Context: Energy security is Important for UPSC prelims and GS PAPER 1 and GS PAPER 2
India’s proactive role through “Act Far East Policy” and Russia’s increasing investment in India’s energy sector can pave the way for energy transformation and energy security in India and has the potential for global energy stability.
RUSSIA Energy Reserves
Russia is a major producer and exporter of oil and natural gas. Russia’s economic growth is driven by energy exports, given its high oil and natural gas production. Oil and natural gas revenues accounted for 36% of Russia's federal budget revenues in 2016.
Russia was the world’s largest producer of crude oil including lease condensate and the third-largest producer of petroleum and other liquids (after Saudi Arabia and the United States) in 2016, with average liquids production of 11.2 million barrels per day (b/d). Russia was the second-largest producer of dry natural gas in 2016 (second to the United States), producing an estimated 21 trillion cubic feet (Tcf).
Russia and Europe are interdependent in terms of energy. Europe is dependent on Russia as a source of supply for both oil and natural gas. Russia is dependent on Europe as a market for its oil and natural gas. In 2016, nearly 60% of Russia’s crude oil exports and more than 75% of Russia’s natural gas exports went to OECD Europe.
Russia was the fourth-largest generator of nuclear power in the world in 2016 and had the fifth-largest installed nuclear capacity. With seven nuclear reactors under construction, Russia is second to China in terms of number of reactors under construction as of October 2017.
According to the BP Statistical Review, Russia consumed 26.74 quadrillion British thermal units (Btu) of energy in 2016, most of which was natural gas (52%). Petroleum and coal accounted for 22% and 13% of Russia’s consumption, respectively.
Russia's oil- and natural gas-producing regions
Urals-Volga was the largest producing region up until the late 1970s when it was surpassed by West Siberia.
The Khanty-Mansiisk area of West Siberia is Russia’s largest oil-producing region, accounting for about 4.8 million b/d of liquids production, nearly 45% of Russia’s total production in 2016.
Yamal-Nenets, Krasnoyarsk, and the Arctic offshore
The Yamal-Nenets Autonomous district straddles the Arctic coast of West Siberia, with Krasnoyarsk lying just to the east of Yamal-Nenets. This region is mostly known for natural gas production. Crude oil development is relatively new for the region and has required the construction of new infrastructure.
Rosneft’s Verkhnechonskoye oil and natural gas condensate field lies in the Irkutsk region near the ESPO pipeline.
The Bazhenov shale layer, which lies under much of the existing West Siberian resource deposits, also holds great potential.
Lukoil has been actively exploring some of the deposits in the North Caspian Sea, and in 2010
Sakhalin Island is located off Russia’s eastern shore. The offshore area to the east of Sakhalin Island is home to a number of large oil and natural gas fields that have had significant investment from international companies.
Kara Sea, Laptev Sea, Chukchi Sea
High production of oil and natural gas.
Russia has been a longstanding and time-tested partner for India. The development of India-Russia relations has been a key pillar of India's foreign policy.
India and the former Soviet Union had signed a Treaty of Peace, Friendship and Cooperation on August 9, 1971.
Since the signing of the “Declaration on the India-Russia Strategic Partnership” in October 2000, India-Russia ties have acquired a qualitatively new character with enhanced levels of cooperation in almost all areas of the bilateral relationship including political, security, defence, trade and economy, science and technology, and culture.
There is regular high-level interaction between the two countries. Two Inter-Governmental Commissions - one on Trade, Economic, Scientific, Technological and Cultural Cooperation (IRIGC-TEC), co-chaired by EAM and the Russian DPM, and another on Military-Technical Cooperation (IRIGC- MTC) co-chaired by Russian and Indian Defence Ministers, meet annually. Russia has been a long-standing supporter of India’s membership of the Nuclear Suppliers Group.
Defence and Security Cooperation:
India has longstanding and wide-ranging cooperation with Russia in the field of defence. India-Russia military-technical cooperationhas evolved from a buyer-seller framework to one involving joint research, development and production of advanced defence technologies and systems.
BrahMos Missile System as well as the licensed production in India of SU-30 aircraft and T-90 tanks are examples of such flagship cooperation.
Both sides concluded agreements on the supply of S-400 air defence systems, construction of frigates under Project 1135.6 and shareholders agreement on the formation of a joint venture to manufacture Ka-226T helicopters in India.
The two countries also hold exchanges and training exercises between their armed forces annually Example Tri Service Exercise INDIRA between two countries
Trade and economic relations:
Intensifying the trade and economic relationshas been identified as a priority area by the leaders on both sides as is clear by the revised targets of increasing bilateral investment to the US $ 50 billion and bilateral trade to the US $ 30 billion by 2025.
Russia is an important partner for India in the area of peaceful use of nuclear energy. It recognizes India as a country with advanced nuclear technology with an impeccable non-proliferation record.
In Dec 2014, DAE and Russia’s Rosatom signed the Strategic Vision for strengthening cooperation in peaceful uses of atomic energy.
KUDANKULLAM NUCLEAR REACTOR- TAMIL NADU
What is Grandfather Clause?
A grandfather clause, or legacy clause, is an exemption that allows persons or entities to continue with activities or operations that were approved before the implementation of new rules, regulations, or laws. Such allowances can be permanent, temporary, or instituted with limits
India-Russia cooperation in the field of peaceful uses of outer space dates back to about four decades. Both sides cooperate in the peaceful uses of outer space, including satellite launches, GLONASS navigation systems, remote sensing and other societal applications of outer space.
Science & Technology:
The Working Group on Science and Technology functioning under IRIGC-TEC, the Integrated Long Term Programme (ILTP) and the Basic Science Cooperation Programme are the three main institutional mechanisms for bilateral Science and Technology cooperation, while the Science Academies of the two countries promote inter-academy exchanges.
There is a strong tradition of Indian studies in Russia. About 20 Russian Institutions, including leading universities and schools, regularly teach Hindi to about 1500 Russian students. Apart from Hindi, languages such as Tamil, Marathi, Gujarati, Bengali, Urdu, Sanskrit and Pali are taught in Russian Institutions.
Russia will help train Indian astronauts for the manned space mission — 'Gaganyaan'.
Both countries shared the view that “implementation in good faith of universally recognised principles and rules of international law excludes the practice of double standards or imposition of some States of their will on other States.”
Russia expressed its support for India’s candidacy for a permanent membership of the UNSC. They called for reform of the UN Security Council to reflect contemporary global realities.
Both countries intend to focus particularly on increasing the effectiveness of countering terrorism, extremism, drug trafficking, cross-border organized crime, and information security threats, in particular by improving the functionality of the Shanghai Cooperation Organisation (SCO) Regional Anti Terrorist Strategy.
Both sides expressed concern over the possibility of an arms race in outer space and advocated peaceful uses of outer space.
Both countries reiterated their commitment to further strengthen global non-proliferation. Further, Russia expressed its strong support for India’s membership of the Nuclear Suppliers Group.
The two sides expressed their support for an inclusive peace and Afghan-led and Afghan-owned reconciliation in Afghanistan.
Both countries reaffirmed their commitment to building an equal and indivisible security architecture in Asia and the Pacific region.
The two sides signed 15 agreements/MoUs in areas such as defence, air, and maritime connectivity, energy, natural gas, petroleum and trade.
On the scrapping of Article 370, Russia has backed India’s move on Jammu and Kashmir, saying that the changes in the status are within the framework of the Indian Constitution. The two nations focused to bolster cooperation in trade and investment, oil and gas, mining, nuclear energy, defence and security, air and maritime connectivity, transport infrastructure, hi-tech, outer space, counter terrorism and people-topeople ties.
Current engagement of India with this region is limited to select pockets such as Irkutsk where the MiG and Sukhoi fighter planes are built and in Sakhalin where ONGC Videsh has invested over $ 6 billion in oil and gas and exploration. The maiden visit by an Indian prime minister to Vladivostok is set to strengthen India's position in Asia-Pacific that has emerged as the kernel of future geo-strategy.
Eastern Economic Forum
The EEF was established by Russia in 2015, with the aim of supporting the economic development of Russia’s Far East, and to expand international cooperation in the Asia- Pacific region.
The Far East lies in the Asian part of Russia and is less developed than the country’s European areas. As part of Russia’s ‘Pivot to Asia’ strategy, Russia invited foreign countries to invest in this region. In the last five years, as many as 17 different countries have invested in the Far East. These include regional and global heavyweights like China, Japan, South Korea, Australia, New Zealand, and Vietnam. As a result, 20 advanced special economic zones ,five free ports have been put in place and total of 1,780 new investment projects have become functional.
Indian Industries in the Region
Indian firms have invested over $7 billion in taking stake in Russian oil and gas fields. ONGC Videsh in 2001 acquired a 20 per cent stake in Sakhalin-1 oil and gas field in Far East Russia.
OVL later bought Imperial Energy, which has fields in Siberia, as also stakes in Vankor oilfield in eastern Siberia.
IOC and its partners have picked up 29.9 per cent stake in a separate Taas-Yuryakh oilfield in East Siberia.
Maritime Route: Chennai and Vladivostok
The two countries are also looking at the feasibility of Chennai-Vladivostok sea route that would allow India access to Russia’s Far East in 24 days, compared to the 40 days taken by the current route via Suez Canal and Europe. This sea route covers a distance of approximately 5,600 nautical miles, or about 10,300 km.
An ocean liner travelling from Vladivostok to Chennai would sail Southward on the Sea of Japan past the Korean peninsula, Taiwan and the Philippines in the South China Sea, past Singapore and through the Strait of Malacca, to emerge into the Bay of Bengal and then cut across through the Andaman and Nicobar archipelago to Chennai.
This route would potentially add the required balance to peace and prosperity in South China Sea and could open new vistas for India, like the India-Russia-Vietnam trilateral cooperation.
Opening of this route between Chennai and Vladivostok assumes significance because it ensures there will be connectivity between the two major ports which will give impetus to the cooperation between India and the Russian Far East.
India is building nuclear power plants with Russia’s collaboration in Kudankulam on the sea coast in Tamil Nadu’s Tirunelveli district. The opening of a sea route is likely to help in the project.
Even otherwise, a vibrant sea route will help in the upscaling of trade relations between the two nations. It will also increase India’s presence in the Indo-Pacific, and especially the South China Sea, a deeply contested patch of the ocean that Beijing considers its stomping ground.
The route will play an important role in connecting India with North East Asia and Western Pacific region. There is an alternate possibility as well that Vladivostok-Chennai link would become an extension of existing India-Japan Pacific to Indian Ocean Corridor, which China considers as a challenge to its maritime One Belt, One Road (OBOR) plan in the region.
Russian Far East is a resource rich region in a hostile climate. It is rich in oil, natural gas, timber, gold and diamond among other resources. India requires all of them. A busy Vladivostok-Chennai link means India strengthening its checks and balances equation with China.
Strategic Implications of Act Far East Policy
The 'Act Far East' policy will open up investment opportunities for India in the region.
Along with a boost in the maritime trade with the Russians, this policy would also facilitate India to grow its maritime trade with other European countries via the Arctic route.
India’s dependency on the West Asian countries for its energy demands can be diversified. The Far East region is rich in energy and minerals. Along with this region, this policy will also help India to access the Arctic region via the Far East route, which is again rich in energy resources. Such diversification would help India get alternative options to fulfil its energy demands.
The policy will not only be significant for India but Russia as well. There has been an increasing presence of China in the Far East region. This has been a concern for Russia, and with this policy, Russia will get an opportunity to diversify its trade relations not only with India but also with Japan. This is because, along with India, Japan, too, wants to increase its political and economic ties with Russia. Such a move will definitely provide Russia with an option to keep a balance of its dependency on China.
With the increasing significance of the Indo-Pacific geopolitics, the interest that India is showing in keeping its historical friend close will prove to be of significant for the two countries at the time of the ongoing U.S.-China trade war.
The 'Act Far East' policy would enable the two countries to deepen their bond with each other and further their diplomatic and economic ties.
Energy cooperation as the backbone of India-Russia ties .Russian companies have the potential to be long-termpartners with India in aiding its energy transformation as
It can lead to technology transfer from Russia to India under “Make In India “ and Atmanirbhar Bharat”
Bring in Advanced technology in terms of ecological footprints which is evident through Russia’s cooperation in nuclear energy and emerging as biggest investor in India’s energy market.