What India can learn from China: Experience of cross border gas pipeline projects

“India is lagging behind China due to TIPS (Trade-Investment-Political-Social) strategy with the supplier and transit country”, claims a new study. Sanket Sudhir Kulkarni and Prof. Hippu Salk Kristle Nathan from the National Institute of Advanced Studies (NIAS), Indian Institute of Science have studied the execution of energy projects in India and China. The study undertook a comparative analysis of approaches of China and India towards supplier and transit countries in the energy pipeline. They found that China had performed remarkably better than India due to better policies and strategic ties with its neighbours.

Increasing energy demand for natural gas and oil have forced the major economic powers of Asia -- India and China -- to import these fuels from countries in the Central Asian region. China has about 1.7 % of world’s natural gas reserves, while India has only 0.7%. Their consumption in the last 10 years (2002-2012), however, has risen from 29.2 to 143.8 billion cubic metre (bcm) and 27.6 to 54.6 bcm respectively. While China has been successfully importing natural gas, India has been at loggerheads with the supplier and transit countries. The most common route of import is the cross border gas pipeline involving multinational cooperation. 

“The dynamic nature of geopolitics in the same neighbourhood makes building energy pipelines a humungous challenge both in political and commercial terms”, says Mr. Sanket Kulkarni, one of the members of the team. “Our study adopted a case-study based method identifying China and India as consumers and Myanmar and Turkmenistan as suppliers. We then evaluated the Chinese and Indian performance by contrasting  China’s projects -- Central Asia (Turkmenistan-Uzbekistan-Kazakhstan)–China (CACGP) and Myanmar–China gas pipelines, with India’s two comparable proposals—Turkmenistan–Afghanistan–Pakistan–India (TAPI) and Myanmar–Bangladesh–India (MBI) gas pipelines,” adds Mr. Kulkarni.  

The results pointed out that China outperformed India on all factors -- economic, political and social. China’s bilateral trade with Turkmenistan went up to 10 billion USD and it is one of the largest trade partners with Uzbekistan and Kazakhstan. On the other hand, India’s bilateral trade with Turkmenistan is limited and is modest with Afghanistan and Pakistan. Though both China and India have maintained a cordial political relationships with supplier and transit countries, China has deepened the strategic cooperation better by significantly investing in infrastructure projects like telecommunications, railways, schools, etc. Also, China’s investment in the welfare programs in the supplier country has been higher than India. 

China’s oil projects -- CACGP and Myanmar-China cross border gas pipelines have been operational since 2009 and 2013 respectively, while on India’s side the discussion for TAPI started in 1995 and MBI in 1997. Yet, none of them have yet seen the light of the day. These delays point out an opportunity for India to improve bilateral ties with countries like Myanmar and Bangladesh.   

“A consumer country must foster bilateral trade and investment in infrastructure, adopt a non-interfering stance in political affairs, forge strategic partnership, ensure development along the course of the pipeline, and facilitate general welfare programmes in supplier and transit countries”, adds Mr. Kulkarni on the key behind China’s success in enabling the cross border energy trade. 

“Energy interdependence and interconnectedness is a reality of the day. Having pipelines in the region not only offsets some of the demand supply mismatches, but can also potentially contribute towards fostering bilateral relations and larger regional cooperation”, signs off Dr. Kulakrni. Is India listening? 

About the authors:

Mr. Sanket Sudhir Kulkarni is a PhD scholar at NIAS, Indian Institute of Science and Hippu Salk Kristle Nathan is an Assistant Professor at NIAS. Authors can be reached at sank.kulkarni@gmail.com and hsknathan@nias.iisc.ernet.in The paper has been published in Energy research and social science (2015) at http://dx.doi.org/10.1016/j.erss.2015.09.010