Pipeline in Siberia a wake-up call for India

MK Bhadrakumar 
Former Ambassador

The past week’s big news has been the commissioning of the Power of Siberia gas pipeline which connects the Siberian gas fields in Russia with China’s northern industrial hubs via a 3,000-kilometre long pipeline, snaking through inhospitable terrain — swamps, mountains and permafrost, in temperatures as low as minus 25°C. For India, there are profound lessons of energy security and ‘political engineering’ to be drawn from it. 

The Power of Siberia pipeline will gradually ramp up to export 38 billion cubic metres within the ambit of a 30-year $400-billion gas-supply agreement signed in 2014. The project develops a new resource base in Russia, builds infrastructure conducive to the socio-economic development of Siberia and the Far East, implementing major investment projects in gas processing and chemical products, apart from exporting to the most dynamically developing market in the world. As for China, it becomes a key land-based channel for sourcing gas, which potentially reduces dependence on tanker LNG deliveries through the US-controlled choke point of the Strait of Malacca and South China Sea. 

The Power of Siberia signals that Russia-China relations are entering a new era where economic interdependence and political/strategic understanding mutually support and reinforce each other. Western experts and many Indian analysts tend to estimate that the Russia-China entente is a ‘marriage of convenience’.

But the geopolitical reality today is that Russia’s ‘pivot to Asia’ has acquired habitation and a name and is anchored firmly on a strategic vision with a long-term perspective. Henry Kissinger’s idea of ‘triangulation’ — ensuring that China and Russia were not friendlier to each other than each was to the United States — has become a relic of history. In a speech in October, Russian President Vladimir Putin said, “This (Russia-China) is an allied relationship in the full sense of a multifaceted strategic partnership.”

Indian analysts harbour a notion that Russia is ‘weaker’ than China and Washington should be reaching out to Moscow to find common ground in checking Chinese power, while Russia could be useful in occasionally siding with an emerging common resistance to China that includes Australia, India, Japan, etc. 

The underlying assumption is that a stronger US pushback at China might work if it were supported by an array of Asian allies and a conniving Russia. The Power of Siberia would have a sobering effect on such notions. Putin, who watched the launch of the Power of Siberia pipeline from the Russian Black Sea resort of Sochi on December 2 via video link with his Chinese counterpart Xi Jinping, said, “This step takes Russo-Chinese strategic cooperation in energy to a qualitative new level.” Xi estimated that it is a “landmark project… and a paradigm of deep convergence of both countries’ interests and win-win cooperation.” 

Nonetheless, it is not as if geopolitics drives energy trade. The $400-billion energy deal that propelled the Power of Siberia took 18 years to finalise, with Moscow and Beijing keenly negotiating the pricing. Clearly, the Indian discourses regarding the moribund Iran gas pipeline project failed to read the tea leaves correctly — namely, that pipelines are largely impervious to geopolitical environment. (The relations between Europe and Russia in the natural-gas sector during the Cold War era testified to that.) 

The point is, pipelines are built on techno-economic factors that are inherently slow and impervious to change: proven reserves of gas, aggregate demand for energy and investment in physical infrastructure to link the two. Pipelines demonstrate the scope for stabilisation of international economic cooperation. 

In a recent book, The Bridge, noted political scientist Thane Gustafson explains how pipelines, which take decades to build, and tend to operate for decades more, often governed by just one or two long-term contracts, create physical, tangible linkage between producer and consumer and “automatically creates a mutual dependence” — since, natural gas (or anything that travels through a fixed infrastructure) is ultimately a ‘relationship commodity. 

So, the Power of Siberia makes a good case study for Indian decision-makers to revisit the Iran gas pipeline project. This is vital, because, as Gustafson calls it, the next few decades will be the ‘golden age of gas’ and commercial interests will induce modern countries to transcend ideological and geopolitical differences. Alas, except for a short while during the UPA-1 regime when Mani Shankar Aiyar was the Petroleum Minister, India has never seriously addressed the intellectual construct of energy security and pipelines. Apropos energy security, the Modi government has fallen back to the role of middleman between the world market and the hapless Indian consumer. 

But India is emerging as a top energy-importing country alongside China. Natural gas will become India’s major energy bridge to a future world of renewables if Indians also are to enjoy ‘green grass and a blue sky’, as the Chinese Communist Party has promised to give its country’s people. 

Indeed, our gas market with the growth potential ought to have a diverse supply mix. The LNG imports from the US may be a useful option for reducing the trade deficit. Whereas, pipelines assure far cheaper gas. And Iran has approximately 29.6 trillion cubic metres of proven gas reserves, which accounts for 16 per cent of the world’s total reserves. This places Iran behind Russia with the second largest gas reserves worldwide.

 The Power of Siberia is a wake-up call for the Indian decision-makers, signalling the high importance that China, a serious rising power, attaches to gas pipelines. In fact, a Power of Siberia-2 is already under discussion to deliver 30 billion cubic metres a year of Russian gas to the western border of China.