India, Quatar seal $25 bn world’s largest gas pact

The visit of the Emir of Qatar, Sheikh Hamad bin Khalifa Al-Thani, to the capital yesterday, where he was feted by the political leadership, was an occasion by New Delhi to revive its interest in the Gulf and establish relationships beyond the “buyer-seller” paradigm that has characterised Gulf policy so far.

A key paragraph in the bilateral joint statement issued at the end of the visit says that both sides “stated their conviction that peace and stability in the Gulf region was essential for the prosperity and development of the countries and peoples of the region. Both sides agreed to exert all efforts to maintain stability and tranquillity in the region.”

Over the last few decades, India and the Gulf have dealt with each other in two important but largely dissociated ways: India imports as much as two-thirds of its crude oil requirements from this region (primarily from Saudi Arabia). On its part, as many as 10 million Indians work in the region, but since they largely constitute “cheap labour” they do not wield much influence there.

The India-Qatar gas deal is an effort to change all that. First, it signals that New Delhi has chosen the natural gas route to at least partially satisfy its growing energy needs, especially in the new millenium. This means that even though capital investment in purchasing gas will be much higher than importing crude in the short run, India is now determined to participate in the highly influential game of energy politics.

Sources in the ministry of external affairs say that “for too long, India has stood on the sidelines and watched,” and picked up the pieces as the volatile energy market goes through its highs and lows. The enormous influence waged by the US in this field, through its strategic energy relationships in the Gulf – and now Central Asia – is not lost on New Delhi.

It is not the government’s brief that this one deal is about to upset the energy apple-cart. But for the first time, analysts say, New Delhi is showing that despite the fact that it is a third world nation, the size and potential of its market could be valuable instruments in creating new leverages.

Qatar was one of seven nations which participated in the worldwide tender floated in 1997. Even though the decision to award the contract was taken under purely financial considerations, the tiny Gulf state (population, 522,000) has, interestingly, also batted on the side of India on other occasions. For example, when the Organisation of Islamic Conference (OIC) issues what New Delhi deems are “unfriendly” resolutions on Jammu & Kashmir (sponsored by Pakistan), Qatar is seen to play a “moderating influence” in behind-the-scenes negotiations.