Looking East for energy Have long-term agreements for the import of LNG from Australia

http://www.tribuneindia.com/2014/20141106/edit.htm#4

G Parthasarathy

PRIME MINISTER Narendra Modi will be setting a new record for an Indian Prime Minister by his participation in four multilateral summits in November 2014. He will be in Myanmar for two meetings, the first with ASEAN Heads of Government. He then participates in the East Asia Summit, which will bring him together with leaders of the US, Russia, China, Japan, South Korea, Australia and New Zealand. He thereafter proceeds to Brisbane to participate in the G-20 Summit, bringing together leaders of the developed world and emerging markets. Towards the end of the month he will attend the SAARC Summit in Kathmandu — a grouping showing little economic promise, thanks to Pakistani obduracy.

The recent BRICS Summit led to tentative steps for ending the global economic dominance of the US and its European partners by the establishment of the BRICS Development Bank and the Asian Infrastructure Bank in China. These institutions should be realistically seen as complementing, supplementing, but not supplanting institutions like the World Bank, the IMF and Asian Development Bank. A multiplicity of institutions for developmental funding fits in excellently with its belief in a genuinely multi-polar world. If some countries take serious objection to American unilateralism, an equal number have serious misgivings about the increasing manifestations of Chinese hegemony, territorial expansionism and crass mercantilism in developing countries.

One of the most productive aspects of Indian diplomacy over the past two decades has been the country's growing economic integration with the fast-growing economies in its eastern neighbourhood, which extends across the Straits of Malacca, to the South China Sea and the Pacific Ocean. The greatest security concern of Japan and ASEAN countries like Vietnam and the Philippines has been the Chinese propensity to use its growing military power to enforce its maritime territorial claims. While India should go along with an ASEAN consensus on this issue, it has happily put aside the Hamlet like self-doubt and pusillanimity that characterised the approach of the national security establishment of the UPA Government, in responding to Chinese aggressiveness, not only on China's maritime boundaries, but also on its land borders with India.

The Modi-Obama joint statement reflected this significant policy change. It affirmed the “importance of safeguarding maritime security and ensuring freedom of navigation and over flight throughout the (Asia-Pacific) region, especially in the South China Sea”. This was followed by shedding earlier fears on equipping the Vietnamese armed forces. The supply of naval patrol boats and expanded training facilities to the Vietnamese armed forces will hopefully soon be followed with equipping the Vietnamese with supersonic Brahmos Cruise Missiles to meet Chinese maritime challenges. There should necessarily be effective answers to Chinese policies of "strategic containment" of India, through its nuclear and missile proliferation to Pakistan and its propensity to seek strategic encirclement of India in the Indian Ocean region.

Prime Minister Modi, who has developed an excellent personal rapport with his Australian counterpart Tony Abbot, will proceed from the G-20 Summit in Brisbane to Sydney, Canberra and Melbourne for an interaction with the 290,000-strong Indian community, an address to the Australian Parliament and extensive discussions with the business and investor community. Virtually every major Indian IT company has an office in Australia. Indian private investment in copper and coal mining in Australia is growing. Major Indian companies ranging from Tata Power and the Adtya Birla group, to Sterlite Industries, Petronet LNG and the Adani group have significant investment interests in Australia. The state-owned NMDC has an agreement with Australian mineral giant Rio Tinto for joint exploration in India and Australia.

India and Australia are set to expand military cooperation. We have to remember that western Australia is located on the shores of the Indian Ocean. It would be useful to establish institutional links between our Andaman and Nicobar Command and its counterparts in nearby Perth. Moreover, India and Australia should seek to work for a system of cooperative security across the Straits of Malacca with ASEAN partners, especially Indonesia. India also needs to move ahead with steps to finalise a comprehensive economic partnership agreement with Australia, as it has done with Japan and South Korea. There are some doubts and misgivings on this agreement, which need to be addressed.

Mr. Modi is likely to discuss the possibility of Indian participation in the America-led “Trans Pacific Partnership” (TPP) for developing a free trade, investment and economic partnership extending from India to the US, Mexico and Canada. Fourteen countries, including Australia, New Zealand, Japan, South Korea, and four ASEAN members — Vietnam, Singapore, Malaysia and Brunei -- have joined negotiations on the TPP. Indonesia, the Philippines and Cambodia have expressed an interest in joining the negotiations. There are naturally apprehensions in India on issues like intellectual property rights, investment protection and government procurement. These issues could be discussed with Prime Minister Abbot, who has taken a keen interest in the TPP.

Mr. Modi’s visit to Australia is taking place when drastic changes are emerging in the global energy situation. The US is now the largest producer of oil in the world. It is also becoming a significant exporter of natural gas across its Atlantic and Pacific shores. Canada is also emerging as a major exporter of gas across the Pacific. Both Japan and South Korea, major buyers of Australian LNG, will soon have alternate sources of supply. The US is building additional LNG capacity of 80 million tonnes a year, predominantly for export. Oil and gas prices will stabilise or fall as the global energy scenario inevitably changes. Australia is also increasing its LNG exports substantially from its Indian Ocean terminals, to reach 83 million tonnes annually in 2017, and expand further thereafter. Given western Australia's proximity to our east coast, Mr. Modi's visit will be an ideal occasion to give momentum to efforts for long-term agreements for the import of LNG from Australia, which would facilitate the development of petrochemical, fertilizer and power industries along our east coast. India's excessive dependence on imports of oil and gas from the politically volatile Persian/Arab gulf region should be reduced.