Millennium Post

Energise old friendship

Russian President Vladimir Putin’s forthcoming visit to India provides a great opportunity to the two time-tested allies for a wide-ranging strategic tie-up in the energy sector, encompassing hydrocarbon, coal, nuclear and non-conventional energies, both at local and global levels to benefit both the countries as well as other stakeholders. Russia has probably the world’s largest reserves of oil and gas. According to Russian Natural Resources Minister Sergey Donskoy, as of 1 January 2012, recoverable reserves of oil in Russia under category ABC1 (equivalent to proven reserves) were 17.8 billion tons and category C2 reserves (equivalent to probable and possible) were 10.9 billion tons. It is a major energy exporter to the European Union. Russian Federation has the world’s second largest coal reserves. It is also 3rd largest producer of nuclear power.

On the contrary, India, currently the world’s 3rd largest energy consumer, is among the top five importers of oil. It is turning to be a large importer of coal as well despite the fact it has the world’s 3rd largest coal reserves. And, it has an ambitious nuclear power generation programme in place. Russia is the biggest nuclear power plant builder (Kudankulam) in India. The state-owned oil exploration companies such as ONGC and OIL are being increasingly involved by exploration work in Russia and outside. BHEL may be next to build a thermal power project in Russia.

What could be a more ideal platform than this to take the energy co-operation between the two countries forward to a strategic level charting a long-term road map.

Frankly, India badly needs the support of a trusted partner in its bid to ensure energy security to achieve a preferred 8 to 9 per cent economic growth till at least 2030, by which the country will be the world’s second largest energy consumer after China and ahead of the USA. Energy security poses the biggest challenge to India’s economic prosperity agenda given the fact that the country is highly energy deficient.

India is nearly 80 per cent dependant on imported oil. Its coal import is rising at a feverish pace of 15-20 per cent annually. Nuclear energy accounts for only around 3.6 per cent of the total power generation. Hydro-electric generation is below 15 per cent. The production of non-conventional energy such as solar and wind power, bio-gas, bio-fuel, etc. meets less than 10 per cent of the electricity needs. The country’s peak hour power deficit continues to be close to 10 per cent. This is despite the fact a large number of India’s households, especially in rural and remote areas, has no access to electricity.

Russia can act as a major catalyst and partner to bridge India’s energy gap. Primary energy consumption in India has more than doubled between 1990 and 2012, reaching an estimated 32 quadrillion British thermal units (Btu). Yet, India’s per capita energy consumption is one-third of the global average, according to the International Energy Agency (IEA), indicating potentially higher energy demand in the long term.

India’s National Sample Survey Organization (NSSO) estimates that about 25 per cent of the population (over 300 million people) lack basic access to electricity, while electrified areas suffer from rolling electricity blackouts.  

In the International Energy Outlook 2013, EIA projected that India and China will account for about half of global energy demand growth through 2040, with India’s energy demand growing at 2.8 per cent per year. But, its demand could be higher if its economy grows at the rate to 8-9 per cent per annum over a 10-year stretch.

No lasting co-operation can be one sided. India has been welcomed in Russia to explore oil. The energy ministries of Russia and India have been in talks for a $600-million deal to set up 480 MW (240MW X 2) power project by BHEL on a turnkey basis at Ulan Ude, the capital of the Russian province of Buryatia. A formal agreement may be signed during President Putin’s visit, next month.

While BHEL is expected to put in half of the project cost, Russia’s contribution of $300 million would be paid out of a Soviet-era debt that India owes to Russia, and which has now been regularised under a rouble-rupee agreement. This would be the first occasion that an Indian company tapping the debt repayment fund that has been created to clear up almost $2 billion of dues that India owes to Russia. So far, Russian companies have used this route for making investments into India. Now reverse investment under the route is considered as part of the exercise to strengthen engagement of companies in both countries. The BHEL-Buryatia project is being billed as win-win for India and Russia.

The recent Russian offer to ONGC Videsh Limited (OVL) of a 10 per cent stake in Central Siberia’s Vankor oil field having recoverable reserves of 500 million tons of oil and condensate and 182 billion cubic meters of gas, has a lot of significance for bilateral and regional economic cooperation between the two countries.

The Russian energy giant Rosneft has also offered up to 49 percent stake in Yurubcheno-Tokhomskoye. OVL’s participation in Sakhalin-I is a well-known success story of this bilateral cooperation. OVL acquired 20 per cent stake in Sakhalin-1 oilfield worth $2.1 billion in 2001. In August this year Rosneft sent a proposal to OVL for joint development of Yurubcheno-Tokhomskoye oilfield in eastern Siberia, which has over 10 billion tons of oil reserve. Ideally, an India-Russia-China cooperation in energy may even see Russian natural gas pipelined into India through the central Asian republics.

On India’s part, it will be an excellent gesture if Prime Minister Narendra Modi is able to push through the proposed nuclear power plant at Haripur in West Bengal’s coastal district of Midnapore under the Russian collaboration.

The project is being opposed allegedly by a foreign-funded NGO. The issue of rehabilitation of a small number of displaced persons should be discussed and settled between the state and the national governments. There is no human-habitation-free land available in the country to set up any new nuclear or even large thermal power or hydro-electric plant in the country.

That doesn’t mean India should stop building such power plants. All that are needed to tackle the situation are a mutually acceptable rehabilitation plan and a well laid-out policy that provides highest importance to energy projects. The next Russian-built nuclear power plant should be at Haripur. IPA

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