China oils its way

The most important aspect of China’s thrust for energy security is to lay out plans for pipelines that would pass through its neighbours: Pakistan, Bangladesh, Thailand and Myanmar. Energy security has become a very crucial issue for Beijing. True, China has abundant coal deposits but burning coal in power stations to generate electricity and its use in other industrial sectors is causing serious air pollution. Hence the thrust on oil.

About 80 per cent of China’s current oil imports come from the Middle East and West Africa via Southeast Asian waterways — chiefly the straits of Malacca and Singapore. The possibility that oil flow through these narrow and congested straits could be disrupted by an accident or terrorist attack — or even as a result of hostilities with the US over Taiwan — does worry Beijing. Indonesia, Thailand and Singapore control the Malacca Straits and their recent decision to launch co-ordinated joint patrols was partly designed to signal to Beijing that it is they, not the US, who are in charge of security in the region. But, this is unlikely to dissuade Beijing from attempting to diversify its oil supply routes. It is already spending about US $3 billion on a 3,000 km long pipeline to bring oil from Kazhakastan in Central Asia to industrial centres in northeast China.

One of the new options being studied is to build a pipeline from a port on Pakistan’s Arabian sea coast to Kashgar, in western China, where it would connect with a domestic pipeline grid. Pakistan is home to several Al-Qaeda linked terrorist outfits, and so this project has not only financial but security constraints. A second option — a pipeline from Bangladesh to Tibet — is a possibility but unlikely to take off because it would have to pass through northeast India — a strategic rival for energy. A third option is to bypass the Malacca Straits by investing with Thailand in a 250 km long pipeline across the isthmus of southern Thailand. This is rather promising. It would link the Gulf of Siam with the Andaman Sea. But recent violence in southern Thailand and doubts about the cost effectiveness of transhipping oil raise questions about the project’s feasibility. China is also wary of the cordial relationship between Thailand and the US.

For China, then, the most promising option would be to build a pipeline from the deepwater port of Sittwe in Myanmar’s Bay of Bengal coast to Kunming, the capital of Yunnan province. Relations with Myanmar are close and the military junta appears to have a firm grip on the country despite trade and investment sanctions imposed by the US and EU. The proposed pipeline, stretching for about 1,250 km and costing $2 billion could be extended from Kunming to industrial centers on China’s southeast coast.

What does all of this mean for India, given the fact that our energy requirements are burgeoning by the day? Despite large coal reserves, China is looking for oil, while India continues to use coal as feedstock for its fertiliser and power plants. Clearly, New Delhi can emulate Beijing’s example of searching for more than one solution for its energy problem. India, too, needs to do what China is doing and adopt one or more of the proposals described above, even as it searches for new and emerging strategic partnerships in Asia. In other words, India should improve its access to gas reserves in Iran, Central Asia, West Asia, Bangladesh and Myanmar in spite of various political and practical difficulties it may have to face as a consequence.

With more than 70 per cent of India’s oil requirements being met from abroad, the country must have in place a clear oil policy, based on effective strategic political partnerships. China seems to be preparing well for the task ahead. India’s energy strategy, in contrast, is clouded with confusion.