India and Russia Energy Cooperation

Dr. Junuguru Srinivas*


India and Russia Energy Cooperation

Introduction :
In 2017, India and Russia celebrated the 70th anniversary of India and Russia diplomatic relations. Both the country’s relations have always been tested by various domestic and international affairs.

In 2017, India and Russia celebrated the 70th anniversary of India and Russia diplomatic relations. Both the country’s relations have always been tested by various domestic and international affairs. The most important area of Indo-Soviet relations is economic cooperation despite the 1971’s ‘Indo-Soviet treaty of Friendship and Cooperation’ considered being the cornerstone of both the countries bilateral relations. At one point of time, USSR became the largest trading partner of India during the 1980s. However, after the disintegration of the Soviet Union in 1991, the relations between the two countries have been gone in several ups and downs. The important reason being both countries introduced economic reforms. Since then both Russia’s and India’s economy has been changed from a centrally planned economy to a market economy. Today, both India and Russia are major global powers. Both India and Russia have become major geopolitical actors in contemporary international relations. However, compared to other major powers bilateral trade relations, India and Russia is very dismal. In fact, India accounts only 1.2 per cent in Russia’s overall trade and Russia accounts for only 1 percent in India’s overall annual trade. So, to boost the bilateral trade, India and Russia have a set a target to raise US$ 30 billion by 2025. For that, both countries have to create alternative areas where they can cooperate more. The paper emphasized more upon energy cooperation.

Historical Background
India and Russia were ancient civilizations. Both the countries a relation goes back to history as Afanasy Nikitin was the first person to find Sea route to India before Vasco da Gama. Since then the relations between India and Russia have been evolved. Russian revolution inspired many of Indian freedom fighters. In fact, USSR was the first country to recognize India as an independent country before even India’s independence. But after that, there were many breakthroughs in India and Russia relations. Furthermore, India’s economic development was inspired by the Soviet Union. In fact, India received financial assistance from USSR in several ways to develop India and towards economic self-reliance. Thus, some of India’s well known public sector companies like Oil and Natural Gas Corporation (ONGC), Hindustan Aeronautical Limited (HAL), Bharat Heavy Electricals Limited (BHEL) have been established with the assistance of USSR. Another major development India and USSR was in 1971. The treaty of Peace, Friendship and Cooperation between India and erstwhile USSR laid the greater foundation for solid relations between the two countries. Later, the 1993 treaty of friendship and cooperation between India and new Russia, 2000 declaration on Strategic Partnership between India and Russia and the 2010 Joint statement elevating the partnership to a special and privileged strategic partnership. The relations between two countries spans across the whole gamut of sectors and rests on the fundamental pillars of political and strategic cooperation, military and security cooperation, cooperation in the areas of the economy, energy, industry, science and technology, and cultural and humanitarian cooperation. However, economic cooperation is an important component of all these. To bolster the economic cooperation India and Russia and India should focus on the areas where they can increase it, such as energy.

Energy cooperation
Both India and Russia have a long history of cooperation in the energy sector, and the prospects for the development of the energy dialogue are as promising now as they were during the period of friendship between the Soviet Union and India. As part of it, since the late 2000s, the Russia-Russia energy partnership has been enjoying a renaissance. Over a period of time, India and Russia have implemented a wide range of long-term and large-scale joint projects in the energy sector, in this first and foremost in the nuclear area. Thus, making it one of the foundations of India and Russia relationship’s special and privileged strategic partnership. Furthermore, in order to cement comprehensive ties and bring them to a new level corresponding to the changing global economic environment. So Russia and India are in dire need of innovative and novel approaches in the energy sector. At present India Russia cooperation in energy sector centred on nuclear energy and oil investments. Russia accounts for less than 1 percent of India’s energy imports, whereas India’s energy imports from Russia is under US$ 1 billion. Indian oil companies have multiple investments in Russian oil fields. It said that these investments have exceeded US$ 10 billion so far. India and Russia Energy Cooperation
Thus it should be diversified in new areas like LNG, natural gas mobility, renewable energy, financial markets for energy and hydroelectricity, nuclear technology cooperation and start scientist’s exchange programmes for sharing scientific knowledge between two countries.

Prospects
Russia is the second-largest producer of crude oil in the world after Saudi Arabia, and which is at 12.65 per cent and 13.36 per cent respectively in global share. India is the third-largest consumer in crude oil in the world and the second-largest consumer in crude oil in the Asia Pacific region after China. Russia is the second-largest producer of the natural gas in the world after the US and that is 16.23 and 21.50 respectively. The NITI Aayog 2017 project says that India’s coal need will be persisted even in 2050 also with an envisaged share of 40 per cent to 50 per cent in the energy mix. India’s coal import increased from 39 MT in 2005-06 to 200 MT by 2015-16 but India’s coal production will reach peak level by 2037 after that again we have to import from other countries. On August 08, 2018 NITI Aayog CEO Amitabh Kant made a presentation at a review meeting held by Prime Minister Narendra Modi, the meeting was aimed at reviewing the progress of key infrastructure sectors like power, renewable energy, petroleum and natural gas, coal and mining. During the meeting, the CEO said that the installed power generation capacity in India increased to 344 GigaWatts (GW) and its energy deficit stood at over 4 per cent in 2014, which has been declined to less than one percent in 2018. However, India’s developmental strategy indicates that there would be a huge energy deficit. So, India’s energy sector is set for a mammoth change with recent developmental ambitions of the Government of India. The government aimed to reach 175 GW of installed capacity of renewable energy by 2022, 24 X7 Power for all Indians by 2022, housing for all by 2022, 100 smart cities mission. These indicators say that India is envisaged to play a key role in the global energy scenario amidst the present trends in the favour of energy buyers rather than suppliers which are likely to continue in the medium term. Further, India is likely to account for 25 percent of the rise in global energy demand by 2040.

The way forward
So to cement the relationship between two countries when India’s Prime Minister visited Bishkek in June 2019 for attending SCO Summit and met with Russia’s President Vladimir Putin and underscored that they want to strengthen and further bilateral cooperation. After the meeting, while briefing the reporters, India’s foreign secretary Vijay Gokhale said that Russia’s President Putin has invited India’s Prime Minister Narendra Modi formally to be the main guest for the Eastern Economic Forum at Vladivostok in early September. For that, India’s Prime Minister Narendra Modi accepted warmly accepted the invitation. Furthermore, Modi informed that India will do a serious preparation for the meeting to ensure its participation fruitfully. But, before that India’s business delegation and representatives of key Indian states will visit Vladivostok and Russian Far East prior to Modi’s visit to identify to work on potential areas of business collaboration. As India is depended more on its external allies in the international market for its oil and gas needs, the Far East could be extremely resourceful for it besides a plethora of other minerals and timber, said by Gokhale. India’s population growing fast and it would be around 18% of the total global population. To meet all these people energy needs India certainly aims to reduce its energy poverty in a sustainable manner keeping in mind its impact on India’s economic growth. Further, On July 3, 2019, India’s Petroleum Minister Dharmendra Pradhan held a telephonic conversation with Russia’s energy minister Alexander Novak on further strengthening of energy relations between two countries. During the conversation, Pradhan argued with Russia that it should play a balancing role in its engagement with the Organization of the Petroleum Exporting Countries by taking into account the interests of consuming countries. Pradhan also shared India’s concern on the growing crude oil price volatility during the few weeks. Further, Pradhan invited Russia to invest in hydrocarbon sector recognizing that India and Russia are one of the largest investors in each other countries hydrocarbon sector. And Russian oil and gas companies to were asked to invest in building gas infrastructure in India in the expansion of city gas distribution networks.

Conclusion
In contemporary world affairs both India and Russia are an important role to play because India and Russia share a common vision for making this world just, democratic, equal and inclusive world. As part of strengthening their relations, both India and Russia diversify their cooperation to meet evolving global geopolitics. The possible area for increasing it is trade and energy cooperation. As trade is very minimal in between India and Russia, it should be cemented in human resources, technology sharing, nuclear technology cooperation, increasing tourism, people to people contact, frequent business summits should take place. The energy relationship should be more diversified by bringing, Venezuela, Vietnam and invest in Arctic region jointly by sharing modern technology.

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Diplomatist Magazine was launched in October of 1996 as the signature magazine of L.B. Associates (Pvt) Ltd, a contract publishing house based in Noida, a satellite town of New Delhi, India, the National Capital.

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