Abstract
The global energy scenario is undergoing a tectonic shift in recent times. While energy security has been emerging as one of the cornerstones of the foreign policy of major countries, a new geological survey has the promise of new discoveries and reserves untapped. One such epic new frontier of the world geological survey has been the post-Soviet Central Asia consisting of five “Stans” of Kazakhstan, Turkmenistan, Uzbekistan, Tajikistan, and Kyrgyzstan, along with the Caspian Sea region. Sitting on huge untapped hydrocarbon potentials, the Central Asian geographical entity in recent years has offered enormous opportunity and appeal for countries adjacent to the region and far beyond. That is perhaps the reason that even after the disintegration of the USSR, the geopolitical importance of Central Asia has never waned down, instead it emerged as a grand chessboard for regional and extra-regional players for the immense opportunities it offered for the energy-crunch countries as potentially new and non-OPEC source of oil and natural gas. In the quest for energy security and diversity of supply sources by energy consumers, the heartland has witnessed a new great game in the scramble for resources. This accentuated struggle for oil and energy in the region has further led to aggressive foreign policy formulations and strategic calculation by countries such as the United States, China, the European Union, Japan, Israel, Iran, Pakistan, and India, to which many now call “the New Great Game” for not just controlling but administering energy resources of the region. The bottom line of the New Great Game, unlike the previous version, is essentially played out around petropolitics and pipeline diplomacy. To support the scramble for energy in Central Asia and the aggressive petropolitics and pipeline diplomacy by major powers, the study adopts the peak oil theory of Club of Rome thesis to understand the global tectonic shift of energy frontiers. Further, this article attempts to examine the position of India in Central Asia and its policy initiatives in the epic quest for oil and energy in the traditional bastion of Russia and the new grand chessboard of China and the United States.
Introduction
Nobel Laureate Richard Smalley (2005) has characterized ten problem areas in the context of the world’s quest for sustainability and prioritized those as energy, water, food, environment, poverty, terrorism and war, disease, education, democracy, and population. He accorded highest priority to energy among all the chronic problems not just because abundant, available, affordable, clean, efficient and secure energy would enable the resolution of all the other problems, energy in addition is needed to reclaim and treat water, grow food and manage the environment. Once these goals are achieved, energy can be used further to arrest poverty and disease and expand education and communication. By meeting these basic needs, we can control the root cause of terrorism and war, expand democracy, and stabilize population (Randolph and Masters 2008: 4). Therefore, energy is a decisive public, economic, social, and environmental issue of high importance. It is, thus, the key for achieving a sustainable world system and a constant flow of energy is, therefore, required to maintain that order. Hence, it is no surprise that energy is certainly the keystone of nature and society.
In fact, revelations of history also reflect the resultant use of energy in the advancement of human society and civilization. Energy has freed people from slave and animal labor, from agrarian society, and from the constraints of space. Energy, in fact, is fundamental to economic development. Without energy resources, businesses would not be able to light their stores; people and goods would not be able to rich markets on the other side of the world; homes and schools would be more difficult to heat; and the manufacturing sector would not be able to produce any products used on a daily basis. In short, the world economy depends on energy, and the largest economies of the world rely on cheap and abundant supplies of energy for the growth of human populations and economic systems.
Since growth demands energy, it is no wonder that India—with an economy expected to grow at a high rate (irrespective of occasional unforeseen fluctuations) for the next 25 years—has developed a ravenous appetite for energy. India, accounting for 2.4 percent of world’s total land surface and around 16 percent of the total world population, is also the third largest growing economy of the world (India Energy Handbook 2011). With rapid rise of the population and industrialization, the main challenge before India, therefore, is to maintain a sustainable growth rate of 8 to 10 percent GDP over the next quarter century to meet its developmental goals for poverty eradication, food security, rural development, education, and health. India has an average growth rate of GDP at 7 percent in the last decade and has attained a growth rate of 7.1 percent up to March 2017 in spite of demonetization (Economic Survey 2017). Further, to catch up with the rest of Asia and to eradicate poverty, it is essential on the part of India to continue to grow at about 8 to 10 percent or more over the next 25 years or so. To maintain this pace of growth, India will have to increase its energy consumption by at least 4 percent annually (Ramachandra and Hedge 2015). The energy requirement for such sustained annual growth poses a major challenge. According to the Integrated Energy Policy of the government of India, it needs to increase its primary energy supply by a factor of three or four and its electricity generation capacity/supply by a factor of five to six compared to its 2004 level (Planning Commission 2006).
Since energy is pivotal for national development and plays an important role in everyday life of individuals and the society, every country strives to be energy secure through both domestic and foreign supply sources. As India’s domestic energy resources consistently failed to meet the energy demands, frustrated by the dismal performance of the domestic energy sector, India’s diplomatic setup has opened up its arms to be actively involved in the energy quest. Diversifying and expanding its international sources of energy has been a major Indian policy thrust for the past decade. Since then, there is a growing recognition that energy security needs to be a critical component of India’s foreign policy as India’s continued economic success hinges around this. It is also believed that India’s energy security can be increased by (a) diversifying both its energy mix and its sources of energy imports and (b) seriously pursuing overseas acquisition of energy assets as oil and gas are nonrenewable and are in limited quantities. So, it is no surprise that energy cooperation is at the heart of India’s engagement with Central Asia.
In the scenario of India’s unprecedented energy requirement and stupendous foreign dependence, the energy resources of Central Asia, including the Caspian Sea region, undoubtedly will play an important role in India’s energy security strategy. This article, thus, deals with a complex issue of current geopolitics widely accepted as the ‘New Great Game” played out in the Central Asian heartland among the regional and extra-regional players having strategic interests in the region to which experts call as “petropolitics and pipeline diplomacy”. The analysis of the paper is centered on three directions: first on strategic-political dimension of Central Asian energy resources; second, pipeline diplomacy and energy security strategies of regional and great powers in Central Asia; and third, examination of the position of India in the epic quest for energy in the traditional bastion of Russia and the new grand chessboard of China and the United States. This article examines as to what rationale and policy reorientation India has been pursuing toward the heartland so as to achieve its equity oil and ensure energy security at home and what policy shifts New Delhi is adopting to redefine its perspectives toward the extended neighbors.
Energy Factor in the Geopolitics of Central Asia
Central Asia as a new geopolitical configuration emerged in 1991 with the disintegration of the Soviet Union. Five countries to the south of Russia, spreading over a territory of approximately 4 million sq km with a thin population of around 53 million (Chandra 2017: 1) came to be known as Central Asia are Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan. It is located in the heart of Asia bordering China to the east, Afghanistan and Iran to the south, Russia to the north, and the energy-rich Caspian Sea to the west. Compelled to live under severe economic downturn and problems of plenty, the Central Asian republics have decided to use their energy resources to the fullest as geopolitical and strategic resource for reconstructing their nation and rebuilding the economies. The emergence of this region simultaneously with the ravenous energy crunch in the world and overdependence on the unstable Middle Eastern countries has undoubtedly invited global attention to this region, mainly focusing on the exploitation and control of energy resources of the region and administering the pipeline networks. For that, a silent rivalry is going on in this region, to which many call the “New Great Game,” while this article prefers to call it “petropolitics and pipeline diplomacy” among the key regional and global players for resources and influence (Pradhan 2019).
The Central Asian region is rich in hydrocarbons, with gas being the predominant energy fuel, and offers immense opportunities for the discovery, production, transportation, and refining of enormous quantities of oil, gas, and other energy resources. Kazakhstan is known for its large reserves of oil and coal and some significant amount of uranium deposits while Turkmenistan and Uzbekistan are noted for their gas reserves. Kyrgyzstan produces significant amount of hydroelectricity power. With proven oil reserves estimated to range from 9 to 40 billion barrels and natural gas reserves possibly exceeding 131 trillion cubic feet (tcf) (Patnaik 2016) Central Asia is in fact poised to become a major world supplier of energy especially in the oil and gas sectors. Since most of its reserves are undeveloped and promising, Central Asian energy excites international interests.
The oil reserves of the region in 2017 were pegged at almost 3 percent (38.284 billion barrels) of the world oil reserves (ENI 2018). As of 2018, Kazakhstan is the main producer of oil in the region with proven reserves of 31.2 thousand million barrels, with a production capacity of 2147 thousand barrels per day (BP 2018). Turkmenistan has proven oil reserves of roughly 0.6 thousand million barrels based on estimates by British Petroleum (BP 2018). It has a production capacity of 258 thousand million barrels per day (BP 2018).
The Oil and Gas Journal estimates that Uzbekistan has 594 million barrels of proven oil reserves with 171 discovered oil and natural gas fields in the country (Oil and Gas Journal 2008). However, in 2015, Uzbekistan had 0.6 tcm of proven oil with a production capacity of 64 thousand barrels per day (BP 2016). Unlike some of their Central Asian neighbors, Kyrgyzstan and Tajikistan produce only undersized quantities of oil.
Total Oil Proved Reserves/Thousand Million Barrels
Central Asia is predominantly a gas-producing region. In 2007, as per the International Crisis Group Report, Central Asia was home to an estimated 4 percent (270–360 trillion cubic feet) of the world gas reserves (ICG 2007). Turkmenistan and Uzbekistan are the two leading gas producers, although Kazakhstan has significant deposits. As of 2015, Turkmenistan had 17.5 tmc of proven reserves with a production capacity of 72.4 billion cubic meters (bcm); Uzbekistan was home to 1.1 tcm gas reserves with a production potential of 57.7 bcm; and Kazakhstan had 0.9 tcm of gas reserves with a production capacity of 12.4 bcm (BP 2018).
In addition, the region has vast coal reserves as well. Kazakhstan is the biggest coal producer in Central Asia with an estimated 33,600 million tons (mt) of coal in Karaganda and other areas; Uzbekistan also has 1,900 mt of coal to its credit (BP 2018). Kyrgyzstan is reported to have substantial coal reserves. Kazakh coal is regularly exchanged for Kyrgyz electricity, and the coal industry is a major employer in Kazakhstan (Dorian 2006). Hydroelectricity potential of the Central Asian region holds considerable importance. Almost 85 percent of the region’s water resources are located in Tajikistan and Kyrgyzstan (Domnin 2016). Kazakhstan and Uzbekistan are the two biggest states among the Central Asian States (CAS) to have largest amount of strategic uranium reserves. Being the highest possessor of uranium in the region, Kazakhstan holds lofty quantities of enriched uranium with an estimate of around 10,590 to 10,940 kg (KazAtomprom 2010). Uzbekistan has uranium reserves of 150,000 tons (Kulebi 2008). Tajikistan and Kyrgyzstan too possess a fairly sizable amount of uranium ore and the potential for its enrichment.
Within this framework, it can be said that, in the regional political vacuum left by the sudden demise of the Soviet Union, the United States, the European Union (EU), Russia, and the People’s Republic of China have been approaching new levels of engagement in Central Asia. There is one common interest that all of these powers share and that is Central Asian energy resources. There are certain motivating factors to which the global powers look seriously and express their interests in Central Asian energy resources despite already mentioned difficulties. These factors are as follows:
Oil Production in Central Asia/Thousand Barrels per Day
Reserves, Production, Exports, and Consumption of Natural Gas in the Central Asian Region
aBP Statistical Review of World Energy, 2018.
The oil of the region is considered to be of good quality.
Central Asia represents one of the world’s last great frontiers for geological survey and analysis offering opportunities for the discovery, production, transportation, and refining of enormous quantities of oil and gas and other energy resources.
Since most of its reserves are unexplored and undeveloped, its contribution to the world energy market seems quite promising.
While the Central Asian states have physical possession of their oil and gas reserves, they do not possess the capital and technology that would allow them to go into production alone, a fact that offers an opportunity to foreign companies to invest and bring them with a share in production and revenues.
Importantly, the biggest part of the Central Asian oil is intended for export, since the needs of producing countries are relatively low and are expected to remain low.
Finally, Central Asia is relatively a stable region in contrast to other energy-rich destinations.
Compounding to these, there are other two major factors that motivate the global powers to expound their interests in Central Asian energy sectors. First, countries of the world strive to secure energy to meet the demands of their domestic consumption. Domestic concerns exert pounding influence on the foreign policy making of a country, to which James Rosenau calls “Linkage Politics” (Rosenau 1969). Second, energy, today, is something beyond just a natural resource. It is in fact a strategic commodity that allows the state to enhance its own economic and political power at the cost of its competitors.
The Caspian Sea Region
The Caspian is the largest inland sea on the earth. The primary factor that brought the world’s attention toward Caspian Basin was the prospect of its large oil and gas deposits found in this region. Consisting of five littoral states—Russia, Iran, Azerbaijan, Kazakhstan, and Turkmenistan—it accounts for 7 percent of the total world gas production (Dekmejian and Simonain 2001). This is much higher than its oil share in total world oil output. Although the Caspian region has a huge energy resource base, but there is hardly any consensus among littoral states and outside powers about the exact energy potential of the basin. In the mid-1970s, the Soviet estimates were around 35 billion barrels (Ibid.: 29). However, a decade later, other estimates were stated that it has around 10–11 billion barrels. Nevertheless, in September 1994, when the “Contract of the Century” signed between Azerbaijan and a consortium of eight oil companies, the energy resources of the Caspian littoral states were said to be comparable to those of Emirates of Kuwait (Pradhan 2010). Other estimates, on the other hand, placed Caspian reserves at par with the massive energy wealth of the Persian Gulf.
In 1997, the U.S. government stepped in and announced that the Caspian region possessed around 15.6 billion proven and 163 billion possible barrels of oil (Dekmejian and Simonain 2001: 30). However, the first credible study on Caspian energy potential has been done in 1998 by Wood Mackenzie, a Scottish consulting company. It has revealed that the combined proven oil and gas reserves of Azerbaijan, Kazakhstan, Turkmenistan, and Uzbekistan were 68 billion oil barrels equivalent. Of this amount, the total for oil was 25.2 billion barrels, 65 percent of which belonged to Kazakhstan (16.43 billion) and the rest to Azerbaijan (6.5 billion), Turkmenistan (0.91 billion), and Uzbekistan (1.34 billion) (Dekmejian and Simonain 2001: 30). Two further studies published in April 1998 by Rice University’s Baker Institute and the International Institute of Strategic Studies of London (Pradhan 2018) confirmed Wood Mackenzie’s figures. Even with this energy potential, Caspian seems important for energy-consuming countries. Given India’s healthy and cordial relations with all littoral states, it needs to step ahead with massive economic investments backed with political willpower to ensure its energy security.
Great Power Interests in the Region and the New Great Game
The sudden demise of the Soviet Union has led to important geopolitical consequences in the post-Soviet space with the rise of an intense political and commercial competition for control and administration of the vast and untapped energy resources and the pipeline networks in the newly independent but vulnerable states of Central Asia and the Caucasus. The geopolitical competition and great power rivalry have been accentuated to such a level that experts have hyped this to be the revival of the “Great Game” that took place in the second half of the nineteenth century between Tsarist Russia and British colonial empire over territory and strategic positions in Asia, wherein the role of regional players was absolutely absent and weak (Hopkirk 1992). Nowadays, a “New Great Game” is taking place in Central Asia between key regional and global powers for the exploitation and control of energy resources and to influence the countries of the region (Cooley 2012).
Although the stakes involved in new great game remain the same as the old one, power-influence-security-wealth, the new playing field is further complicated by a vast array of problems. These include intra-regional conflict, political instability, fierce competition among multinational conglomerates, and a shortfall in commercial expertise and legal infrastructures. (Avranitopoulos 2002)
In fact, the new great game became even more complicated and multi-vectored due to the global transformation with the tectonic shift:
China emerging as a new capitalist state; US is with America First policy is getting protective and orienting a socialist outlook in its foreign policy; Russia is asserting to evolve again as a super power and the EU is facing Brexit while all of them competing with each other in the grand chessboard of Central Asia. (Chandra 2017).
However, the essence of this “new geopolitical game” has been quite similar and twofold: to control the production of oil and gas and to administer the pipeline routes (Avranitopoulos 2002). Even the “New Silk Road” initiatives of the United States and China with large-scale strategies and “the North–South Corridor under the aegis of Russia and India to connect the Central Asian region with the wider world have underlined the growing geopolitical and geo-economic potential of the Central Asian republics in recent times” (Chandra 2017) and have in fact augmented the scramble for oil and energy in the region. It would be interesting to see the nature of the great power engagement in the heartland region literally turned into a grand chessboard with the regional countries showing determination to insist upon their autonomy in foreign policy, which is amply exemplified in their multi-vectored policy in which several regional and global powers have been given access to natural resources and preferential treatments while reaping benefits from better deals through bargaining with a vision to invite more and more FDI from multiple countries so that no single country can dominate over the region; hence, autonomy of the regional countries would be maintained.
Petropolitics and Pipeline Diplomacy
Central Asia represents both large potential producers of energy resources and a hub to connect oil and gas ducts inside Eurasia. Estimation by the International Energy Agency indicates that the Caspian region including Azerbaijan contains 3.5 percent of the world’s proven oil reserves (Feddersen and Zucatto 2013). The bulk of those reserves are in Kazakhstan, with smaller volumes in Azerbaijan and Turkmenistan. Similarly, in the case of natural gas, the region accounts for around 7 percent of global proven reserves mostly concentrated in Turkmenistan. The main issue of concern for the energy-rich countries since independence has been their landlocked position, making them rely heavily upon complex infrastructure to import and export resources.
The geographical positioning of Central Asia in the middle of Eurasia has in fact created problems for its much needed transportation of energy resources. From the standpoint of transportation logistics, there is no easy route linking Caspian oil and gas with maritime shipping lanes leading to the world’s major energy consumers (the United States, the EU, China and India). To head directly toward the West necessitates skirting the Caspian, greatly increasing the length of any pipeline or building under water pipeline, which greatly increases the cost of the project. Further, the complications surrounding the heated dispute among its five littoral states add more woes to the already worrisome states. Heading east toward the Pacific Ocean is technically feasible from Turkmenistan through Uzbekistan and Kazakhstan, and since 2005 the China–Kazakhstan oil pipeline and since 2009 the Central Asia–China gas pipeline are fully functioning, and many other pipelines are under construction. Running southeast toward the Indian Ocean through Iran, Afghanistan and Pakistan is also feasible but the Hindu Kush mountain, trouble-torn Afghanistan, and terror-prone Pakistan emerge as troublesome obstructions.
Nevertheless, the energy crunch worldwide and bourgeoning fuel demand from the native population have invited many potential consumers for Central Asian energy, including the United States, China, the EU, Japan, India and Pakistan. However, there are only few states that possess the capability to influence Central Asian energy geopolitics at the global level. While Russia remains an influential power, any examination of Central Asian energy geopolitics must now also take into account the influence of the West and the growing reach of China. The slow progress of India also needs to be taken note of. The entry of the West into the region after the Soviet era marked in many ways the rejuvenation of Central Asian geopolitics, threatening Russia’s historical influence.
Russian Pipeline Strategy
Central Asia has always been the traditional sphere of influence of Kremlin. Since the Soviet days, due to a centralized planning and energy distribution system, Central Asia remained dependent on Moscow. All the pipelines transport and communication network were integrally connected with Russia. The Soviet pipelines were used by the Western companies such as Chevron to reduce the cost of new infrastructure. That is why all the Central Asian countries rely on Russia to transfer their oil and gas through Russian pipelines, enabling Moscow to maintain a stronghold in the region and to generate transit fees out of it. Any Western presence in the region would be the spoilsport for Russian interests in its backyard.
The primary threats to Russian energy dominance, then, are new pipeline routes beyond its control. The BTC pipeline is the greatest success that the West has had in creating an alternative route, a success that the EU would like to replicate with the Nabucco project. After completion of the Kazakh–Chinese pipeline as well, Russia perhaps realized that it did not have much time to act before other players’ secured greater access to the region. Therefore, Russia started reasserting its position in the hinterland under the able leadership of Vladimir Putin (Reuters 2009).
As such, Moscow’s main political goal is to maintain a wide range of influence over the former Soviet Republics which it labels as “near abroad.” In addition to build and institutionalize relations with Central Asian states, the Russian government also employs legal and commercial means deemed necessary: (a) in ensuring that Russian firms participate in developing the region’s natural resources and that Central Asian oil and gas exporters continue to use Russian pipelines; (b) in minimizing the involvement of U.S. and European companies in joint ventures formed with Central Asian counterparts; (c) in scarring off potential competitors by announcing or constructing alternative pipelines conducive to Russia-dominated overland energy transport; (d) in splitting Western power through energy diplomacy, thus augmenting the energy dependence of the EU upon Russia and less on the United States; and (e) in fostering selective bilateral ties with Central Asian governments within the setting of comprehensive multilateral security umbrella (Geopolitica.ru).
In fact, to strengthen its grip on European gas markets and head off a U.S.-backed pipeline project, Nabucco, which would bypass Russia, Moscow, wants to use “North Stream,” the 1,200-km twin pipeline that would carry a total of 55 bcm from Russia’s port of Vyborg to the German port of Greifswald. Construction of the euro 7.4 billion started in 2010, with the first pipeline ready for delivery in 2011. This pipeline is built without crossing Ukraine and Poland, the transit countries with which Moscow has had odds for years over Russian gas destined for the European market. For example, in January 2009, Moscow cut off gas supply via Ukraine for two weeks and caused uproar. However, the project was abandoned by Russia in December 2014 following disagreement with the European Union and Bulgaria. The European Union in partnership with the U.S. has slapped sanctions on Russia following its invasion of Crimea has led the project to controversy. The project is replaced with Turkish stream pipeline and Tesla pipeline (Global Energy Monitor 2020).
The United States: Search for Energy Independence
It was only after the U.S. Department of Energy in its report predicted that the estimated potential of the Caspian Sea reserves to be around 200 billion barrels, equivalent to that of Saudi Arab, the United States started giving importance to this region (Patnaik 2016). The United States is the world’s largest energy consumer, requiring 19.4 million barrels of oil per day (tbl/d) in 2015 and 21.9 trillion cubic feet of natural gas per year (bcf/y) in 2015 (EIA 2015). Though the United States is also a huge oil and gas producer, it remains a net energy importer, domestically producing 12,704 thousand barrels daily of oil in 2015 and 368.7 tcf/y of gas in 2016 (BP 2016).
The U.S. interest in Central Asian energy, though, is not primarily driven by a need for a new source of imports. The United States already has well-established ties with other suppliers, its top five import partners in 2016 being Canada, Saudi Arabia, Mexico, Venezuela, and Nigeria. Importing crude from Russia is the closest the United States comes to taping the Central Asian energy market, and Russia only ranked as the 13th largest import partner of the United States (EIA 2015). While the United States does not need Central Asian energy to supply domestic demand though, it does have strategic, geopolitical interests in the region’s energy. The United States has an interest in preventing the Russian monopolization of energy resources that might allow manipulation of prices as OPEC did in 1973, and it has an interest in keeping certain states (such as Iran) from earning profits from Central Asian energy.
The United States has a basic interest in promoting the flow of oil and natural gas to Europe and Asia that has sought to limit the Russian influence over the oil and natural gas supplies from Central Asia. Despite knowing about India’s urgent need for natural gas, Washington opposed the Iran–Pakistan–India and Myanmar–India gas pipeline to isolate Iran and Myanmar. Central Asia and the Caspian might be the areas rich in energy resources, which too faced similar problems concerning the transit, development, and infrastructure of oil and natural gas reserves. Besides the above, the United States had played an important role in bringing together Georgia, Azerbaijan, and Turkey for building up the new pipeline project called the BTC pipeline.
In geopolitical terms, policy makers in Washington were unambiguous in their support for building multiple pipelines for Caspian oil and gas and for supporting American energy groups playing a significant role in the Caspian. The strategic goals that propel growing U.S. presence in the region are self-evident: to excel in the collective game over its rivals, real or imaginary (Geopolitica.ru). It is evident from the policy of the successive U.S. administrations to fill up the power vacuum after Russia’s unprecedented retreat and maintain their hegemony in Central Asia.
In 2006, the United States inaugurated the 1,760-km BTC oil pipeline project as part of its energy venture in Central Asia with a cost of US$4 billion (Piskur 2006). This pipeline in fact is the second longest and world’s most expensive pipeline project ever planned and executed. It runs through Azerbaijan and Georgia, proceeds through Armenia before ending at the Turkish port of Ceyhan (Escobar 2006: 42). For natural gas, the United States is working hard to ensure that a new transport route—the Nabucco pipeline—initiated by OMV of Austria and BOTAŞ of Turkey in 2002 would materialize. Aimed at breaking Russia’s monopoly, this equally costly project (estimated at US$ 12.3 billion; Reuters 2008) is designed to carry natural gas from Shah Deniz field of Azerbaijan to Baumgarten of Austria; it travels over a total length of 3,400 km and trespasses six countries en route (Geopolitika.ru). Nabucco is rated highly by the EU for two reasons: first, it is a diversion from the traditional troublesome northern route via Ukraine and Poland—which still pumps about 80 percent of the gas EU imported from Russia—and hence immune from possible disruptions in gas supply to consumers in Europe; second, because major gas producers as Iran, Iraq, Turkmenistan, and Egypt may be included as new sources of supply (Reuters 2008). But so far the outlook of this project is not entirely clear; “Western” powers (the EU and the United States) have been unable to organize a united front capable of withstanding the multifaceted pressure from Moscow. U.S. vulnerability, in particular, may be accessed through several perspectives.
China: The New Pole in the Grand Chessboard
Brzezinski in his grand chessboard has pointed out about four prominent poles playing an important role in Central Asia (Brzezinski 1998). China, which is one among these four poles, recently made a powerful entry into Central Asia, particularly in the oil and gas sector. Sensing the geopolitical vacuum in the heartland region and disinterestedness of Kremlin, China expressed its desire of forming the Shanghai Cooperation Organisation involving Russia and all Central Asian countries except Turkmenistan. To silence the widespread fear of “China threat,” Beijing reverted instead to “Peaceful Rise” as the official position on China’s development path and went on investing in Central Asia heavily. Tempted by lucrative trade with China, Central Asian republics cede increasing mineral rights to China’s state-owned enterprises, such as state-owned Chinese National Petroleum Company (CNPC) and Sinopec, and agreed to build cross-border pipelines (Ong 2005). To shed light on this topic, following reference is made to the widely discussed pipeline project Beijing collaborated with Kazakhstan and other Central Asian republics.
The Sino-Kazakh Oil Pipeline Co. Ltd. (KCP), a joint venture between CNPC and KazMunaiGas, was concluded in 1997 between China and Kazakhstan (Xinhua 2005). The eastern section first started pumping oil in May 2005 from the Kumkol field of the Aktobe region, making it the first pipeline to transmit crude directly into China. On October 27, 2005, China made its first major foray into the Central Asian oil industry when the CNPC purchased the Canadian-based PetroKazakhstan Inc., owner of the Kumkol field (Chinese Embassy 2005), but China paid well over market value and was forced to sell a third of its holdings in the Kazakh state oil company KazMunaiGaz back to the government as part of the deal (Pala 2006). On completion in 2009, the Sino-Kazakh pipeline has ultimately 20 million tons/year capacity, which is about 10 percent of China’s total crude imports in 2009. KCP was also designed to transport Russian crude, thus laying the base for trilateral pipeline cooperation. The question is whether LUKoil, owner of half of North Kumkol’s exploration and production license acquired from the Kazakhstani government in 1995, would use “oil weapon” to further state interest. By the end of 2006, LUKoil managed to own the legal rights of the entire area of Kumkol North after first using litigation to drain CNPC tens of millions of dollars. Russia’s geopolitical lever matters for China for two reasons: first, Kumkol field is the primary local supply source feeding the Atasu–Alashankou pipeline; second, the Shymkent refinery that is associated with the Kumkol field is connected to the Soviet-era Omsk–Pavlodar pipeline, officially named the Central Pipeline Consortium/CPC, controlled by Russia’s Transneft. This means that Transneft combined with LUKoil has the option to regulate the volume of crude movement between CPC and KCP (Marten 2007). After all Russia did not oppose the construction of the “Sino-Kazakh Pipeline” (Sheives 2006) virtually because it has only symbolic meaning and does not hamper its grip on the Central Asian pipeline. On the other hand, Washington saw China’s advance as a threat but less harmful as long as it reduces Russia’s domination on the pipeline (Geopolitica.ru).
Dismissing conceivable Russian sabotage, at bilateral level, the major advantage accruing to both Kazakhstan and China may be seen in the fact that: (a) KCP provides a direct transport route between two neighbors devoid of border disputes (completely resolved in 1997); (b) there is no charge on transit fees; (c) no third country can hold Kazakhstan’s oil hostage by arbitrarily raising fees or blocking the pipeline; (d) Kazakhstan is guaranteed a reliable export outlet for its superabundant oil reserve much as China needs a stable supply to sustain its high growth momentum. Nevertheless, there are minor disadvantages as well. On this pipeline, China acts as a monophony; the majority of the oil comes from the Caspian fields or even the massive Kashagan field, a high-pressure field with large quantities of poisonous hydrogen sulfide located in the shallow northern Caspian Sea which freezes in winter (The Economist 2007: 28). On natural gas, China has separately and jointly reached agreement with Turkmenistan, Uzbekistan, and Kazakhstan in building a cross-border pipeline. The result is the “Sino-Turkmenistan” pipeline or, more accurately, the “Central Asia–China Gas Pipeline.” The project was first discussed between Chinese President Hu Jintao and his Kazakh counterpart on his visit to Astana in June 2003, joined by a framework agreement signed with Turkmenistan (2006) for long-term gas supply and pipeline construction, and with Uzbekistan (2007) for building the Uzbek section of the pipeline (Geopolitica.ru).
One of the important agenda of China in the post-Cold War years remains energy procurement and preservation, on account of its heavy domestic demand. As a result, China has expanded its wings, starting from South Asia to Latin America. It started investing heavily in the downstream sector, building oil refineries and pipelines across the region to satisfy its domestic demands. So, its current involvement in the Central Asia, with which it shares 3,500 kilometers of border, has not been an isolated matter. China, the world’s second largest importer, has been importing pipeline or liquefied natural gas for transforming its own economy. In Central Asia, Kazakhstan is the most important energy partner of China. Beijing controls approximately 20 percent of Kazakhstan’s oil production and has constructed world’s longest pipeline running 2,300 kilometers from the Caspian Sea to the Xinjiang province (Hart 2016). CNPC also owns a significant stake in the Kashagan oil field. It also owns several small oil fields in Kazakhstan. In addition, Kazakhstan serves as the transit route for Chinese oil transportation.
China also directly imports gas from Turkmenistan—the main gas exporter of the region. Beijing has constructed the Central Asia–China gas pipeline. Uzbekistan also supplies gas to China through the upgraded pipeline network. In 2013, China and Uzbekistan have inked a bilateral energy deal of $15 billion. It has also financed two other refineries in Kyrgyzstan, in the towns of Kara-Balta and Tomak. The 2013 visit of Chinese President Xi Jinping resulted in signing of worth tens of billions of dollars energy deal with Central Asian states. Given the current energy engagement of China in Central Asia, the International Energy Agency (IEA) has estimated that China may be importing up to 50 percent of region’s oil and gases by 2020, leading to a decisive shift in Central Asia’s energy flow from west to east (Hart 2016).
While the United States has distant strategic interests in the energy geopolitics of Central Asia, the EU stands to directly win or lose in the diversification of Central Asian energy exports. In 2015, the EU consumed 18,380 tbl/d of oil and 1,003.5 bcm/y of gas (BP 2016). It is a net energy importer. Even before the end of the Cold War, Europe was reliant upon energy exports from Russia. Now, with Soviet republics as members, the EU is finding itself even more dependent. In 2011, 33 percent of the EU’s oil imports and 40 percent of its gas imports were supplied by Russia, and with energy conflicts between Ukraine and Russia upsetting gas supplies to Europe, the EU cares about Central Asian energy (EU 2011).
As a huge energy market, the EU has the potential to be a major player in Central Asian energy. However, the EU has only recently begun harmonizing the activities of its member states in the region, creating its first comprehensive Central Asia strategy paper in 2007. One of the main projects this document advocates is the construction of the Nabucco pipeline. This gas pipeline project would create a trans-Caspian pipeline link to the existing (BTE) Baku–Erzurum line and then carry gas through Turkey and into Europe. That route would avoid Russia and reduce Europe’s dependency on Russian gas (Cooley 2008).
Where Does India Stand in Pipeline Diplomacy in Central Asia?
Notwithstanding India’s close cultural affinities and historical connections, India has not been able to position itself at par with other powers in the region. Given the geopolitical salience of Central Asia and India’s growing energy requirements and quest for diversifying its supply routes, New Delhi is bound to keep looking for an area of cooperation with Central Asia. However, the immediate challenge for India comes from the landlocked geographical positioning of the region, lack of land roads for transportation from India to Central Asia, and the challenges posed by China on energy issues and Russia on matters of national security. It is disheartening to note that despite excellent diplomatic and political relations, India’s engagement in Central Asia is far behind in comparison to other regional and global powers. In spite of sustained rapport at top political level and mutual respect for each other, the trade and energy relationship between both the regions is still at a miniscule level. The challenges India faces are genuine geopolitical situations and geographical barriers.
Like China, India is also actively involved in oil politics of Central Asia. Both China and India are expected to occupy 50 percent of total world energy demand growth, 60 percent of world oil demand growth, 20 percent of natural gas, and 85 percent of coal demand growth (Hart 2016). India wanted the construction of pipelines that became clear in its support for pipelines along with six countries passing through Afghanistan, Pakistan, Bangladesh, Iran, Myanmar, and Turkmenistan. India’s primary energy demand is expected to grow at 6 percent with the GDP growth at 7 to 8 percent. According to the IEA reports, a $10 rise in crude prices would reduce India’s GDP by 1 percent, which calls for the diversification of energy sources for ensuring the availability of energy at affordable rates (Hart 2016).
India with its Connect Central Asia Policy has been one of the first such countries to establish strategic connections with the region in June 2012. The full membership position granted to India in Shanghai Cooperation Organization (SCO) has further bolstered New Delhi’s position in the region as an alternative to Chinese hegemony (Pradhan 2015).
TAPI
The Turkmenistan–Afghanistan–Pakistan–India (TAPI) project, started in 1995, is an ambitious pipeline for transporting natural gas from Central Asia to South Asia for the first time (Report 2011). The proposed pipeline project is a USD 10 billion (Niti Central 2015). The project covers a 1,040 miles (1,680 kilometers) route from Dauletabad in Turkmenistan through Herat, Helmand, and Kandahar in Afghanistan, to Quetta and Multan in Pakistan, and then on to Fazilka in India (Report 2011), passing through some of the worst conflict-ridden areas of Afghanistan and Pakistan. Turkmenistan has the world’s fourth largest source of natural gas. The TAPI project is intended to transport 33 bcm of gas from Turkmenistan via Afghanistan and Pakistan to India (Report 2011). However, the construction of the pipeline has been stalled for various reasons: prior commitment of Turkmenistan gas reserves to Russia; difficulties in engaging with the regime in Ashgabat; security risks associated with the pipeline that will run through troubled Afghanistan and Pakistan; lack of financing to the gas project by international companies; India’s reservations with regard to security of supply. Nevertheless, the visit of the Indian prime minister to Turkmenistan on July 11, 2015, was able to clear the air, and a joint statement was prepared to address the issue. The joint statement welcomed the establishment of the “TAPI Ltd” special-purpose vehicle for the project and the “leaders reaffirmed their strong commitment towards timely implementation of this strategic project” (MEA 2015). Timely completion of the project is mutually beneficial for both India and Turkmenistan. The latter currently depends on oil exports to China for revenues and would find an alternative source after the completion of this project. Greater cooperation in the area of oil exploration between the two countries—India and Turkmenistan—was also discussed, and the leaders welcomed the establishment of a representative office of ONGC Videsh in Ashgabat.
CASAREM
The Central Asia–South Asia Regional Electricity Market (CASAREM) (World Bank 2014) is based on the vision of a Greater Central Asia. This, in turn, is based on the premise that Central and South Asia are, or can become, a single integrated unit committed to economic activity and growth. The countries of the region, and particularly India as the leading force of South Asia, have deep cultural and historical ties and many common concerns such as against terrorism, finding outlets for energy supplies, achieving prosperity through economic cooperation, and moving toward enhanced security and stability. This concept further strengthens the spirit of regional security and regional cooperation. CASAREM is already connected with Afghanistan from Kyrgyzstan and Tajikistan and has the potential and possibility to connect other South Asian countries including India if effective initiatives are taken. It can help India in providing electricity to its north Indian cities, which are generally subjected to blackout during the summer months.
Central Asia in India’s Energy Strategy
India’s rise as an economic power has resulted in its energy crunch overwhelmingly, and its quest for energy diversifications and supply routes gains momentum. This has further encouraged the government of the day to take political and financial risks in its overseas investments by improving ties with resource-rich countries in Central Asia. Since geography is the single most physical barrier between India and Central Asian republics in establishing direct connection with each other, India’s topmost priority has been to develop transit routes to connect with Central Asia through Iran and Afghanistan. Therefore, India has been investing in infrastructural development projects in Iran and Afghanistan apart from its investment plans and joint ventures in Central Asian oil and gas fields.
In that direction, a landmark policy initiative was taken in 2012 to mark the 25th year of the establishment of diplomatic relations between India and Central Asian republics with the formal unveiling of India’s “Connect Central Asia Policy” by then External Affairs Minister S. M. Krishna in June at Bishkek (Chandra 2017: 40). However, the objectives of this Connect Central Asia Policy were annunciated a month later by then Minister of States for External Affairs E. Ahmad when he visited Kyrgyzstan in July.
Prime Minster Narendra Modi has taken a decisive step in transforming New Delhi’s relationship from the “clichéd iteration of deep historical connections and friendship to a new economic and strategic engagement” during his comprehensive visit to all the five Central Asian republics in one trip in July 2015 (Chandra 2017: 42). This goodwill tour has further strengthened the political ties and diplomatic relationship with both the regions and helped India to develop a proactive political, economic, and people-to-people engagement with all the countries of the region with an aim to expand its level of political, security, economic, cultural, and energy engagements with the region.
India’s inclusion into SCO along with Pakistan as full member at the SCO–BRIC summit at Ufa in 2016 has further allowed India to cement its relations with Central Asia and upgrade its trade, economic, and energy relations, making India a visible, neutral third vector after Russia and China.
Importantly, India is emulating China in Central Asia in mapping its energy security strategies. Taking cue from China, India is improving relations with oil-rich regions to enhance its energy security. Indian oil and gas companies are also amply encouraged to invest in strategically important countries. OVL’s investment in Sakhalin 1 and Sakhalin 2 projects is a good step forward for India to enter into joint ventures in Central Asian gas fields and oil wells. India is already making progress in TAPI and Iran–Pakistan–India (IPI) projects in spite of uncertainty over the gas reserves in Turkmenistan and the great “Iranian Crisis” because of the sanctions imposed by the United States on Iran. However, good news recently has come in the form of the International North–South Transportation Corridor (INSTC) that India and Russia has agreed to maintain in order to bolster their mutual trade by overcoming their geographical distance in spite of the U.S. warning against trade activities with Iran (FT 2020; RT 2020).
Policy Options for India
Through the better part of India’s history, links with Central Asia had been the most important in its contact with the outside world. In fact, India’s aim had traditionally been to take its philosophical and cultural message across Inner Asian countries up to the remote Siberian region. During the British period, political officers, explorers, surveyors, and traders, obviously for the “Great Game” postures, maintained some interest in Central Asia. However, in the post-independence period, India has grossly and perhaps consciously overlooked the studies and understanding of its non-South Asian neighboring areas, which traditionally formed “buffer zones” against external aggression. However, during the 1970s to 1990, India’s Central Asia policy was factored by the Soviet Union. In the early 1990s, with the disintegration of the Soviet Union, India’s focus in the region again remained poor and dismal. However, with the increasing geopolitical and strategic significance of the region for India, it directed its foreign policy formulation toward the region, which many called as India’s “Look North Policy.” This policy is basically meant to promote democracy, secularism, and peaceful coexistence in the Central Asian region. The situation has, however, been changed with the evolving energy scenario in the region. Accordingly, policy formulation of the countries changed responding to the region’s demand. In this context, India’s policy option is still unclear and confusing. Perhaps, it would not be an exaggeration to say that probably India does not have any worthwhile energy policy for the region.
India, so far, has hardly succeeded in winning deals in the Central Asian oil sector. The reasons are many and varied—ranging from technical hurdles to high-stake politics. The problem of inaccessibility apart, the issue of avoiding transit through Pakistan itself has become a fact of life. Therefore, it becomes essential, and inevitably so, to factor China in our energy security calculus. During the British rule, the route via Xinjiang was preferred for conducting trade and commerce with Central Asia. However, the partition of India and illegal and forceful occupation of Northern Kashmir by Pakistan have blocked India’s old trade route option in its transit route vision.
But with growing cooperation with China (depending on the state of bilateral ties), the feasibility of constructing oil/gas “Energy Highway” from Central Asia along Western China connecting to Northern India can be well assumed. If this happens, it would bring about unprecedented strategic change, let alone endowing energy supplies to the entire Northern India. Such a project connecting Central Asia and India through China will undermine the much-hyped Turkmenistan–Afghanistan–Pakistan gas pipeline project.
Until such a time when construction of direct oil and gas pipelines becomes possible, India’s interest should remain focused in the petroleum management sector. The Caspian Sea region and Kazakhstan offer enormous opportunity for Indian technicians and experts. Indian presence in the region is already growing, as hundreds of Indian technicians and skilled workers are finding their way into infrastructure development projects. About a thousand Indians are already working in Aksai and Karachaganak-based Consolidated Construction Company and SAIPEM Company, undertaking pipeline construction. With the increasing participation of the Indian workforce in petroleum management, the Caspian Sea region and Central Asia would inevitably become another Gulf model for India.
It is, therefore, necessary for India to evolve its own perspective and understanding, and to broaden its operational scope of Central Asia. In this mission, it also needs to include Afghanistan and the frontiers of China (Xinjiang) in its greater Central Asian vision.
India should also look into capitalize the entry to SCO. It would be prudent for India to use the organization and broaden its deftness. A sub-regional framework involving India, China, Kyrgyzstan, Tajikistan, Kazakhstan and Afghanistan could form a viable option for a long-term cooperation. Like China, it could also use the SCO mechanism to garner its interests in the region.
Despite India’s weak presence in Central Asia, New Delhi (if it cautiously treads its path and decisively shifts its policy process) can do wonders in the region. Importantly, it must look on to capitalize on the following options:
To continue to build on our strong political relations through continuous and consistent exchange of high-level visits at bilateral and multilateral forums.
To show the political willingness and economic strengths to take on the financial risks involved in the overseas investments.
To establish physical connectivity with each of the Central Asian states (Chandra 2017).
To step up multilateral engagement with CAS using the existing multilateral forums such as SCO and Eurasian Economic Community.
India has to take a leaf out of Chinese economic diplomacy and encourage economic interests to lead other political and security objectives in place in the region.
The focus needs to be shifted from import orientation to export promotion of Indian goods in CAS.
More concentration should be given on trade in service than on trade on goods.
One of the major reasons for trade relationship not moving to its potential is the absence of private investments. Therefore, the Indian government must come forward and provide a certain level of assurance to tackle the risks involved in the trading system to encourage private entrepreneurs’ to play an important role in strengthening the relationship in trade and the economic sector, which eventually would spread to sectors such as energy and security.
Public enterprises such as ONGC, SAIL, BHEL, BSNL, CIL, etc., must come forward and play in the front foot as far as investments in strategic collaborations and joint ventures are concerned in energy and power sectors, minerals and oil explorations, etc.
Importantly, India needs to come out of its “one-size-fits-all approach” (Chandra 2017). Instead of formulating a general trade policy for a region, New Delhi needs to formulate and have country-specific trade strategies.
Market mapping, analysis, creating data banks for raw products, consumer, and capital goods is critical for Indian exporters. Hence, updated and critical information network must be created for better business ties with CAS.
Language barriers need to be dismantled by encouraging student exchange programs and provisioning translator facilities by the government.
India needs to work on an alternative logistic route like Chinese One Belt, One Road and hence must reactivate land connectivity at the earliest through INSTC.
The International North–South Transport Corridor is a 7,200 km long multimode network of ship, rail, and road route for moving freights between India and Russia through Iran, Europe and Central Asia. The concept is not new; in September 2000, this project was proposed and initiated by India, Russia, and Iran in St. Petersburg. The objectives of the corridor are to increase trade connectivity between major cities such as Mumbai, Moscow, Tehran, Baku, Bandar Abbas, Astrakhan, etc. The agreement was signed on May 16, 2002, and the first dry run of two routes was conducted successfully in 2014 (Chaudhury 2017). The result was amazing as the cost of transportation was reduced by $2,500 per 15 tons of cargo (MEA 2017). Since India is facing roadblocks in materializing the TAPI and IPI pipeline projects due to its transit through Pakistan, INSTC offers India bounties of opportunities to sideline Islamabad by working out the INSTC option through the Bandar Abbas and Chabahar ports of Iran to Mumbai through the Arabian Sea. Also, from the cost–benefit point of view, this has been seen as less expensive than other available routes, and importantly it is secure and free from any sort of hostilities.
Footnotes
Conclusion
The Central Asian energy exports (oil and gas) have to come in through a pipeline network and this will undoubtedly change geopolitical configuration of the region as well as beyond. The question is not how the energy resources will be transported—but who will get the Central Asian energy resources—is perhaps the reason why the new “Great Game” in Central Asia has been going on for nearly two decades. Of the four poles, China and Russia correspond with each other the most, however, covering a variety of regional policies for one important reason: they are pregnant with the vision of multi-polarity in world affairs (Walsh 1993: 273). Oil and gas loom as the cornerstone of their common initiatives, even if they have different or even competing goals in the region (Bates and Oresman 2003; 
). By contrast, the EU expresses greater interest in energy security than how it may be satisfied, intend on including Iran as potential gas supplier through Caspian pipelines that bypass Russia, a position Washington objects to. To perpetuate its hegemony, the United States is strongly motivated to liquidate Russia’s rule in Central Asia, restructure Eurasian space according to own interests preventing China’s or Europe’s rule there, progressively tighten their grips on Central Asian minerals and the pipeline infrastructures, aim at eventually crowding out Russia’s influences and curbing China’s rise.
Although India has a plethora of policies in place for its engagements in Central Asia, it lacks concrete strategy to acquire the oil and gas of the region. It needs to develop that part of its engagement with the region. Additionally, China cannot be ignored while dealing with Central Asia, as it largely factors in the regional trajectory of the region. India needs to include Chinese relevance in its Central Asian policy calculus. Importantly, Russia has always been very supportive to India; being a full member of SCO now, India has an advantage to make an inroad to the energy-rich heartland and capitalize on the historic bonding and superb friendship it shares with the countries of the region. But for that, India needs to exhibit strong political willpower and economic tenacity to engage with the countries of the region and strengthen its position in the Central Asian energy bastion. Further, India needs to maintain better relations with its neighbors, particularly China, Pakistan and Afghanistan. Since its geopolitical location in South Asia demands this, without such cooperation it will be hard for India to achieve its foreign policy goals and to ensure its energy security vision. Importantly, India must count on Tehran’s goodwill to tie up with India and Russia on INSTC in spite of U.S. sanctions on Iran.
Consequently, the five Central Asian states are casting about for counterbalances against the two large Asian powers. Kazakhstan’s somewhat closer relations with India earlier in the decade, which seemed to promise increased trade ties, foundered for a time upon the difficult geography: on top of the transportation difficulties prevalent to the region, New Delhi has no border with any Central Asian state. As of Uzbekistan, it is an old ally of India—historically connected. Turkmenistan, Kyrgyzstan and Tajikistan have maintained very close and cordial relations with India through years and are expecting a greater Indian role in their region to counterbalance the growing hegemony of Russia, China and the United States. But India must not forget that, Kazakhstan, Turkmenistan and Uzbekistan have followed different paths after independence to consolidate their national development and have been using energy as a strategic resource to augment development through FDIs and therefore adopted different energy policies and investment regulations for foreign countries. Therefore, India should not adopt a “one-size-fits-all approach” in its dealing with them, instead it must formulate country-specific trade and energy strategies.
In the last few years, India has shown keen interests particularly under the Narendra Modi administration. Through the Reconnecting Central Asia policy and strengthening bilateral relationship with the Central Asian states in addition to the recently acquired full member status of the SCO, New Delhi could be able to make its presence felt in the region. If New Delhi manages to consolidate on its “Connect Central Asia Policy,” work on war footing to materialize the INSTC at the earliest, and engage with the Central Asian states through multilateral frameworks and groupings such as SCO and EAEU, then it is just a matter of time that India may emerge as a third pole after Russia and China in Central Asia.
Declaration of Conflicting Interests
The author declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
Funding
The author received no financial support for the research, authorship, and/or publication of this article.