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Russia and India have agreed to set up a Task Force on Gas, Deputy Energy Minister Pavel Sorokin said at the opening of the Indian Energy Center in Moscow. The new center will serve as a project office to foster interaction between key Indian energy companies and Russian businesses, Sorokin said.

India and Novatek are already discussing the conclusion of a long-term contract for the supply of liquefied natural gas (LNG) from the Arctic LNG-2 project, said Tarun Kapoor, Deputy Minister of Oil and Natural Gas of India. The first stage of the Arctic LNG-2 plant is planned to be launched in 2023.

India already in this decade will become the main source of growth in energy demand, overtaking China and the United States. The country has become the third energy power in the world, although it depends on the export of raw materials to a much greater extent than its competitors. All major energy suppliers, including Russia, are fighting for its market.

There are examples of successful cooperation between the countries in the energy sphere – the Sakhalin 1 project, Rosneft owns 49.13% of the shares of the main Indian oil refining company Nayara Energy, and the possibility of Indian participation in the Vostok Oil project is being discussed. But so far Russian companies do not feel as confident in the Indian market as in the Chinese one.

There are several reasons. Russia has no common borders with India. There are no oil and gas pipelines from Russia to India, and they are not expected in the near future. Moreover, the countries through which their routes could pass (Pakistan, Afghanistan, China) have very complicated relations with Delhi. That is why the construction of the Indian section of the TAPI gas pipeline (Turkmenistan, Afghanistan, Pakistan, India) is constantly being postponed and the idea of ​​a gas pipeline from Iran through Pakistan to India, in the construction of which Gazprom was planning to take part, has been almost completely buried, although the initial approval of the project between the countries was carried out.

Deliveries from Russia of oil, liquefied natural gas (LNG) and coal by sea are possible and produced, but their volumes are very small due to unsuccessful logistics. Here we lose to competitors from Qatar with LNG, Australia with coal, and Saudi Arabia and the UAE with oil. Therefore, it is necessary to gnaw out a share in the Indian market with discounts and long-term contracts. For example, from 2022, LNG exports should increase to 2.5 million tons thanks to Gazprom’s contracts with the Indian company GAIL. In total, India imported 24 million tons of LNG in 2019, but volumes are expected to grow to over 30 million tons in the coming years. If we manage to reach agreements with Novatek, the share of domestic LNG in India will increase.

In addition, an important feature of India is that this country is not rich, even in spite of rapid economic growth. Therefore, India will not buy LNG or oil when their quotes hit price records. According to the Ministry of Power, as of August 31, 2020, the installed capacity of power plants in India was 372,693 MW (for comparison, in Russia in January 2021 – 245,313 MW). The share of thermal power plants, most of which run on coal, in the country’s energy balance is 62%. It is no coincidence that back in 2016, the Ministry of Energy of India refused to accept new applications for the construction of coal-fired power plants, explaining that, taking into account the projects already adopted, there is enough capacity to meet the demand for electricity until 2027. In parallel with this, the renewable energy sector is actively developing in India. In 2020, their share in the energy balance was 23%, excluding hydroelectric power plants – 12.5% ​​and nuclear power plants – 1.8%.

There are also political barriers. For China, cooperation with Russia has almost always been a priority. India, on the other hand, has historically been oriented first towards Britain and then towards the United States. There is even an opinion that the United States deliberately made huge investments in the Indian economy in order to oppose India to the “Chinese economic miracle.” The United States, Germany and the United Kingdom have long-standing and very strong economic ties with India that cannot be underestimated. Suffice it to say that India’s largest trading partner is not neighboring China, but the United States with a turnover of $ 92 billion.

A source: Russian newspaper

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EDITOR’S NOTE: This article is a translation. Apologies should the grammar and / or sentence structure not be perfect.

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