maximize its recovery rate at the Mumbai High, which supplies the bulk of the countrys natural gas at present. Transnational Pipeline to meet India s needs 3. Iran-Pakistan-India Pipeline . India has considered various proposals for international pipeline connections with other countries. One such scheme is the Iran-Pakistan-India (IPI) Pipeline, which has been under discussion since early nineties (1994). The plan calls for a roughly 1,700-mile, 2.8-Bcf/d pipeline to run from the South Pars fields in iran to the Indian state of Gujarat [11]. 4. Turkmenistan-Afghanistan-Pakistan-India Pipeline . India has shown interest to join onto the Turkmenistan-Afghanistan-Pakistan pipeline. The TAP project consists of 1,500-mile pipeline originating in Turkmenistans Dauletabad – Donmex natural gas fields and transporting the fuel to markets in Afghanistan, Pakistan, and to India. Initial plans for the TAP call for the line to have a capacity between 2-4Bcf/d at an estimated cost of $3.4 billion. While India has publicly promoted this scheme while negotiations with Iran have slowed, the TAPI(India) project faces a variety of hurdles. India has concerns about the security of the proposed line, which would traverse unstable regions in Afghanistan and Pakistan. Furthermore, a recent review of the TAPI project raised doubts whether the Turkmen natural gas supplies are sufficient to meet its proposed export commitments. 5. Imports from Myanmar . A third international pipeline proposal envisions India importing natural gas from Myanmar. In March 2006, the governments of India and Myanmar signed a natural gas supply deal, although a specific pipeline route has yet to be determined. Initially, the two countries planned to build a pipeline that would cross Bangladesh. However, after indecision from Bangladeshi authorities over the plans, India and Myanmar have studied the possibility of building a pipeline that would terminate in the eastern Indian state of Tripura and not cross Bangladeshi soil at all. Let us now discuss the impotence of Myanmar and see as to why is it so relevant in the overall energy game. GEO-STRATEGIC LOCATION OF MYANMAR Geographic Loc 6. Myanmar shares common borders with five countries Bangladesh 193 km, China 2,185 km, India 1,463 km, Laos 235 km, and Thailand 1,800 km. India dominates Myanmars western borders, just as China dominate its north-eastern borders. Thailand borders the entire eastern part of Myanmar except for narrow strip that borders Laos. And this makes Myanmar a strategic land bridge linking South, and Southeast Asia [12]. 7. As a littoral of the Indian Ocean, Myanmars strategic value further increases. Its 1930 km long coastline dominates the eastern arch of the Bay of Bengal, leaning on to the Malacca Strait. Thus Myanmar provides China the shortest land and sea access to South Asia, just as it provides convenient external land and sea communication options to Indias landlocked north-eastern states. Myanmars ocean boundaries are barely 30 km from the Andaman Islands increasing its maritime security potential. 8. Most of Myanmars mountain ranges and major river systems run north-south. This makes construction of road communication and movement from Indias east to Myanmar against the grain of the country difficult. At the same time it facilitates easier movement from the Chinese border in the northeast, and provides for natural flow of traffic. The Chinese have used this favourable terrain configuration to build road from the Chinese border to Mandalay in the heart of Myanmar and onward to the coast. As Myanmar provides the shortest access from mainland China to Indias eastern borders these developments have special long term strategic significance to India. 9. Indias north-eastern states bordering Myanmar are not as well developed as Yunnan province of China bordering Myanmar in the northeast. China has found it useful to link the development of Yunnan region jointly with Myanmar and Laos. Thus the two-way border trade and commerce is qualitatively and quantitatively better with China than with India. 10. While Indias relations with Myanmar have seen substantial improvement in recent years, Myanmar apparently remains within the Chinese sphere of influence. India has moved from voicing its opposition to the military juntas crackdown on pro-democracy activists and the arrest of Aung San Suu Kyi, the leader of the National League for Democracy to a more pragmatic, non-interventionist policy. This change in policy by India has been prompted by its desire to access the regions energy resources, gain access to the vast markets of Southeast Asia and to balance the influence of China. Strategic Significance of Myanmar 11. Strategic Importance to India . The reasons for the strategic importance of Myanmar to India are: (a) Myanmar is located at the tri junction of East Asia, South Asia and South East Asia. (b) Myanmar is the second largest of Indias neighbours and the largest on the eastern flank. (c) Myanmar provides the Eastern littoral of the Bay of Bengal. An unfriendly Myanmar hosting foreign naval presence would pose a threat to Indian security. (d) Myanmar has a big border with China in the north contiguous with the Sino-Indian disputed border which has many implications. (e) India has both a land border and a maritime boundary with Myanmar in the Bay of Bengal. Four Indian states (Arunachal Pradesh, Nagaland, Manipur and Mizoram) border Myanmar (Kachin Chin states and Sagaing Division) . (f) China can gain easy access to Indian Ocean through Myanmar. 12. Strategic Importance to China . In recent years, the strategic landscape in Southeast Asia has begun to change with the emergence of the Peoples Republic of China as a regional power. Chinas economic and military capabilities have grown dramatically at a time when Chinas traditional security challenge, Russia, has faded. Japan remains a long-term, but not an immediate security problem for China. This has left China free, in geopolitical terms, to shift its attention to the south Asia. Most striking manifestation of this development has been a very assertive policy toward the South China Sea; i.e., the entire sea and all the islands within it are now claimed as Chinese sovereign territory. Myanmar has a great deal of strategic significance for both India and China. Myanmars role in providing China a shorter access route to Indian Ocean and South Asia is going to be crucial in the strategic scene of South Asia. The Chinese have used the geophysical advantage they enjoy to gain access to Myanmars mineral and natural g as resources. Following a policy of non-interference in internal affairs of the country, China has become the main supplier of arms to Myanmar. This has enabled the military junta in power to beat the western sanctions and double the Army strength. The Energy factor 13. Chinas building of a port in Pakistan, its extra-polite friendship with the rulers of Myanmar and now its offer to Iran to pick up gas from Pakistan, is all part of the countrys quest for energy to feed its export economy and to marginalise Indias traditional dominance in the South Asian region. There, a mix of its own but rapidly depleting oil, low-grade coal and imported oil and gas are keeping the wheels of the export industry churning. 14. Myanmar is being cultivated as an exclusive oil and gas supplier to China. The extraordinary friendship the Chinese have struck up with the Myanmar rulers is not so puzzling if it is appreciated that oil and gas are Chinas main interest there. To this affect all loans advanced and all military hardware being sold have only one purpose to allow them to grab as much oil and gas as they can [13] . 15. South-East Asias biggest proven gas reserve lies in the Shwe field, just off the coast of Ramree Island. There is a plan to build a pipeline to carry the gas from Shwe field to China. A parallel pipe is also planned to be completed in next two years that will carry Middle Eastern and African oil from a new deep-water harbour at Kyaukphyu, bypassing the Strait of Malacca and fuelling the economy of Chinas south-west . China has made huge energy investments in Myanmar and plans to construct overland energy transport routes through that country to avoid the Malacca Straits choke point. This is a possibly the key factor behind Beijings support for the military junta in Myanmar. 16. The China National Offshore Oil Corporation (CNOOC) signed six contracts on production sharing with the Myanmar Oil and Gas Enterprise (MOGE) of the Ministry of Energy from October 2004 to January 2005 [14] . The China Petroleum and Chemical Corporation and its subsidiary Dian Quiangui Petroleum Exploration also work the inland fields. Moreover, the China National Petroleum Corporation (CNPC) and its subsidiary Chinnery Assets also won contracts to upgrade the four old oilfields in central Myanmar. 17. In a development of strategic importance, recently China beat India to sign a 30-year mega deal to import natural gas from fields in Myanmar offshore where interestingly Indias oil companies have 25 percent stake. Chinas State-run China National Petroleum Corp (CNPC) entered into a gas sales agreement with South Koreas Daewoo International for buying gas from the Shwe field in A-1 offshore block and the adjoining A-3 block[15] . Possible Implications Of Chinese Intentions 18. Myanmar, after decades of neutrality and a strictly non-aligned foreign policy has today emerged as Chinas principle military ally in Asia. China was the first country to officially recognize Myanmars State Law and Order Restoration Council (SLORC) after it seized power in September 1988. However, prior to this coup China had poured in arms, ammunition in Myanmar and actively supported rebels in Myanmar. This change can be explained in terms of Chinas changing post-Cold War strategic thinking and its priorities. Apart from sharing strategic and economic interests, China and Myanmar also share more than 2,000 km long common border. Besides, Myanmar has also been historically viewed as a buffer state between China and India. Thus, for reasons of geographical proximity, history and security, China has been going overboard trying to sweep Myanmar into its sphere of influence with a combination of economic, diplomatic and military ties[16] . China also views Myanmar as a gateway to Indo-China, South East Asia and the Indian Ocean. Domination of Myanmar enables China to encircle littoral and degrade Indias security environment along its North-eastern border and in the Bay of Bengal. Energy Security 19. It is now very clear that China is an emerging economic and military super power. Its economy has been growing at a consistent rate of 8-10% for the last 10 years and is expected to grow at the same rate in years to come. To be able to sustain its growth rate, China has huge energy requirement and is forging alliances all over the world to not only meet its requirements but also secure energy resources for future. Myanmar has reportedly worlds tenth biggest gas reserves estimated to be more than 90 trillion cubic feet. 20. Eighty percent of China bound oil and liquid natural gas passes through the Indian Ocean. Therefore, China is giving special importance to building strategic naval assets in the Indian Ocean. The building of the Gwadar port in Pakistan ia s part of this plan. Its naval listening facility in Myanmar is also augmenting Chinas blue water capabilities. But Chinas chief interest in Myanmar, analysts say, may lie in its strategic location as a site for pipelines that Beijing reportedly wants to build from Burmas ports to southern China for trans-shipping oil and gas brought by tankers from the Middle East. That would reduce Chinas need to ship oil or gas through the Malacca Straits, which Beijing worries could be closed off by the Indian Navy in the event of a conflict. Standing in the way of Chinese mastery of Indian Ocean shipping lanes is the Indian naval facility in the Andaman and Nicobar Islands in the Bay of Bengal, opposite the Malacca Straits. In addition, Indias modernization of its navy and its proposed acquisition of nuclear submarines and aircraft carriers are not sitting well with the Chinese. From these small islands, India can interdict most of Chinas energy imports. Indias Energy Security Concerns and Its Implications Indias Energy Security Concerns and Its Implications CHAPTER-I INTRODUCTION 1. Indias economy undeniably, is on a roll. However the parallel energy discourse, sadly, moves at a slow pace, lacking in requisite agility and momentum. If India is to secure its interests in a more healthy manner, its energy discourse must keep pace qualitatively and quantitatively, in concept and in execution, with its economic flight. There is indeed a need to take an analytical look at the entire paradigm of Indias energy security and critically examine whether or not it is appropriately poised and try and to identify the necessary correctives that will help propel the Indian economy along its growth trajectory. 2. A UNDP report defined energy security as the continuous availability of energy in varied forms, in sufficient quantities and at reasonable prices. For India, the Parikh Committee report stated that a country is energy secure when it can supply energy to all its citizens and meet their demand for safe and convenient energy at affordable costs, at all times, with a set confidence level, considering shocks and disruptions that can be expected. It is the, affordable rather than reasonable source of energy that any country would like to have. While describing the concern over Energy Security three major reasons come to mind as far India is concerned: (a) To achieve the aimed domestic economic growth rate of 7-9% energy security is an absolute necessity. (b) High overall global demand and limited supply constraints are continuously pushing up oil and gas prices to higher and higher limits. (c) With Energy supply constraints, there is tremendous international competition to secure the scarce energy resources. 3. Energy is paramount for the sustained economic growth of our country and to fulfil our aspirations of becoming a true Global Power. High projected economic growth rate call for greater availability of reliable and cheaper energy. India and Chinas energy demand growth is unfolding in the midst of a perfect storm: economic, geopolitical, and environmental factors are combining to create new challenges, pressures, opportunities and alliance. Furthermore economical per capita energy consumption (through better governance and distribution mechanism) and access to cheaper energy will help in reduction of energy poverty which is a key development goal for any country. In search of oil and gas these, countries are exhibiting a hunger for energy resources, which has resulted in establishing new ties in South East Asia, in Africa and in Central Asia. 4. It has been seen on various occasion, that these countries are been pitted against each other and this competition has given rise to concerns about the potential for re-emergence of conflict over energy resources. A fallout of this has been a realization by the West of the new geopolitics that endangers the global security and a realization by South Asian, Middle East and Africa countries of the attractiveness of Asia as an alternative market to Europe and the US. On another front, climate change and the links it has with energy and energy choices are also creating significant pressure for low-carbon economy paths for these emerging new economies, adding yet another restraint to energy choices and a new geopolitical dimension. METHODOLOGY Hypothesis 5. China has sought to gain strategic advantage over India in South Asia not only militarily but also through securing energy recourses by progressively making Indias neighbors dependent on China to a large extent for their defence supplies and other economic goodies . Chinese aid to Islamabad , Bangladesh , Sri Lanka and Myanmar is designed to lock India in a low-level deterrent relationship with its immediate neighbors and keep India confined to the sub-continent. The expansion of Chinese influence into Myanmar provides China, the potential to deploy their sea power in the Bay of Bengal, in Indias sensitive areas of maritime interest and to eventually pose a direct threat to Indias eastern seaboard. Also, China is competing for foreign investments and markets in these countries for their products in the next 15 to 20 years to achieve economic marginalization of India. The close relations between China and Myanmar also pose a threat to overall Indian security and economic interests in the Bay of Bengal region. 6. China has been providing military, economic and infrastructure support to these South Asian countries with a long term interest in mind. By providing this support, China aims to secure energy resources for its growing economy, build better relations with its neighbours, and gain a foothold in the South/South East Asian region. 7. Another aspect of Chinas interest in Indias neighbors could be simply be to support to its growing economy. China is aiming to quadruple its per capita GDP by 2020. This would imply an average annual economic growth of 7.2% till 2020. In order to attain this, China will have to keep meeting the enormous appetite of its energy. Thus, the Chinas interest may purely be to strengthen its economy with or without any malicious intentions towards India. However India can afford not be complacent with Chinas intentions if she wants to maintain a safe and secure scenario in South Asia for its own economic and social development. Statement of Problem 8. Are Indias future energy need concerns justified and what is its affect on the South Asias overall security scenario in the backdrop of Chinas aggressive quest for energy in the South Asian region . Justification of the Study 9. Energy crisis is a situation in which the nation suffers from a interruption of energy supplies, coupled by rapidly increasing energy prices that threaten economic and national security. The threat to economic security is represented by the possibility of declining economic growth, increasing inflation, rising unemployment, and losing billions of dollars in investment. The threat to national security is represented by the inability of the government to exercise various foreign policy options, especially in regard to countries with substantial oil reserves. 10. China and India are two rapidly growing economies. Chinas real GDP growth has shown a sustained growth of 8-9%. India too has shown an impressive growth. Both these countries are also one of the most populous in the world. China is the third largest importer of oil behind US and Japan whereas India is the fifth largest consumer in the world. The Energy hunger of India and China is already pushing oil and gas resources to its limits its their own countries. Both these countries also cannot afford any disruption to their energy supplies. 11. India, will face an energy crisis, if there is any disruption in the energy flow, either by war, terrorist strikes on oil production platform or blockage of SLOCs, resulting in increasing oil price. It is therefore imperative to understand the steps taken by India to ensure Energy security, especially in the backdrop of Chinas aggressive quest to secure its energy supplies in the South / South East Asian region and the growing ties between China and Myanmar. Scope 12. The study will discuss the energy forecast of India and China up to 2030 and the availability of energy resources in the world and South /South East Asia( With special reference to Myanmar ) . Having considered the energy resources available, it will explore the way and means adopted by both these countries to secure their energy resources and transportation without challenging each other and affecting the overall security scenario in South Asian region. Method of data collection 13. The source of data collection is Defence Services Staff College Library and Internet . The bibliography is appended at the end. Organisation of Dissertation 14. The study is carried out in the following sequence: (a) Energy requirements for India and China. (b) Indias efforts to secure energy supplies and the importance of Myanmar (China – Myanmar relations). (c) Indias initiatives in Bay of Bengal region to secure energy sources and maintain regional harmony. (d) The way ahead (Importance of cooperation with neighbouring countries for regional peace in South Asia). (e) Conclusion. CHAPTER-II ENERGY REQUIRMENT F OR INDIA A ND CHINA Indias Energy Quest 1. The Hydrocarbon Vision 2025, published by the Government of India in the month of February 2001[1], set out in very clear terms, Indias energy security dilemma : its crude oil self-sufficiency declined from 63% in 1989/90 to 30% in 2000/01. In 2024/25, crude oil self-sufficiency was expected to be a mere 15%. The situation relating to gas was equally grim. From 49 BCM (billion cubic metres) in 2006/07, Indias demand for gas is expected to rise to 125 BCM in 2024/25. As against this, production from existing fields and discoveries was 52 BCM, leaving a gap of 75 BCM to be filled through new domestic discoveries and from imports. The electric power sector was projected to account for 71% of the total incremental growth in Indias natural gas demand from 2000 to 2025. Indias installed power capacity at present is based on coal (59%), hydropower (26%), gas (10%), and nuclear (2%). In the period up to 2025, the share of gas in the energy mix would be 20%. The Integrated Energy Policy (I EP) document prepared by the Planning Commission, in August 2006, under the Chairmanship of Mr Kirit Parikh, takes a holistic view of Indias energy requirements up to 2031/32. The report postulates that, in order to reach growth rates of 8% per annum up to 2031/32, the country needs to do the following: (a) Increase primary energy supply by three to four times. (b) Expand electricity generation capacity by five to six times from the 2003/04 levels, that is, power generation capacity must increase from the current 160,000 MW (megawatt) to nearly 800,000 MW by 2031/322[2] . 2. Taking into account power and other commercial requirements, the report suggests that Indias primary commercial energy requirement (in million tonnes) would be as given in as following[3] : (a) Primary commercial energy requirement (million tones) . 3. The place of gas in the energy mix between 2006/7 and 2031/32 is projected as given as following[4]: (a) Energy mix (million tones) . 4. To reach its growth targets, India would need to hunt all available fuel options and energy sources, conventional and non-conventional. However, the current position with respect to specific energy resources is also to be noted. Presently, Indias energy mix is: coal and lignite 50%; oil and gas 45%; hydropower 2%, and nuclear 1.5%. In 2022, fossil fuels will continue to dominate Indias energy mix to the extent of 75%, with hydropower providing 14%, and nuclear power 6.5%. Even the proponents of nuclear power have noted that, most optimistically, nuclear energy will provide only 8.8% in Indias energy mix in 2032, as against 76% for fossil fuels, and 12% for hydropower. In 2052, when nuclear energy is likely to be 16.4% of our energy mix, coal is expected to be 40%; hydrocarbons 35%; and hydropower 5.1%[5] . 5. The IEP report has looked at different international scenarios pertaining to coal and gas. Its conclusion is unambiguous. Any supply strategy over the coming decades will have to emphasize Indias major resource, that is, coal. Coal is the most abundant domestically available primary energy resource other than thorium and solar. In the coal-based development scenario, the total demand for coal increases from 172 MTOE (million tonnes of oil equivalent) in 2004/05 to 1022 TOE in 2031/32. Measured in MT of Indian coal with 4000 kcal/kg (kilocalories per kilogram), the requirement of coal will thus increase from 406 MT in 2004/05 to 2555 MT in 2031/327 [6]. Chinas Energy Requirments 6. Before analyzing the Chinese forays in Energy markets South Asia , a basic question needs to be answered ,Why China? .The answer lies in the fact that India and China share many similarities. The countries are located in the same geographical area and are amongst the worlds most populated countries. They are the fastest growing economies in the world and are dependent on oil imports to fuel their economic growth. The way China has jump started its economic growth holds some important lessons that can be learnt. 7. The main reason fuelling Chinas aggressive forays into the energy markets are Chinas economic growth which has led to a near doubling of oil consumption in China. The average growth rate has been between 8-10% in the last decade . At this pace of economic growth, the Gross Domestic Product is expected to reach four times of its present value to 4.7 trillion dollars by year 2020 [7] . This high rate of growth has been fuelled by growth in heavy industries which will increase the demand for energy by 150% in the next decade. The near doubling of oil consumption is also partly fuelled by the fact that there is a high requirement of petro-chemical products in heavy industries and an increase in automobile growth in China. This has led to an increase of 7.5% in oil demand every year. Competition to Access Oil Resources in South / South East Asia 8. The oil situation emerging in South/ South East Asia is further complicated by the ongoing tussle between China and India to secure their own energy supplies in this region. The stiff competition is mainly because of two reasons, firstly the countries are amongst the fastest growing economies and secondly they lack in sufficient domestic energy sources and are net importers of oil. The two nations are resorting to efforts, both in the diplomatic and economic spheres. These efforts include forging new diplomatic alliances, high profile diplomatic visits, financial aid to the South Asian countries and investments in economic sectors like infrastructure, telecom and mineral extraction and resource development etc. 9. The state oil companies at the same time, are involved in deals in the oil and gas sectors purchasing stakes in oil fields which are already producing oil or are being explored, exchanging the know how in return for oil and participating in exploratory efforts to discover new oil and gas finds in the region . India is learning from the Chinese efforts in these fields as they have a head start over us in this area and have been quite successful in their efforts to secure their energy supplies. Both India and China are looking towards SriLanka, Bangladesh and Mayanmar for oil and Gas. Chinese Forays 10. China is not only a major energy consumer, but also a major producer with a high degree of self-reliance. In 2008, Chinas energy production reached 2.06 billion tonnes of standard coal and the consumption was 2.22 billion tonnes, ranking the second both in terms of production and consumption with a self-sufficiency of 93%. Coal is the primary source of energy for China and oil comes the second. While meeting the domestic demand, China exports 60–80 MT (million tonnes) of coal every year and is a main exporter of coal and charcoal in the world (even to India). Chinas power generation capacity in 2008-09 was the second largest only after that of USA. China produced over 182 MT of petroleum and 54 BCM (billion cubic metres) of natural gas. 11. To fulfil its growing appetite for energy, China is aggressively pursuing various energy resources. Chinese companies are involved in acquisition of oil companies, buying oil fields and purchasing partnerships in oil fields that are being developed. China is pursuing a multi dimensional approach which is a mix of diplomatic and economic efforts. One of the main thrust of Chinas oil policy is towards Asia and Africa. The importance of Africa countries to China can be appreciated from the fact that the trade between these is expected to rise many fold by the years to come . As part of its Go West policy, China is also accessing the Central Asian Region. It has plans to build pipelines from Tarim Basin in China to Kazakhstan and Turkmenistan in order to import oil and gas. In 2004, construction began on a pipeline from North West Kazakhstan to Xinjiang to carry oil. Chinese influence in the Central Asian Republics can be gauged from the fact that these republics now subscribe to the Chinese view on a multi polar world, and its views on various regional and international issues like Tibet, Taiwan etc. CHAPTER-III INDIAS EFFORTS TO SECURE ENERGY SUPPLIES AND THE IMPORTANCE OF MYANMAR 1. India Hydrocarbon Vision 2025 document as discussed earlier had given considerable importance to the role of gas in the energy mix to realize the projected national growth rates. This may be is primarily because though we may be having a large deposits of coal however the domestically produced coal has very high ash and sulphur content and is of very low calorific value . The coal utilized in the country has 4000 kcal/kg as against 6000 kcal/kg available in imported coal. In fact, the coal used in the Indian power plants has a calorific of value 3500 kcal/kg. Large estimates of total coal reserves do give a false sense of security because current and future technologies will convert only a small portion of the total reserves into a mineable category. Owing to all these reasons the govt has started looking towards new sources of energy supply so as to have a requisite amount of strategic energy reserve [8]. 2. There have been several large natural gas finds in India over the last five years, predominantly in the offshore Bay of Bengal (Krishna Godavari region). The discoveries also fit into the recent trend of large upstream developments in the Bay of Bengal, especially in the Krishna Godavari basin. Gujarat State Petroleum Corporation (GSPC) holds an estimated 20 Tcf of natural gas reserves in the Krishna Godavari area [9]. ONGC has worked to maximize its recovery rate at the Mumbai High, which supplies the bulk of the countrys natural gas at present. Transnational Pipeline to meet India s needs 3. Iran-Pakistan-India Pipeline . India has considered various proposals for international pipeline connections with other countries. One such scheme is the Iran-Pakistan-India (IPI) Pipeline, which has been under discussion since early nineties (1994). The plan calls for a roughly 1,700-mile, 2.8-Bcf/d pipeline to run from the South Pars fields in iran to the Indian state of Gujarat [11]. 4. Turkmenistan-Afghanistan-Pakistan-India Pipeline . India has shown interest to join onto the Turkmenistan-Afghanistan-Pakistan pipeline. The TAP project consists of 1,500-mile pipeline originating in Turkmenistans Dauletabad – Donmex natural gas fields and transporting the fuel to markets in Afghanistan, Pakistan, and to India. Initial plans for the TAP call for the line to have a capacity between 2-4Bcf/d at an estimated cost of $3.4 billion. While India has publicly promoted this scheme while negotiations with Iran have slowed, the TAPI(India) project faces a variety of hurdles. India has concerns about the security of the proposed line, which would traverse unstable regions in Afghanistan and Pakistan. Furthermore, a recent review of the TAPI project raised doubts whether the Turkmen natural gas supplies are sufficient to meet its proposed export commitments. 5. Imports from Myanmar . A third international pipeline proposal envisions India importing natural gas from Myanmar. In March 2006, the governments of India and Myanmar signed a natural gas supply deal, although a specific pipeline route has yet to be determined. Initially, the two countries planned to build a pipeline that would cross Bangladesh. However, after indecision from Bangladeshi authorities over the plans, India and Myanmar have studied the possibility of building a pipeline that would terminate in the eastern Indian state of Tripura and not cross Bangladeshi soil at all. Let us now discuss the impotence of Myanmar and see as to why is it so relevant in the overall energy game. GEO-STRATEGIC LOCATION OF MYANMAR Geographic Loc 6. Myanmar shares common borders with five countries Bangladesh 193 km, China 2,185 km, India 1,463 km, Laos 235 km, and Thailand 1,800 km. India dominates Myanmars western borders, just as China dominate its north-eastern borders. Thailand borders the entire eastern part of Myanmar except for narrow strip that borders Laos. And this makes Myanmar a strategic land bridge linking South, and Southeast Asia [12]. 7. As a littoral of the Indian Ocean, Myanmars strategic value further increases. Its 1930 km long coastline dominates the eastern arch of the Bay of Bengal, leaning on to the Malacca Strait. Thus Myanmar provides China the shortest land and sea access to South Asia, just as it provides convenient external land and sea communication options to Indias landlocked north-eastern states. Myanmars ocean boundaries are barely 30 km from the Andaman Islands increasing its maritime security potential. 8. Most of Myanmars mountain ranges and major river systems run north-south. This makes construction of road communication and movement from Indias east to Myanmar against the grain of the country difficult. At the same time it facilitates easier movement from the Chinese border in the northeast, and provides for natural flow of traffic. The Chinese have used this favourable terrain configuration to build road from the Chinese border to Mandalay in the heart of Myanmar and onward to the coast. As Myanmar provides the shortest access from mainland China to Indias eastern borders these developments have special long term strategic significance to India. 9. Indias north-eastern states bordering Myanmar are not as well developed as Yunnan province of China bordering Myanmar in the northeast. China has found it useful to link the development of Yunnan region jointly with Myanmar and Laos. Thus the two-way border trade and commerce is qualitatively and quantitatively better with China than with India. 10. While Indias relations with Myanmar have seen substantial improvement in recent years, Myanmar apparently remains within the Chinese sphere of influence. India has moved from voicing its opposition to the military juntas crackdown on pro-democracy activists and the arrest of Aung San Suu Kyi, the leader of the National League for Democracy to a more pragmatic, non-interventionist policy. This change in policy by India has been prompted by its desire to access the regions energy resources, gain access to the vast markets of Southeast Asia and to balance the influence of China. Strategic Significance of Myanmar 11. Strategic Importance to India . The reasons for the strategic importance of Myanmar to India are: (a) Myanmar is located at the tri junction of East Asia, South Asia and South East Asia. (b) Myanmar is the second largest of Indias neighbours and the largest on the eastern flank. (c) Myanmar provides the Eastern littoral of the Bay of Bengal. An unfriendly Myanmar hosting foreign naval presence would pose a threat to Indian security. (d) Myanmar has a big border with China in the north contiguous with the Sino-Indian disputed border which has many implications. (e) India has both a land border and a maritime boundary with Myanmar in the Bay of Bengal. Four Indian states (Arunachal Pradesh, Nagaland, Manipur and Mizoram) border Myanmar (Kachin Chin states and Sagaing Division) . (f) China can gain easy access to Indian Ocean through Myanmar. 12. Strategic Importance to China . In recent years, the strategic landscape in Southeast Asia has begun to change with the emergence of the Peoples Republic of China as a regional power. Chinas economic and military capabilities have grown dramatically at a time when Chinas traditional security challenge, Russia, has faded. Japan remains a long-term, but not an immediate security problem for China. This has left China free, in geopolitical terms, to shift its attention to the south Asia. Most striking manifestation of this development has been a very assertive policy toward the South China Sea; i.e., the entire sea and all the islands within it are now claimed as Chinese sovereign territory. Myanmar has a great deal of strategic significance for both India and China. Myanmars role in providing China a shorter access route to Indian Ocean and South Asia is going to be crucial in the strategic scene of South Asia. The Chinese have used the geophysical advantage they enjoy to gain access to Myanmars mineral and natural g as resources. Following a policy of non-interference in internal affairs of the country, China has become the main supplier of arms to Myanmar. This has enabled the military junta in power to beat the western sanctions and double the Army strength. The Energy factor 13. Chinas building of a port in Pakistan, its extra-polite friendship with the rulers of Myanmar and now its offer to Iran to pick up gas from Pakistan, is all part of the countrys quest for energy to feed its export economy and to marginalise Indias traditional dominance in the South Asian region. There, a mix of its own but rapidly depleting oil, low-grade coal and imported oil and gas are keeping the wheels of the export industry churning. 14. Myanmar is being cultivated as an exclusive oil and gas supplier to China. The extraordinary friendship the Chinese have struck up with the Myanmar rulers is not so puzzling if it is appreciated that oil and gas are Chinas main interest there. To this affect all loans advanced and all military hardware being sold have only one purpose to allow them to grab as much oil and gas as they can [13] . 15. South-East Asias biggest proven gas reserve lies in the Shwe field, just off the coast of Ramree Island. There is a plan to build a pipeline to carry the gas from Shwe field to China. A parallel pipe is also planned to be completed in next two years that will carry Middle Eastern and African oil from a new deep-water harbour at Kyaukphyu, bypassing the Strait of Malacca and fuelling the economy of Chinas south-west . China has made huge energy investments in Myanmar and plans to construct overland energy transport routes through that country to avoid the Malacca Straits choke point. This is a possibly the key factor behind Beijings support for the military junta in Myanmar. 16. The China National Offshore Oil Corporation (CNOOC) signed six contracts on production sharing with the Myanmar Oil and Gas Enterprise (MOGE) of the Ministry of Energy from October 2004 to January 2005 [14] . The China Petroleum and Chemical Corporation and its subsidiary Dian Quiangui Petroleum Exploration also work the inland fields. Moreover, the China National Petroleum Corporation (CNPC) and its subsidiary Chinnery Assets also won contracts to upgrade the four old oilfields in central Myanmar. 17. In a development of strategic importance, recently China beat India to sign a 30-year mega deal to import natural gas from fields in Myanmar offshore where interestingly Indias oil companies have 25 percent stake. Chinas State-run China National Petroleum Corp (CNPC) entered into a gas sales agreement with South Koreas Daewoo International for buying gas from the Shwe field in A-1 offshore block and the adjoining A-3 block[15] . Possible Implications Of Chinese Intentions 18. Myanmar, after decades of neutrality and a strictly non-aligned foreign policy has today emerged as Chinas principle military ally in Asia. China was the first country to officially recognize Myanmars State Law and Order Restoration Council (SLORC) after it seized power in September 1988. However, prior to this coup China had poured in arms, ammunition in Myanmar and actively supported rebels in Myanmar. This change can be explained in terms of Chinas changing post-Cold War strategic thinking and its priorities. Apart from sharing strategic and economic interests, China and Myanmar also share more than 2,000 km long common border. Besides, Myanmar has also been historically viewed as a buffer state between China and India. Thus, for reasons of geographical proximity, history and security, China has been going overboard trying to sweep Myanmar into its sphere of influence with a combination of economic, diplomatic and military ties[16] . China also views Myanmar as a gateway to Indo-China, South East Asia and the Indian Ocean. Domination of Myanmar enables China to encircle littoral and degrade Indias security environment along its North-eastern border and in the Bay of Bengal. Energy Security 19. It is now very clear that China is an emerging economic and military super power. Its economy has been growing at a consistent rate of 8-10% for the last 10 years and is expected to grow at the same rate in years to come. To be able to sustain its growth rate, China has huge energy requirement and is forging alliances all over the world to not only meet its requirements but also secure energy resources for future. Myanmar has reportedly worlds tenth biggest gas reserves estimated to be more than 90 trillion cubic feet. 20. Eighty percent of China bound oil and liquid natural gas passes through the Indian Ocean. Therefore, China is giving special importance to building strategic naval assets in the Indian Ocean. The building of the Gwadar port in Pakistan ia s part of this plan. Its naval listening facility in Myanmar is also augmenting Chinas blue water capabilities. But Chinas chief interest in Myanmar, analysts say, may lie in its strategic location as a site for pipelines that Beijing reportedly wants to build from Burmas ports to southern China for trans-shipping oil and gas brought by tankers from the Middle East. That would reduce Chinas need to ship oil or gas through the Malacca Straits, which Beijing worries could be closed off by the Indian Navy in the event of a conflict. Standing in the way of Chinese mastery of Indian Ocean shipping lanes is the Indian naval facility in the Andaman and Nicobar Islands in the Bay of Bengal, opposite the Malacca Straits. In addition, Indias modernization of its navy and its proposed acquisition of nuclear submarines and aircraft carriers are not sitting well with the Chinese. From these small islands, India can interdict most of Chinas energy imports.