Sanjay Kumar Pradhan

India’s Quest for Energy Through Oil and Natural GasTrade and Investment, Geopolitics, and Security

India’s Quest for Energy Through Oil and NaturalGas

Sanjay Kumar Pradhan

India’s Quest for EnergyThrough Oil and Natural GasTrade and Investment, Geopolitics,and Security

123

Sanjay Kumar PradhanInternational RelationsPandit Deendayal Petroleum UniversityGandhinagar, India

ISBN 978-981-15-5219-9 ISBN 978-981-15-5220-5 (eBook)https://doi.org/10.1007/978-981-15-5220-5

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This work is in memory of my mother lateSmt. Sushila Pradhan

Preface

India’s quest for energy has transmitted its relationship with other countries fromthe buyer–seller to the level of strategic partnership. The economic liberalizationand growing demand for more energy resources have prompted India to change itspolicy to access oil and natural gas assets abroad. Accordingly, diversification andinvestment are two major approaches followed by the Indian government tointensify its engagement with the oil and natural gas-rich countries in the world.However, in the process of trade and investment, the geopolitical dynamics,domestic issues and security concerns have necessitated for introspection of India’squest for energy security through oil and natural gas resources. As India is the thirdlargest importer and consumer of oil and natural gas in the world, by 2025, it isexpected to overtake China—the second largest consumer of energy after the USA.By 2040, as projected, the Indian market will constitute about a quarter of thegrowth in global energy demand, and New Delhi is now looking for variousinternational destinations to meet its energy requirements. Significantly, shaleenergy has added a new dimension to India’s external engagements. India has beenlooking for all possible overseas destinations for oil and natural gas imports, whilestimulating its own sources of energy, along with focus on renewables. India hasposed as a potential contender in investing upstream, midstream and downstreamsectors of energy economy, and energy has turned as a strategic resource in NewDelhi’s resource diplomacy and foreign policy discourse that includes secured,reliable, uninterrupted and affordable supply of energy. Therefore, energy has posedas “second to India’s food security”, and New Delhi aptly tries to achieve its energysecurity, so as to have a decisive role in international energy architecture, rightfulplace in the global politics, and a greater degree of independent foreign policypursuance. Accordingly, India has steered for diversification of its energy basketand investment in the overseas energy assets. India has established or fastened itsfootprints in the oil and natural gas sectors of Africa, West Asia, Central Asia, theLatin America and the Caribbean (LAC), Arctic, South China Sea, Russia and theUSA, along with the pipeline options. While explaining the conceptual frameworksof geopolitics of energy and energy security and contextualising energy security inthe Indian context in the first chapter of the book, the subsequent chapters have

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attempted at analysing geopolitics and security aspects of India’s trade andinvestment in the international energy market-both region and country-specific. Inits concluding part, the book has recommended action plan for promotion ofexisting trade and investment opportunities in the oil and natural gas sectors abroad,while suggesting for renewable energy resources so as to enrich India’s energybasket in its quest for low carbon emissions and clean energy. Throughout theanalysis, qualitative method is applied, with some focus on quantitative data. Thehistorical perspective has also been resorted to substantiate India’s strategicengagement with the oil-rich countries and the major powers-broadly through thechanging geopolitical dynamics and energy security perspectives. With regard tothe literature, the government reports, information from the international andregional organizations and forums, books, journals and internet sources have beenextensively used for data collection and analysis. Specifically, my earlier publica-tions—related to geopolitics of energy and energy security—have been referredwhenever required, but with the modifications and new orientations. “India andAfrica: Quest for Oil and Gas” (Indian Foreign Affairs Journal, July–September2012), “Spratly Dispute: Looking through Oil and Gas and India’s EnergyApproaches” (World Focus, June 2012), and “Indo-Russian Energy Cooperation:Geopolitics in a Fluid Matrix” (Economic & Political Weekly, 10 February 2018)have provided basic grounds to develop Chaps. 2, 6 and 8, respectively, with thedue approval of the journals concerned.

Gandhinagar, India Sanjay Kumar Pradhan

viii Preface

Acknowledgements

This research endeavour would not have been possible without the help of a numberof people who with their kind cooperation, benign guidance and support made thisresearch work a reality.

The constant support and encouragement of my wife Dr. Geetanjali Dutta hasenabled me to complete the work in time. My little son Sanket (Sonu) has been aninspiration throughout my research.

I am deeply indebted to Prof. Keshab Das and Prof. Tara Nair for their constantencouragement and scholastic guidance despite their busy schedule.

I take this opportunity to thank Springer Publisher for accepting my manuscriptfor publication. I am grateful to the editorial board of Springer and anonymousreferees who guided me throughout the process.

I owe a lot to the library, colleagues, staff and students of Pandit DeendayalPetroleum University. Not to mention, all my friends, relatives and students havegiven all kinds of support throughout my research. My special thanks go toDr. Venkat Ram Reddy, Dr. Katyayani Singh, Prof. Rajarshi Kumar Gaur andMr. Jenish Trivedi.

I would like to mention my gratitude especially to my family members for theirunflagging support and steadfast encouragement throughout the research.

Having been privileged in getting support and guidance, I owe responsibility forall the errors or omissions in this work.

Gandhinagar, India Dr. Sanjay Kumar PradhanMay 2020

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Contents

1 Conceptual Frameworks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1 Energy Perspectives in International Relations . . . . . . . . . . . . . 11.2 Geopolitics for Energy Security . . . . . . . . . . . . . . . . . . . . . . . . 91.3 Energy Security—A Wider Connotation . . . . . . . . . . . . . . . . . . 111.4 Energy Security—An Indian Perspective . . . . . . . . . . . . . . . . . 14

1.4.1 Growth of India’s Oil and Natural Gas Sector . . . . . . . 151.4.2 Energy Requirement and Policy Perspectives

Since 1990s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

2 Africa: Existing Potentials with a Promising Future . . . . . . . . . . . . 332.1 Trade and Investment Potentials . . . . . . . . . . . . . . . . . . . . . . . 332.2 Foreign Policy Pursuits and Resource Diplomacy . . . . . . . . . . . 382.3 Chinese Resource Diplomacy-Where Does India Stand? . . . . . . 412.4 Internal Security Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . 442.5 The “New Scramble” for Resources? . . . . . . . . . . . . . . . . . . . . 492.6 Could Energy Deficit Hinder Export? . . . . . . . . . . . . . . . . . . . . 502.7 Can India Have a Better Footprint? . . . . . . . . . . . . . . . . . . . . . 51References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

3 West Asia: Trade and Investment in a Geopolitical Intricacy,and Security Worries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 613.1 Energy—“Asia Bound” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 613.2 Trade and Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 633.3 Geopolitics and Security Challenges . . . . . . . . . . . . . . . . . . . . 70

3.3.1 Implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 723.3.2 Security Arrangements . . . . . . . . . . . . . . . . . . . . . . . . 74

3.4 Balancing the Adversaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82

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4 Central Asia: Geopolitics and “New Great Game” . . . . . . . . . . . . . 874.1 Historicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 874.2 Energy Potentials, Trade and Investment . . . . . . . . . . . . . . . . . 884.3 Energy in “Connect Central Asia” Policy . . . . . . . . . . . . . . . . . 914.4 The Great Game Versus New Great Game . . . . . . . . . . . . . . . . 93References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100

5 The Latin America and the Caribbean (LAC):An Introspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1035.1 The Potentials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1035.2 Trade and Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1055.3 Geopolitics and Security Challenges . . . . . . . . . . . . . . . . . . . . 112

5.3.1 Venezuela—Oil Socialism or Oil Curse? . . . . . . . . . . . 1125.3.2 Venezuela-US Imbroglio . . . . . . . . . . . . . . . . . . . . . . . 115

5.4 A Wavering India? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1165.5 Challenges with a Different Kind . . . . . . . . . . . . . . . . . . . . . . . 118References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124

6 Other Regions: Opportunities with Complexities . . . . . . . . . . . . . . 1276.1 Arctic Energy—A New Frontier of Risk . . . . . . . . . . . . . . . . . 127

6.1.1 Drilling Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . 1296.1.2 Exploration Implications on Environment . . . . . . . . . . 1306.1.3 Geostrategic Competitions and Security . . . . . . . . . . . . 1326.1.4 What Prospects for India? . . . . . . . . . . . . . . . . . . . . . . 135

6.2 South China Sea—Drilling in the Troubled Waters . . . . . . . . . . 1376.2.1 Potential Conflicts and Security Aspects . . . . . . . . . . . 1376.2.2 New Delhi’s Stakes . . . . . . . . . . . . . . . . . . . . . . . . . . 142

References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148

7 Pipelines: Challenges Many, Progress Slow . . . . . . . . . . . . . . . . . . . 1517.1 The Essence of Pipeline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1517.2 Turkmenistan–Afghanistan–Pakistan–India Pipeline (TAPI) . . . . 153

7.2.1 Impetus for Pipeline . . . . . . . . . . . . . . . . . . . . . . . . . . 1537.2.2 Security Apprehensions . . . . . . . . . . . . . . . . . . . . . . . 1547.2.3 Economic Mileage and Geopolitical Gains . . . . . . . . . . 156

7.3 The Myanmar–Bangladesh–India Pipeline (MBI) . . . . . . . . . . . 1577.3.1 Pipeline Pursuit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1577.3.2 Pipeline Implications . . . . . . . . . . . . . . . . . . . . . . . . . 1617.3.3 Progress Without Commitment . . . . . . . . . . . . . . . . . . 162

7.4 Iran–Pakistan–India Pipeline (IPI) . . . . . . . . . . . . . . . . . . . . . . 1647.4.1 Pipeline Pursuits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1647.4.2 Implications Riddled with Imbroglio . . . . . . . . . . . . . . 1657.4.3 Undersea Pipeline Options . . . . . . . . . . . . . . . . . . . . . 166

7.5 Russia–China–India Pipeline (RCI) . . . . . . . . . . . . . . . . . . . . . 167References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173

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8 Russia: Energy Surge and Geopolitical Milieu . . . . . . . . . . . . . . . . 1758.1 Russia—The World Energy Leader? . . . . . . . . . . . . . . . . . . . . 1768.2 “Asia Pivot” Perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1788.3 Trade and Investment Potentials, with a Brighter Prospect . . . . . 1818.4 Crimean Crisis—Balancing the Global Powers . . . . . . . . . . . . . 1848.5 Clout in Crude Price and Economic Sanctions . . . . . . . . . . . . . 1858.6 India–Russia–China–US Matrix . . . . . . . . . . . . . . . . . . . . . . . . 188References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192

9 The USA: Destination for a New Energy . . . . . . . . . . . . . . . . . . . . 1979.1 The Shale Boom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1979.2 Geostrategic Shift and Energy Market . . . . . . . . . . . . . . . . . . . 2019.3 Trade and Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2039.4 Implications of Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . 2089.5 Shale, OPEC and West Asia Market—Prospects for India . . . . . 2109.6 Shale Versus Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 212References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 218

10 The Way Forward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22110.1 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22110.2 Action Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227

10.2.1 Quest for Renewables . . . . . . . . . . . . . . . . . . . . . . . . . 232References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 234

Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 235

Contents xiii

About the Author

Sanjay Kumar Pradhan is an Assistant Professor of International Relations, atthe School of Liberal Studies, Pandit Deendayal Petroleum University, Gujarat,India. He received his postgraduate, advanced postgraduate, and Ph.D. degreesfrom the School of International Studies, Jawaharlal Nehru University (JNU), NewDelhi, India. During his Ph. D. programme, he was awarded a centrally sponsoreddoctoral fellowship to pursue his doctorate by the Indian Council of Social ScienceResearch, Government of India. He has 14 years of teaching and research experi-ence, teaching and guiding undergraduate, postgraduate and Ph.D. students in areasranging from political science, international relations, law, to liberal studies. Hisresearch interests include the geopolitics of energy, energy security, resourcediplomacy, international political economy, green energy, climate change andsustainable development, Africa, diaspora, gender, foreign policy, peace & conflict,and theories of international relations. He has published a book and 43 researchpapers in various respected journals, including the Indian Journal of Social Work,Asian Studies, Indian Foreign Affairs Journal, Journal of Peace Studies, AsianProfile, and Economic & Political Weekly.

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Acronyms

AC Arctic CouncilADB Asian Development BankADNOC Abu Dhabi National Oil CompanyAEP Act East PolicyAFRICOM United States Africa CommandANCAP Administración Nacional de Combustibles Alcohol PortlandAPERC Asia Pacific Energy Research CentreARF ASEAN Regional ForumASEAN Association of South East Asian NationsASSOCHAM Associated Chambers of Commerce and Industry of IndiaAU African UnionAUC African Union CommissionBAU Business-As-UsualBCM Billion Cubic MetreBIMSTEC Bay of Bengal Initiative for Multi-Sectoral Technical and

Economic CooperationBOE Barrels of Oil EquivalentBPCL Bharat Petroleum Corporation LimitedBPRL Bharat Petro Resources LimitedBRICS Brazil–Russia–India–China–South AfricaCAGR Compound Annual Growth RateCARICOM Caribbean Community and Common MarketCBM Coal Bed MethaneCELAC Community of Latin American and Caribbean StatesCIA Central Intelligence AgencyCIS Commonwealth of Independent StatesCNG Compressed Natural GasCNOOC China National Offshore Oil CorporationCNPC China National Petroleum CorporationCOP21 21st Conference of the Parties

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CPCIA China Petroleum and Chemical Industry AssociationCSS Committee of State SecurityCSTO Collective Security Treaty OrganisationCTL Coal-to-LiquidDES Delivered Ex ShipDGFI Directorate General of Forces IntelligenceDGH Directorate General of HydrocarbonsDOC Declaration on the Conduct of PartiesDOE Department of EnergyE&P Exploration and Production (E&P)EAEU Eurasian Economic UnionEEZ Exclusive Economic ZoneEIA US Energy Information AdministrationEIL Engineers India LimitedELN Ejercito de Liberación NacionalENAP Empresa Nacional de PetróleoENARSA Argentina’s Energía Argentina S.AEXIM Policy Export Import PolicyFARC Fuerzas Armadas Revolucionarias de ColombiaFDI Foreign Direct InvestmentFLEC Front for the Liberation of the Enclave of CabindaFNDIC Federated Niger Delta Ijaw CommunitiesFSB Federal Security ServiceFTA Free Trade AgreementFUC United Front for Democratic Change (Front uni pour le

changement)GAIL Gas Authority of India LimitedGCC Gulf Cooperation CouncilGDP Gross Domestic ProductGHG Greenhouse GasesGNPOC Greater Nile Petroleum Operating CompanyGRM Gross Refining MarginsGSPA Gas Sale and Purchase AgreementGSPC Gujarat State Petroleum CorporationGTCL Gas Transmission Company LimitedGW GigawattHPCL Hindustan Petroleum Corporation LimitedIBFPL Indo-Bangla Friendship PipelineIBSA India–Brazil–South AfricaICD International Cooperation DivisionICJ International Court of JusticeIEA International Energy AgencyIEF-16 International Energy Forum-16IMF International Monetary FundINDC Intended Nationally Determined Contributions

xviii Acronyms

INSTC International North South Trade CorridorIOCL Indian Oil Corporation LimitedIPE International Political EconomyIPI Iran–Pakistan–IndiaIRENA International Renewable Energy AgencyIS Islamic StateISA International Solar AllianceISGS Inter State Gas Systems (Private) LimitedISI Inter-Service IntelligenceISIL Islamic State of Iraq and the LevantISIS Islamic State of Iraq and SyriaITEC Indian Technical and Economic CooperationIUPF Indo–US Parliamentary ForumJCERDC Joint Clean Energy Research and Development CenterKG Krishna–Godavari BasinKNOC Korea National Oil CorporationKOGAS Korea Gas CorporationKPC Kuwait Petroleum CorporationLAC Latin America and the CaribbeanLNG Liquified Natural GasLOC Lines of CreditLPG Liquefied Petroleum GasMBI Myanmar–Bangladesh–IndiaMDGs Millennium Development GoalsMECL Mansarovar Energy Colombia LimitedMEND Movement for the Emancipation of the Niger DeltaMMBTU Million Metric British Thermal UnitsMMT Million Metric TonnesMNC Multinational CompanyMNRE Ministry of New and Renewable EnergyMOGE Myanmar Oil and Gas EnterpriseMOU Memorandum of UnderstandingMPNG Ministry of Petroleum and Natural GasMRPL Mangalore Refinery and Petrochemicals LtdMT Million TonnesMTCO2 Eq Metric Tons of Carbon Dioxide EquivalentMTOE Million Tonnes of Oil EquivalentMW MegawattNAM Non-Aligned MovementNAMA Nationally Appropriate Mitigation ActionNATGAS National Gas CompanyNATO North Atlantic Treaty OrganisationNDC Nationally Determined ContributionNELP New Exploration Licensing PolicyNEPAD New Partnership for Africa’s Development

Acronyms xix

NGHP National Gas Hydrate ProgrammeNGL Natural Gas LiquidNITI Ayog National Institution for Transforming India AyogNSR Northern Sea RouteOAS Organization of American StatesOBOR One Belt One RoadOECD Organization for Economic Co-operation and DevelopmentOIC Organization of Islamic CooperationOIL Oil India LimitedOMEL ONGC-Mittal Energy LimitedONGC Oil and Natural Gas Corporation of IndiaOPEC Organisation of the Petroleum Exporting CountriesOVL ONGC-Videsh LimitedPACE Partnership to Advance Clean EnergyPdVSA Petróleos de Venezuela, S.APetroSA Petroleum Oil and Gas Corporation of South AfricaPSC Production Sharing ContractPSU Public Sector UndertakingPSUV United Socialist Party of VenezuelaPTA Preferential trade agreementQUELRO Quantified Emissions Limitation and Reduction ObjectiveR&D Research & DevelopmentRCI Russia–China–IndiaRE Renewable EnergyREEEP Renewable Energy and Energy Efficiency PartnershipREN21 Renewable Energy Policy Network for the 21st CenturyR–TAPI Russia–TAPISAARC South Asian Association for Regional CooperationSAGE South Asia Gas Enterprise Private LimitedSAP Structural Adjustment ProgrammeSCO Shanghai Cooperation OrganizationSCS South China SeaSICA Central American Integration SystemSINOPEC China Petroleum and Chemical CorporationSIS Secret Intelligence Service (M16)SNC Syrian National CoalitionSOMO State Oil Marketing OrganizationTAPI Turkmenistan–Afghanistan–Pakistan–IndiaTBD Thousands of Barrels per DayTCF Trillion Cubic FeetTCM Trillion Cubic MetreTEAM-9 Techno-Economic Approach for Africa-India MovementTMB Thousand Million BarrelsTPP Trans Pacific PartnershipUAR United Arab Republic

xx Acronyms

UN United NationsUNCHR UN Commission on Human RightsUNCLCS UN Commission on the Limits of the Continental ShelfUNCLOS United Nations Convention for the Law of the SeaUNDP United Nations Development ProgrammeUNEP United Nations Environment ProgrammeUNFCCC United Nations Framework Convention on Climate ChangeUSGS US Geological SurveyUSISPF US–India Strategic Partnership ForumUSSR Union of Soviet Socialist RepublicsVLCC Very Large Crude CarrierWPI Wholesale Price IndexWTI West Texas IntermediateWTO World Trade Organisation

Acronyms xxi

List of Tables

Table 1.1 India’s overseas projects and investmentsby the end of 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Table 2.1 Africa’s oil reserves and production by the end of 2018 . . . . . . 34Table 2.2 Africa’s proved natural gas reserves and production

by the end of 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34Table 2.3 India’s investment in oil and natural gas sectors in Africa

by the end 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39Table 3.1 Total proved oil reserves and production in West Asia

by the end of 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64Table 3.2 Total proved natural gas reserves and production in West Asia

by the end of 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65Table 3.3 India’s investment in oil and natural gas sectors in West Asia

by the end of 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66Table 4.1 Total proved oil reserves and production of major countries

by the end of 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89Table 4.2 Total proved natural gas reserves and production of major

countries in Central Asia by the end of 2018 . . . . . . . . . . . . . . . 90Table 5.1 Total proved oil reserves and production in LAC

by the end of 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105Table 5.2 Total proved natural gas reserves and production in LAC

by the end of 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106Table 5.3 Major Indian overseas projects/assets in LAC

by the end of 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108

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Chapter 1Conceptual Frameworks

The chapter tries to explain the concept of geopolitics of energy, energy security,and energy factor in international relations. This chapter further contextualizes theseaspects in the Indian scenario. Since oil and natural gas is a strategic resourceand global competition happens for this limited resource, energy geopolitics triesto explain both conflicting and complimentary interest of the both energy supplierand energy importing countries and regions in the world. Geopolitics and internaldomestic issues many times in the oil-rich countries result in war, civil war, low-intensity warfare and oil black market, which have adverse impact on oil production,refining and supply process. Energy security tries to explain these aspects in theglobal energy trade and investment. Since India is the third largest importer andconsumer of oil and natural gas energy, energy security has been well integrated tothe fulcrum of India’s national security. As there has been dependence and inter-dependence among the oil-producing and oil-consuming countries, the chapter triesto explain cooperation or conflict among these nations through various perspectivesin international relations, such as realism, structural realism, neoliberal institution-alism, complex interdependence and international political economy. Along withthese aspects, the chapter will focus on energy security from the Indian perspec-tive which covers India’s energy requirements, origin and growth of India’s oil andnatural gas sector, India in the global energy trade and investment, and the policyperspectives to ensure energy security for India.

1.1 Energy Perspectives in International Relations

The concept of energy security and energy geopolitics can be interpreted throughvarious perspectives in international relations. This has been more significant sincetheWorldWar II, which can be explained through realism and neorealism, liberalism,neoliberal institutionalism and international political economy.

© Springer Nature Singapore Pte Ltd. 2020S. K. Pradhan, India’s Quest for Energy Through Oil and Natural Gas,https://doi.org/10.1007/978-981-15-5220-5_1

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2 1 Conceptual Frameworks

For long, oil supply has become a subject of major vulnerability-perceived or real,and there has been a growing sense of energy consumption and import dependency.On this context, both realism and neorealism or structural realism have focused ona rational approach of international political relations, which has been shaped byimbalances between the energy-producing and energy-consuming countries in theworld. In realism, according to Hans J. Morgenthau, a particular reference has beenattributed to political conflicts in connection to natural resources. The realists includegeneral definitions of security in international relations, oil geopolitics, and definitionof the latest trends emerged indue course of time, and thefinal culminationof resourcewar [1]. According to the neorealist or structural realists like Kenneth NealWaltz andJohn JosephMearsheimer, states are behaving and acting according to their structuralpowers within the framework of international system. The Waltzian assumptions arebased on the rhetoric that the states struggle for and go for war for their survivalwithin an international system characterized by anarchy, i.e. absence of any centralauthority at global level, and the rise of power features in the interstate relations,including competition for access to resources, and security challenges. While thecountries at the international level were apprehensive of US energy vulnerabilityin the wake of Arab oil embargo in 1970s, yet Waltz predicted US energy securitywith a positive note [2, pp. 152–155, 221–222]. However, in the aftermath of theoil shocks, the security of energy supply turned a matter of security motivationfor most of the developed countries. Under these circumstances, Waltz highlightedthe continuity of strategies for energy geopolitics so as to ensure energy security.The political actors may change but the national strategy continues [2, p. 117].John Joseph Mearsheimer argues that the states make good strategic move to gaincontrol of strategic resources, and if the circumstances allows monopolization andhegemonizing of natural resources [3]. Out of both these realism and neo realism,the former is an option to enhance power, so as to protect and promote a country’snational interest, and the latter is a compulsion for the nation-state for its survivaland security. Although both the realists and neo realist agree with the importanceof power factor in international relations, “self-help” system and status quo in theexisting economic and political order, yet realism believes in the innate desire of thenations for power, whereas the neorealists portray an anarchical situation where thecountries have no option, but to go for power for their survival and security.

Unlike the neorealist arguments, the concept of security, as defined by the Copen-hagen School of Security Studies, is not considered to be a direct consequence ofthreat; rather, defined as the consequence of the political interpretation of threat, wellknown as “securitization”. This school places particular focus on the non-militaryaspects of security, which is a shift away from the traditional studies on security [4].Scholars like Barry Buzan of this school points out the need for theorizing security ismore specific than just threat or problem [5]. Accordingly, security is conceptualisedas a nonlinear reaction to the threat (real or perceived). Having inherited the realistperception of international relations, the Copenhagen School considers anarchy asthe salient feature of the international structure which explains states’ behaviour andaction towards security matters. However, security, unlike the realist or neorealists,includes five categories: firstly, the political security which involves the internal and

1.1 Energy Perspectives in International Relations 3

external stability of state; secondly, the military that includes defensive and offensivecapabilities; thirdly, the societal which covers the stability of cultural (i.e. nationalor religious) identity; fourthly, the economic that includes the access to resourcesand markets; and fifthly, the environmental which involves protection of ecology [6,p. 19]. TheCopenhagenSchool of SecurityStudies does not differentiate energy secu-rity fromother security sectors although its importance is observed in all the sectors ofsecurity which can be described through four broad spectrums. Firstly, political secu-rity involves in security relations with other states where each state looks for energyself-sufficiency. Secondly, energy availability contributes to military capabilities.Thirdly, environmental security includes the compatibility between rapid economicgrowth and natural resources management. Fourthly, economic security foreseesenergy security in the capitalist and growing economies [6, pp. 235–237]. Further,the 1990s and afterwards, the ecology security challenges have thus culminated tothe threat of global warming and climate change, which are caused by fast-growingfossil fuel consumptions. The climatic change perspectives thus have necessitatedchanges in the socio-economic and political attitudes of the society towards the tech-nological advancements for the minimization of emission and consumption of fossilfuels.

Stephen Krasner, who believed in the power approach of Morgenthau, Waltz andMearsheimer, while focusing on liberalism, went to the extent that the less economi-cally developed countries will try to avoid the danger of being politically vulnerableto the pressure emanated from others. However, the states whose hegemony comesunder the fear of loss of power to their rivals tries hard to resist the regimeswhich haveposed, or will pose potent danger in future. Although the open trade well providesabsolute gains for all the states that engage in international trade, yet some statesgain more than the others. State is an autonomous entity which seeks to executethe national interest, which even can go contrary to the interest of the citizens andinternational actors. The collective good of states is not necessarily corollary to indi-vidual states, and the energy-consuming countries, according toKrasner, in twentiethcentury invested a large proportion of their national budget for investments in theresource assets abroad. His argument is that while the smaller nations focus moreon sustaining their territorial and political integrity and economic interests, onlythe powerful actors will try to remake the world order of their own. This can besubstantiated that while the USA used force against Vietnam on ideological counts,Washington restrained on Gulf oil embargo (1970s) because of America’s energyinterest.

For the liberals, war or civil war is a cancer on the body politic, and the humanbeings have the capacity to cure such ailment. The treatments to which the liberalsprescribed in the eighteenth century have not changed so far: the causes and conse-quences of war and civil war could be successfully treated with subscription of freetrade and democracy. The democratic processes, regimes and institutions, by nature,break the power of the governing elites and contain their propensity towards violence.The free trade and commerce certainly overcomes the artificial barriers between thepolitical units in the world and unites them into one community. The solution tothe existing problems can be accrued from the arguments of Adam Smith and Tom

4 1 Conceptual Frameworks

Paine, whowere the strong proponents of freemovement of goods and services. If thecommerce was expanded to a universal extent, it would extirpate the system of warand civil war, and growth of democracy from within. Congruence to the argumentsof Adam Smith and Tom Paine, John Stuart Mill in 1848 claimed that the free tradeand commerce was the means to bring an end to all wars [7]. On the same line, thecontemporary liberal scholars advocated, it is commerce that has made war obsolete,although strengthening and multiplying the ruler’s personal or party interest which isa natural opposition to it [8]. Thus, the nature of government influence significantlyin the allocation of resources. The populist, economically privileged, or self-servinggroups shapes the policies for their own ends [9]. Krasner argues that the smalland poor states in the south tend to support those governments in the north whichfacilitate the allocation of the resources authoritatively. The rich states in the Northsupport those regimes in the South which give priority to principles, rules andmarketmechanisms. By authoritative regime, Krasner refers to principles, rules and proce-dures that increase the sovereign powers of individual states. However, sometimes,the commonalities of interest prompts countries to work together to regulate interna-tional flow, and access of strategic resources, and this approach may not comply toindividual country or a group of countries. For example, increase in oil price by theOrganization of the Petroleum Exporting Countries (OPEC) in 1970s went contraryto the interest of the Third World oil importing countries [9].

Both the liberal and neoliberal institutionalists went to the extent of analysinginternational relations with the changing geopolitical dynamics, where economicfactors largely shape the relations. President Woodrow Wilson’s vision of trans-forming global politics from a “jungle” of chaotic power politics to a “zoo” ofpeaceful and regulated intercourse among the nations [10, pp. 105–106] signifies thenecessities of the institutions for the conduct and regulation of bilateral and multilat-eral relations. His Fourteen Points Programme for the establishment of the Leagueof Nations reflected the desire for a global cooperation based on institutional devel-opments. However, the present-day institutional liberals are less optimist than theirmore idealist predecessors. They do agree that international institutions can makecooperation easier and far more likely, but they do not claim that such institutionscan by themselves guarantee a qualitative transformation of international relations,from a jungle to zoo. The powerful states will not easily be completely constrained.Yet, the institutional liberals do not agree with the realist and neorealist view thatinternational institutions are just “scraps of paper”, and at the complete mercy of thepowerful states. The interdependence or “complex interdependence”, in turn, givesrise to institutions or regimes which have their own independent importance, andwhich can promote cooperation between the nations [11]. Interdependencewithin thefulcrumof liberalismassumes the use of force as less beneficial for the states and tradetransactions. It is best explained by the liberal Richard Rosecrance who advocatedin changing characteristics of economic production and correlated economics andinternational relations. The liberals argue that a high division of labour in the interna-tional economy increases interdependence between states, which in turn discourageand reduce violent conflict between or among the states. Still, there remains the riskthat the countries may go back to the military options and enter into arms race, and

1.1 Energy Perspectives in International Relations 5

thus the violent confrontations. Yet, that is not a norm under liberalism. Accordingto Rosecrance, the less developed or developing countries are prone to war and civilwars since there is the lower levels of economic development, land is the prime factorof production, modernization is far weaker, and little interdependence [10, p. 102]exists in the international economic market that constitute energy market. Further,the international relations, in past, were directed and controlled by state leaders whiledealing with other state leaders which were straitjacketed. This could be best exem-plified by the use of military force on many issues. The high politics of security andsurvival had priority over the low politics of economics and social affairs. But, thepresent-day socio-economic and political dynamics urge the nations to work with theassumptions that the existing international relations are not one-dimensional; rather,multidimensional, where low politics precedes over high politics.

Institutions or regimes are of independent importance, and they can promote coop-eration between the states [11]. RobertO.Keohane and JosephN.Nye have construedin-between two theoretical models—realism and liberalism, through complex inter-dependence. Realism, according to them, is based on three basic assumptions: firstly,states are coherent units and the most important political actors; secondly, forceis an effective instrument of policy; and thirdly, there exists a hierarchy of issuesin the world politics dominated by security questions. However, in contrast, underthe conditions of complex interdependence: actors (state and non-state) participate,there is no clear-cut hierarchy of issues, and force is largely ineffective. Underthese circumstances, outcomes will be on the basis of distribution of resources and“vulnerabilities” within the particular issue areas. However, Keohane acknowledgedthat his complex interdependence model was not necessarily an alternative to neorealism or realism. He agreed to many of the neorealist assumptions linking thecreation of regimes in the areas of trade, finance and the energy oil market. He alsoagreed that interdependence and power were not independent of each other. Rather, itcould be argued that “asymmetrical interdependence” (i.e. dependence) is a form ofpower relationship that exists in international relations [12]. Keohane’s book “AfterHegemony: Cooperation and Discord in the World Political Economy” has been theculmination of his effort in synthesizing both structural realism and complex inter-dependence [13]. The fusion is well known as “modified structural realism”, bestknown as “neoliberal institutionalism”. Further, he went to the extent of revisingthe “functional theory” of institutionalized cooperation, which is based on oil, tradeand finance. In spite of the absence of a formal and legal hierarchy of authority, theinformal structures of governance exist in the form of regimes and “institutions” anda related complexity of rules and norms that overcome the market failures whichexist in global resource and energy market [14].

The neo-realist and neo-liberals disagree to the extent how the states visualize oftheir own interests. For the neorealists, such as Waltz, the states are concerned with“relative gains” meaning gains assessed in comparative terms; in short, who willgain more? On the other hand, the neo-liberals claim that the states are concernedwith the maximizing their absolute gains, i.e. an assessment of their own growthindependent of their rivals; in short, what will gain me the most? The neorealistsjustify the cause that the states will cooperate one another if they expect to gain more

6 1 Conceptual Frameworks

benefits than their rivals. Whereas, the neo liberal institutionalists believe that theinternational relations are a zero-sum game, as many states as possible feel secureenough to maximise their own interests or gains regardless of what ensued to others.Further, the mutual benefits accrued from cooperation are possible since the statesare not always preoccupied with relative gains [7]. However, liberal institutionalistsacknowledge that the cooperation between the states is likely to be fragile, partic-ularly where the enforcement procedures are weak. According to Rosecrance, thegrowth of economic interdependency has been matched by a corresponding declinein the territorial aggression by the states, and the benefits of trade and cooperationamong the states greatly exceed military competition and territorial control [15].But, for the neo-realist Grieco (1988), economic interdependency will never takeprecedence over strategic security interest since states are primarily concerned withtheir survival and security. Interdependence does not eliminate hegemony and depen-dency in interstate relations as power is unevenly distributed throughout internationaltrade, investment and financial markets. The neo-liberal institutionalism contributesa science of international interdependence, a study of the relations between the stateand non-state actors in an anarchical environment of world politics [16].

Countering “high politics” and supporting to “low politics”, Richard Rosecrance,the liberal, argued that the balance of trade has supplanted ideological confrontationand balance of power, and thus the establishment of “commercial liberalism” [17,p. 114]. Also, for details, refer to Rosecrance, Richard, 1987. The Rise of the TradingState: Commerce and Conquest in the Modern World, New York, Basic Books. Hedid not say that interdependence will necessarily overshadow the logic of territori-ality. But, on a balance, he predicted that the future of international relations will bemarked by a shift in states’ priorities from the logic of military competition to thelogic of trade cooperation and interdependence. Since the World War II, the benefitsof trade have arisen in comparison with the costs, and the oil-producing states under-stood the advantages of such market in spite of having a spate in US-Soviet Unionrift. While he did not rule out the possibility of military confrontation and nuclearwar between the nations, he was hopeful that the responsive nations are capableof change and can adapt to the necessities of “trading state”. The collapse of theideological confrontation between capitalism and socialism has been replaced by thehegemony of the world market, i.e. the only “civilization” begun in the 1990s. In hisrecent arguments, Rosecrance pointed out that the world is now in an era of “virtualstate”. The “virtual state” does not try to increase its territorially based productivecapabilities; rather, like a giant corporation, it invests in services and people. Insuccessful virtual states, the traditional demands for advanced democracies such ashigh government spending, more social benefits and larger deficits, have to be subor-dinated to the demands of the international marketplace such as rising productivity,a strong currency, low inflation, flexible and trained workforce. Although the virtualstate is the emergingmarket force, yet the commercial liberalismwill dominate inter-national relations in future because of the existence of a large number of developingand underdeveloped nations in the world [17, pp. 118–119].

Like realism and neo realism, the liberals or the neoliberal institutionalists believein the behaviour of the nation states, which are unintended, reciprocal and often

1.1 Energy Perspectives in International Relations 7

negative in effects [18]. All the countries or a group of countries have a commoninterest in finding solution to the existing or emerging problem and resolution ofthose through a collaborative effort. However, actors may fail to cooperate eventhrough their interests are purely identical [13, p. 65]. Barriers exist in one form orthe other, which are largely due to the political inclination of the nations, geopoliticalchanges and economic pursuits. As a consequence, the game theory or game turnsas an option for nations involved in the system. Game theory, many times, provesitself as a supplementary to realist and liberal approaches. It differs from realismand liberalism in the sense that it is concerned with the processes of nation-statedecision making, rather than being involved in the totality of global geopolitics. Ithas been used by both the realists and the liberals to explore and explain conflict andcooperation and has been very useful in the study of deterrence and alliance formation[19]. Derived from rational choice theory, mathematics (and logic) and economics,the theory is interested in the rationality of decision making. Rationality, here, doesnot refer to the “rationalism” of the Grotian tradition and the English school, nor doesit mean correct, good or wise. It is not about assessing the content of a player’s goals;rather, it is interested in outlining how human beings justify their order or reasonwhile obtaining the goals they prefer, and maximization of preferences or interests,i.e. best explained as “utility function” [20]. The game theorists have developeda wide range of games for analysing different strategic situations in internationalrelations. Broadly, the games can be divided into chicken, stag hunt and prisoner’sdilemma. Most of the times, the countries reject chicken game since it is of high costwith big uncertainty. Both in the stag hunt and prisoner’s dilemma, the actors lacksufficient information about one another’s true preferences. A player state may fearthat the other states will cheat it by taking advantage of its cooperation. Cooperationprevented even if all actors involved recognize that they have a common issue andthe cooperation would be the best solution to the problem. A country may prefer toprevent others from free riding off their cooperative efforts, or the nations may wishto avoid the transaction costs that a cooperative deal might involved. Informationand communication gap, insecurity, lack of trust and situations play larger roles forthe games.

Since the emerging political economy of energy is characterized by an increasingdiversity in energy technology, trends towards deregulation and foreign investments,a great sense of interdependency has developed among the nations for this resource.Theoretically construed, the international interdependence structure explains thepatterns of interdependence among different states. P. Andrew-Speed introduced“schematisation of international oil interdependency” [21], which is explainedthrough different categories: first, countries although export and invest in financeand technology sectors, yet imports energy. For example, the USA, South Korea,Japan and the most of the European countries like Belgium, Germany, Spain, Italyand France; second, countries exporting oil and natural gas, along with finance andtechnology. The countries in this category include Norway, the Netherlands andDenmark; third, countries exporting oil and natural gas, while importing capitalin the form of technology and finance. The majority of the hydrocarbon producingcountries including the OPEC countries, the countries across the Caspian and Central