Policy

Energy ties with US: Time for India to strike a balance

Richa Mishra New Delhi | Updated on April 29, 2018 Published on April 29, 2018

Warming up to Washington must not affect relationship with traditional partners, say industry experts

As India moves forward aligning itself with America to satisfy its energy appetite, a challenge before New Delhi would be to strikea perfect balance between the US and OPEC as well as Russia, without damaging relationship.

Warming up to the US in the energy space is largely being seen as India’s attempt to take forward what Prime Minister Narendra Modi and US President Donald Trump had announced after the Washington summit in June 2017. But, it is also sending a subtlemessage to OPEC that India has other partners to manage its supplies.

However, Kabir Taneja, Associate Fellow, Observer Research Foundation, says, “Purely from a geopolitical perspective, I think policy wise India is not going to be glaringly pro-US on energy. There are some issues that may deter India from doing so, first being it would not want to let go of its balance.”

On whether the partnership will ruffle feathers with its traditional partners —Arab countries, Iran, Russia, Taneja argues that a state needs to be like a spider for energy security, many legs in many barrels, so to speak. “If one is on fire you still have seven more,” he said.

According to him, Iran can become a problem if the JCPOA (Joint Comprehensive Plan of Action) deal falls through on May 12 and sanctions are imposed again on Tehran.

Aashish Chandorkar, public policy commentator, says “I would say we are co-opting the US and looking for alternatives. The US fits well enough, especially with the Trump mercantile view of life, but too early to call it a full shift.”

But, Sachin Chaturvedi, Director General, Research and Information System for Developing Countries (RIS), feels India should not let go of its ties with its traditional partners. According to Chaturvedi, “such partnerships are absolutely essential and we should not get swayed away as far as policies are concerned.”

Quick decision-making

However, if India is serious about this American partnership, then New Delhi has to act now. While they believe that issues of free trade agreement (FTA) and pricing can be dealt with, what is required is quick decision making.

Businesses in the US are governed more on commercial basis, so a lot will depend on how quickly Indian firms move in. “Though importing (oil or gas) all the way from the US could add to the costs and make it expensive, there is always an option of swapping,” said a player in India’s energy space.

On FTA challenges for importing gas from America — as New Delhi does not have an FTA with Washington and gas can be sourced only from projects that are approved to sell to non-FTA countries — it may not be a concern now as we already have got GAIL deal as an example where exemption has been given, the executive said.

And India must not miss the bus, as those associated with the energy space believe that the golden era of gas pricing will last 15-20 years with American shale gas revolution.

“India should act now. Indian companies could form a consortium and bid for assets in the US — exploration, LNG liquefaction plants — and not remain only with buyers because the onus of debottlenecking the infrastructure has shifted from the producer to the consumer,” said Prabhat Singh, Managing Director & CEO, Petronet LNG.

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Published on April 29, 2018
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