Indian Defence Review

For India’s economic growth to sustain at eight per cent plus per annum, its energy supply must increase at more than six per cent per annum over 30 to 40 years’ time frame. As India is heavily dependent on imported hydrocarbons for its energy needs, the country’s must pursue an energy security strategy that minimises the severity and risks of oil and gas dependency, high prices and geopolitical pressures. India’s energy security strategy should comprise a balanced mix of overseas equity investment in oil and gas sources, astute energy diplomacy to draw up favourable long-term supply and transportation contracts, diversity of supply sources to reduce vulnerability to shock, increase in domestic production, building of sufficient strategic oil reserves to cater for disruptions in supplies during war and peace, energy conservation and realistic reduction in demand, improved efficiency in management of supply-side issues (generation and distribution of electricity) and the gradual substitution of fossil fuels by hydro-electric and nuclear power as well as unconventional sources of energy.

India’s energy security strategy would be seriously flawed unless due emphasis is given to the security of the sources of supply, the energy infrastructure and the transportation of fuels through pipelines and ships. The aim here is to address some of the concerns related to security issues and to suggest ways and means to overcome the security-related challenges.

Pipeline Politics: Security of the IPI Pipeline

Trilateral negotiations on an overland natural gas pipeline from Iran to India have been going on for several years but have remained inconclusive. Since the pipeline would run through Pakistan’s Balochistan and Sind provinces, with attendant security risks, discussions of the proposal have tended to generate more heat than light in India. Considering that energy qualifies as a strategic resource in which India is grossly deficient, the issue merits dispassionate consideration, as decisions made today will affect India’s growing economy and national security for decades to come.

India’s energy security continues to be precarious. At present, approximately 40 per cent of India’s energy requirements are supplied by oil and natural gas. Since domestic production has stagnated at around 33 million tonnes, India relies on crude oil imports totalling over 70 per cent of the requirement. According to an estimate by the The Energy and Resources Institute (TERI), New Delhi, this import dependence is expected to increase to over 80 percent by 2010 as the growing economy will demand greater energy supplies and domestic production is expected to increase only marginally. Such a high level of import dependence will make India vulnerable to future oil shocks – occasioned by lower than projected production, disruption in supplies, price volatility and reasons such as economic sanctions.

Hence, it is in India’s strategic interest to, firstly, ensure that the country receives sufficient future oil supplies through the acquisition of overseas sources and astute diplomatic tie ups with friendly oil exporting nations at reasonable prices and, secondly, explore possibilities for alternative energy sources, including a gradual increase in the share of natural gas in the country’s energy basket since it is available in greater abundance and at a lesser cost than oil. India’s present requirement of natural gas is approximately 34 billion cubic metres (BCM) while domestic supply is 26 BCM. The requirement is expected to increase to over 75 BCM by 2010, of which imports will account for almost 58 BCM, which is 76.9 per cent.

India is surrounded by countries with surplus natural gas (Iran, Turkmenistan and Myanmar). However, it has not been possible so far to tap much of this gas on a long-term basis. It is in order to bridge the gap between availability and supply that India is so dependent on Iranian gas. While it would be strategically prudent to diversify and stabilise India’s supply sources and invest in oil equity in various locations across the world, the Persian Gulf region will remain a major source of oil and natural gas for India. Iran is an energy giant with one foot in the Caspian Sea and the second in the Persian Gulf. It is mutually beneficial for India and Iran to enter into a buyer-seller relationship for natural gas as Iran has in abundance and India desperately needs. The geographical location of Iran’s natural gas reserves at the South Pars field is such that the Indian and, to some extent, Pakistani markets are the only major markets that can be profitably served by Iranian gas.

Natural gas is transported either through overland or undersea pipelines in its natural state or as liquefied natural gas (LNG). Transporting LNG in oil tankers is a costly venture. The capital outlay that would need to be incurred would include an expenditure of USD 2 billion for a liquefaction unit, USD 200 million for each LNG tanker and USD 500 million for a re-gasification plant. Considered purely in economic terms, overland pipelines present the most viable commercial option. The 2,200 km overland pipeline from Assaluyeh and Bandar Abbas in Iran, which would pass through Pakistan and link up with the existing HBJ pipeline in Rajasthan, is likely to cost between USD 3 to 4 billion. Since this pipeline would supply natural gas to Pakistan also, the cost would be proportionately shared by India, Iran and Pakistan. The 2,900 km offshore pipeline from Bandar Abbas to Jamnagar, through shallow waters on the Continental Shelf, would cost approximately USD 5 billion, to be shared by India and Iran. The deep-sea option, that is still technologically suspect, would cost almost as much to build, operate and maintain as the LNG option.

The overland pipeline option suits Pakistan admirably as it will benefit by netting a transit royalty of USD 700 to 800 million annually, besides getting a regular source of gas with minimal investment. So far, Pakistan has not been able to fully exploit its own gas reserves in Balochistan. Pakistan’s economy is still recovering from the mess that it was in when the country was on the verge of becoming a failed state till Uncle Sam bailed it out after 9/11. A guaranteed inflow of substantial revenues would help Pakistan considerably to stabilise its economy. However, the Baloch people are concerned that Pakistan will not equitably share these revenues with their underdeveloped province.

Though the overland option through Pakistan is economically the most viable, India cannot let good economics translate into bad security. India must not allow the supply of a strategic resource to be held hostage to the spiteful machinations of a capricious government. General Pervez Musharraf’s military regime has stated several times that Pakistan is willing to give a unilateral undertaking that it will not disrupt the supply of gas to India. However, after the Pakistan army’s insidious intrusion into Kargil in 1999, the Pakistan army has completely lost India’s trust. Pakistan must prove that it is capable of ensuring the security of the IPI pipeline if it wishes to garner substantial revenues and gain economically from the proposed pipeline. General Musharraf has admitted that his government has no control over at least some Jehadi organisations that are sending mercenary militants to fight the Indian security forces in Kashmir. It is a moot point whether his government will be able to ensure the physical security of a pipeline that runs for almost 1,500 km through Pakistani territory even if it was keen to do so. Also, the Baloch people are concerned that Pakistan will not equitably share the revenues earned from the pipeline with their underdeveloped province. A fairly vigorous insurgency is sweeping across Balochistan and the gas pipeline will be a lucrative target for scoring political gains. As a Baloch MNA (member of Pakistan’s national assembly) told this author three years ago, the Baloch people will never allow this pipeline to function without frequent disruption unless the Pakistan government shares revenues with them in a ratio with which they are satisfied.

The diameter of the gas pipeline would be between 50 to 55 inches (approximately 1.25 to 1.40 metres). Though such pipelines are mostly buried underground, they are laid just below the surface and their route is well marked to facilitate maintenance, making them prone to easy disruption. The compressor stations that are usually over-ground are also vulnerable to sabotage, but these can be easily guarded. Any terrorist group or disgruntled individual fanatic with a medieval mindset could disrupt the pipeline with a few grammes of plastic explosive or a few hundred grammes of high explosive – commodities that are available in abundance in Pakistan. In fact, in some areas in Pakistan, explosive charges, detonators and cordite are so freely available that one can buy the stuff from the neighbourhood grocer. Under such circumstances, ensuring the security of the pipeline would be a daunting challenge for the most committed police or paramilitary force.

The entire length of the pipeline would need to be fenced off on both sides to deny easy access to prospective saboteurs. Since wire fencing can be easily cut, it would need to be kept under electro-optical surveillance throughout its length, combined with continuous patrolling. Patrolling would tie up large numbers of security personnel and would be possible only if a motorable track is constructed parallel to the fencing. The area would have to be well lit at night. Even if a triple-wire fence, with the inner strand electrified, were constructed on either side of the pipeline, the security force would still have to contend with attempts at tunnelling under the fence. The BSF battalions stationed on the international boundary in the Punjab and Rajasthan sectors, where an electrified fence has been built, are witness to the large number of attempts that are made from Pakistan’s side to tunnel under the fence. All these measures would cost a massive amount to implement and would still not guarantee 100 per cent security.