India – Russia Energy Ties
Context:
- Due to the sanctions imposed by the west, many companies are ending their partnership with Russian oil and gas firms.
- Sakhalin-1 and Sakhalin-2 major energy consortium consisting of major companies such as Shell and Mitsubishi are terminating from the project.
Background:
- The Far Eastern region which is prone to earthquakes needs special technical expertise and engineering skills.
- Even the economic input for exploration of minerals in the region is also huge.
- Oil and gas sector is vital for the Russian Economy, specially after the Ukrainian crisis.
- Therefore, Russia requires long term partner in the oil and gas sector in the Far Eastern region.
- The alternative market for Russia would be in the South Asia, South East and the Eastern Asia.
India – Russia Energy Ties
- The bilateral energy trade between the two nations remains significantly low considering its historical ties.
- This is despite Russia being the third largest producer and India being the third largest consumer.
- The fundamental reason for this is the geographical obstacles for the transportation of oil.
- Amidst the conflict in Ukraine, Russia has offered to supply India with cheaper crude oil.
- Indian companies though significantly increased their volumes of oil imports from Russia.
- India’s total import of Russian oil despite buying additional volumes in March 2022, remained less than 1 per cent of its total oil import.
- These figures increased to 18 per cent in May, 2022 as per a report published by CREA.
Strategic Challenges:
- An increase in energy spending in the Russian Far East would boost naval ties between India and Russia and the Indian presence in the Indo-Pacific.
- Shipments of Indian oil from the Russian Far East would also be free of the threat of piracy that still exists close to the Horn of Africa.
- One could contend that China would, in a worst-case situation, ban imports of Indian oil from the Russian Far East.
- However, considering the geopolitical alliance between China and Russia, the claim that China would find it challenging to halt Russian oil shipments to India is a convincing counterargument.
- Even so, India might wield a similar leverage against China if the need ever arises by interfering with its oil supplies across the Malacca Strait.
Source The Hindu
