THE GEOPOLITICS OF OIL

G. Parthasarathy assesses New Delhi’s increased focus on relations with its oil-rich western neighbourhood

The year 2018 commenced with perhaps the most extensive outreach by India to virtually every major partner in its western neighbourhood. Israeli Prime Minister Benjamin Netanyahu arrived in Delhi on January 14 for a six-day visit, accompanied by a large business delegation. Ever since diplomatic ties were established nearly three decades ago, India and Israel have expanded military and business links in areas ranging from missiles and radars to agriculture and diamonds. Thousands of young Israelis find India a fascinating tourist destination, where they are welcomed warmly.

Netanyahu’s tripbegan with a visit to the memorial to Indian soldiers who, during World War I, carried out the victorious assault to liberate Haifa in September 1918. Barely a month later, Prime Minister Modi headed to Ramallah to meet Palestinian President Mahmoud Abbas – the first ever visit by an Indian Prime Minister to the Palestinian capital. Following a visit to the Mausoleum of Palestinian Leader Yasser Arafat, Mr Modi expressed India’s firm support for Palestinian aspirations, proclaiming that he hoped to see ‘an independent Palestinian State living in an environment of peace’.

These events were followed by visits to Delhi by Iranian President Hassan Rouhani and Jordan’s King Abdullah, who is widely respected in India as a descendant of the Prophet Mohamed and regarded as a voice of moderation in a volatile region. Jordan’s monarch delivered a special address, organised by India Islamic Centre in New Delhi,on ‘Promoting Understanding and Moderation’.

There wasa clear domestic political dimension to these visits,with New Delhi highlighting that better relations with Israel would be accompanied by a corresponding outreach to India’s Islamic neighbours and support for the Palestinian cause. Despite the polarisation in Shia-Sunni relations and rivalries across the Muslim world, the 25 million Shias and their more than 150 million Sunni brethren in India live in peace and harmony. India has no desire to see Islamic sectarian and civilisational rivalries across its western neighbourhood spill into its territory. As well as friendly ties with Iran and Israel, New Delhi has good relations with all countries in the Arab world and it is surely significant thatthe recent visits received the Saudi government’s approval and permission for Air India to overfly the kingdom en route to Israel.

The 25 million Shias and their 150 million Sunni brethren in India live in peace and harmony

Two other major considerations drive India’s policies in the Middle East, which is described as ‘West Asia’ in the Indian diplomatic lexicon. The first is the presence of an estimated seven million Indian nationals living in Arab Gulf countries, who remit around $40 billion annually to India’s economy. The safety and security of this diaspora is the primary concern of Indian diplomacy in the country’s western neighbourhood. There have been occasions in the past when thousands of Indian nationals had to be safely repatriated to India from Iraq, Kuwait and Yemen, at considerable cost.

DIPLOMATIC TIES: Israeli PM Benjamin Netanyahu (centre, shaking hands with PM Modi) arrived in Delhi on January 14 for a six-day visit
DIPLOMATIC TIES: Israeli PM Benjamin Netanyahu (centre, shaking hands with PM Modi) arrived in Delhi on January 14 for a six-day visit

The second reason for the significant focus of attention on West Asia is that India gets around 75 per cent of its oil and gas from the Arab Gulf countries and Iran.The geopolitics of oil plays an important role in determining India’s foreign and security policies. While India depends heavily on imported fuels for domestic consumption – about 80 per cent of its total oil and natural gas need are met by imports – it is also a significant exporter of refined petroleum products from its refineries. The country exported an estimated $35.9 billion of refined petroleum products in 2017, a figure that is set to increase progressively as new refineries, being planned in collaboration with Saudi Arabia and others, come on stream. Given the growing civilisational and sectarian rivalries in its western neighbourhood and the increasing Chinese maritime presence across the Indian Ocean, security of the sea-lanes of the Indian Ocean and the geopolitics of the region are now becoming increasingly complex.

With the discovery of shale oil and gas in the US and Canada, huge oil reserves in Venezuela, untapped shale gas reserves in Argentina, and with Mexico increasingly adding to world oil supplies, North and South America and parts of Europe are relatively immune to cut-offs in vital oil supplies. Russian oil and gas also contribute significantly to meeting energy demands in Europe and across Eurasia. The major markets for oil supplies from the Arab/Persian Gulf countries are China (8.4 million barrels per day), India (4.4 million bpd) and Japan (3.4 million bpd).  In the meantime, the oil-producing Arab Gulf Monarchies, major suppliers of oil, are today preoccupied in dealing with a resurgent Iran, which is presently free from Western-led international sanctions. Iran is evidently seeking to become the dominant power in the energy-rich Gulf region.

India exported an estimated $35.9 billion of refined petroleum products in 2017

Given the bitter rivalry between Saudi Arabia and Iran and the likelihood of the Trump Administration re-imposing sanctions on Iran, India will have to navigate a path through its oil-rich western neighbourhood with dexterity. The Gulf Arab Monarchies, together with Iraq – which is and will possibly continue to be the largest supplier of oil to India – will remain the focal point of attention. India will also continue to make every effort to sustain economic cooperation with Iran, especially on issues of regional connectivity. However,New Delhi may soon have toreassess the global energy scenario if, as appears likely, the Trump Administration re-imposes sanctions on Iran in coming months.

In light of the growing rivalries in its western neighbourhood and the increasing Chinese maritime presence across the Indian Ocean, security of the sea-lanes of the Indian Ocean is now becoming increasingly important and more complex.  Maritime cooperation with the US, Japan and others is being stepped up. While India’s maritime cooperation with the US was,until recently, almost exclusively across its eastern shores, with the US Pacific Fleet, New Delhi is now also establishing ties with the US Fifth Fleet based in Bahrain, even though Washington and New Delhi may not see eye to eye on ties with Iran.


G Parthasarathy is a career Foreign Service Officer. He has served as Ambassador of India to Myanmar, High Commissioner of India to Australia, Pakistan and Cyprus, and Spokesman of the Prime Minister’s Office.. He is currently Visiting Professor at the Centre for Policy Research in New Delhi

 

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