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25 Jan, 2020 05:52

India eyes opportunities for energy supplies from the Arctic as Russia invites strategic partner for joint exploration

India eyes opportunities for energy supplies from the Arctic as Russia invites strategic partner for joint exploration

Moscow has invited New Delhi to explore potentially lucrative oil and liquefied natural gas (LNG) projects in the Arctic. This could pave the way for India to be the first non-Arctic state to mine resources from the region.

At a recent conference in New Delhi, acting Russian Foreign Minister Sergey Lavrov announced that “Russia and India are working together on geological exploration, which could allow India to become the first non-Arctic state extracting resources in the Arctic.” He added that “all of this makes it possible to speak with confidence about the prospects of Russian-Indian cooperation in the Arctic.”

India’s role in the Arctic

India is one of the few major non-Arctic states other than China – both of whom were granted observer status in the Arctic Council in 2013 – to have a permanent research station in the region.

The Indian station called Himadri was set up at Spitsbergen, Svalbard, in Norway in 2008, about 1,200 kilometers from the North Pole, and is currently engaged in atmospheric, marine, geological, and climatic studies.

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So far, New Delhi seems to have regarded the Arctic region from a distance. Strangely so, given its potential importance as a source for energy resources, an alternate sea route that could open up after climatic changes in the future, and as a laboratory to study weather patterns that could have an impact on South Asian monsoons.

Earlier discussions in India on Arctic exploration led to little progress, but things are different now.

Quest for new energy supplies

The Indian minister of oil and natural gas, Dharmendra Pradhan, accompanied by business leaders from Coal India (the world’s largest coal producing company), visited Russia’s Far East late last year to discuss a potential partnership. According to Pradhan, India needs about 70 million tons of high-quality coal for its aluminum and steel industry.

“Our negotiations must end with a successful project decision on the development of metallurgic coal that is to be exported from Russia,” the minster said in a meeting.

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The Russian Ministry of the Far East and the Arctic underscored that Russia – the third largest producer of coal globally – can offer what India needs.

Significantly, the Taymyr coal basin in the Arctic region is estimated to have as much as 225 billion tons of high-quality fuel. Russian coal giants Vostok Coal and Severnaya Zvezda have production licenses in the area and are gearing up to send millions of tons from a new terminal located near Dikson on the Kara Sea coast. Reportedly, production could start this year.

Interestingly, about a month before Pradhan’s visit, Indian Prime Minister Narendra Modi visited Russia’s frozen Far East – the first Indian PM to visit the region – where he signed a memorandum of intent to open a full-fledged maritime route between Russia’s eastern port city of Vladivostok and Chennai on India’s eastern seaboard, located over 10,000 kilometers away.

Beyond coal

In addition to coal, India is also one of the largest and fastest growing liquefied natural gas (LNG) markets, and wants to get its hands on Russian LNG from the Arctic. Pradhan stated that India could join an Arctic LNG project led by Russian energy giant Novatek.
Evidently, India is keen to diversify its LNG supplies, currently routed from Iran via Pakistan – a region that is seemingly constantly troubled – and turn to the Arctic instead.

“We don’t want to deal with Pakistan. We are more interested in Russian LNG,” Pradhan announced.

Russia’s Novatek and India’s H-Energy Global reportedly signed an agreement for LNG supplies to India on a long-term basis last September. An agreement signed also envisages joint investment in future LNG terminals by the two companies, as well as establishing a joint venture to sell LNG and natural gas to customers in India, Bangladesh, and other countries.

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Finally, crude oil is another area where India has shown interest in investing in projects with Vostok Oil, a joint venture between Russia oil major Rosneft and private oil producer Neftegaz holding (NGH), though details are yet to be made public.

Based on the above developments, it is clear that India’s involvement in the Arctic region is slated to expand in the coming months.

This could add a new dimension to the existing Indo-Russian strategic partnership, a partnership that has endured since the Soviet era, even as New Delhi simultaneously maintains relations with Washington.

Whether its deepening cooperation with Russia on energy matters affects the latter relationship remains to be seen.

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The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.