Energy in the East

Energy in the East

Not satisfied with its explorations westwards, India is also looking to the east in its quest for energy security. In January 2005, plans for a pipeline carrying natural gas from the fields of Burma to India through Bangladesh were approved, in principle, by the energy ministers of the three countries. The gasline has been termed a 'win-win-win' opportunity for all concerned, with Burma gaining access to new markets, Bangladesh earning transit fees and India quenching its ever-increasing thirst for energy.

While Burma is estimated to have abundant natural gas reserves, India is already facing a massive shortfall in supply (see graph on page 32). The gas in question would be transported from the offshore Shwe fields in the Arakhan province of Burma. The route of the pipeline, to be decided on the principle of "ensuring adequate access, maximum security and optimal economic utilization", would most likely pass through the Indian states of Mizoram and Tripura, entering Bangladesh at Brahmanbaria and crossing over into West Bengal through the Rajshahi border.

An interesting aspect of the trilateral ministerial agreement is that Bangladesh and India are allowed to use the pipeline to "inject and siphon off their own natural gas." This means that India would be able to feed gas from its Tripura gas fields into the pipeline and then extract it once the pipeline reaches West Bengal. And Bangladesh could use the gasline to transport gas from the eastern Sylhet region, where its reserves lie, to its west.

The project's benefits to Bangladesh include about USD 125 million a year in transit fees. Dhaka is also assured of supply of Burmese gas should its own reserves begin to run out. The Burma gasline gains additional significance against the backdrop of Dhaka's reluctance to export its own natural gas to India, a reticence ascribed to both doubts about the size of its reserves and the dynamics of Bangladeshi politics, which make exports to India problematic. The Burma pipeline could help relax such attitudes in Dhaka in the future.

The January agreement, meanwhile, has hit a patch of bad weather, with a set of conditions set by Bangladesh on India. As part of a quid pro quo, Dhaka wants Delhi to provide it with transit facilities for import of hydroelectricity from Nepal and Bhutan, as well as measures to reduce the trade imbalance between India and Bangladesh. Bangladesh has also demanded access to a corridor through India for trade with Nepal and Bhutan. With India refusing to include bilateral issues in a tripartite agreement, the signing of a Memorandum Of Understanding (MOU) in April was deferred. The political risk involved in signing an agreement with India on the eve of an election may be weighing heavy on the minds of the ruling dispensation in Dhaka.

There is also opposition to the gasline from Burmese pro-democracy activists and some international groups. They argue that the deal, pushed by Bangladesh and India as Southasian democracies, would simply strengthen and legitimise the authoritarian regime in Rangoon. With the recent 'realist' tilt in New Delhi towards the Burmese ruling junta, and given the country's energy needs, it is unlikely that India for one will be swayed by the opposition. If this situation holds, if Dhaka relents and if an understanding does get formalised this year, officials estimate that Burmese gas could be flowing to Calcutta industries and households within five years.

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