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@wiki::12/ 2007-01-25 2007-01-25T23:10:48Z

Basir Ahmed T stable, secure and ample energy supplies is a fundamental underpinning of all nations security and prosperity economies with high-energy demand. The quest for energy brings into focus, several disparate issues of economics, national security, politics and power. The regional energy security question has a profound impact on the energy flow in terms of demand and supply and on the emerging energy relations between them. It is a dominant trend among scholars of Asian energy, to view energy as a Hostile factor, fomenting regional tensions, conflicts and militarization. They tend to see the question of regional energy situation through the prism of military modernization, an array of unresolved territorial disputes, lingering historical distrust, and suspicion looming behind strategic competition. Thus it became received wisdom, at seemingly endless conclaves on the future of Asian security, that the specter of competition for dwindling oil and gas resources is a likely source of future conflicts among increasingly well armed states as they played out the region's panoply of territorial disputes. In the twenty- first century, Asia's future, prominent political scientists suggested may be Europe's past Something is clearly wrong with this view of regional security scenario. The emerging Asian energy relationship between India, China, and Saudi Arabia may not be conflictual, rather, as subsequent events tends to suggest, it may be heading towards Convergence of interests. These nations may try to explore opportunities for mutual benefit and cooperative development. It would be clearly a premature wisdom to conclude that, all cooperative here is little that is more essential to the daily life of civilization than energy. Access toi. This is more so, in the context of Asian nations, which are fastly growingii. relations are conflictual. While it is true, that, the quest for energy between India and China may heighten competition between them, but it is not necessary that, this competition will assume conflictual forms. The emerging pattern of interdependence and mutualism among Asian nations primarily between Saudi Arabia, India, and China contests the hitherto held Conflictual assumptions of some scholars. The new Gulf Asian economic relationship is becoming a harbinger of a new geopolitics of energy, which does not necessarily be (sic) militaristic. This new geopolitics of Asian energy explains the adjustment made by these countries in terms of interest accommodations and benefit sharing. Indeed, for most of the past two decades, the locomotive of global oil markets has been burgeoning with Asian demand, which grew nearly six times faster that that of western industrialized states, prior to the 1997 Asian financial crisis. Asian oil consumption doubled from 1985 to 1995, and is projected to double again by 2015. It is true that, if china and India reached the same per capita energy use as the United State's, global oil demand would increase roughly threefold This Asian thirst for oil, renewed the apprehension about energy security. By the mid 1990s, many Asian political military specialists began to voice fears that energy security concerns might turn the regions myriad territorial disputes into resource wars result, rapid militarization in the region will take place, and the emerging energy relation among these nations would be that of hostility and conflict. But this was not to be the case, and like several other slained myths in the energy market, this myth was also slained. The continuing trend towards deregulation and privatization has facilitated profound changes into the energy relations. At the same time both India and China are becoming more reliant on imports from the Gulf region. Asia will be the world's largest consumer of primary energy by 2010, with the overwhelming majority of its oil imported from outside the region. By 2020, China and India - both with burgeoning middle classes will produce more carbon emission than the United States and Europe in retrospect, it is true that the Asian government viewed Energy interest in strategic terms. iii.iv. They even felt that as av Therefore, Middle East and Asian energy interdependence is a fact of life. Moreover, The strategic view of oil, has been part and parcel of their national security and foreign policy calculus. In a region where underlying suspicion, distrust, had remained part of the pathology of inter Asian and Trans Pacific relations still in a state of protracted historic transition also equally true that, they suffer from a similar problem of energy insecurity. And it is quiet likely that, in the long run common energy concerns may prevail over historical tensions. However, with regard to the energy security of the Asian actors, the importance of Gulf and especially of Saudi Arabia cannot be minimized. One central consequence of Gulf Asia oil link would be the convergence of economic and financial relationship. Therefore, commerce and market forces may shape cooperative inter state relationship, more than that of ideological or territorial disputes. It may be quiet safe at this stage to assume that, the emerging energy linkage, instead of a source of volatility and instability in the region, could force stability and prosperity. These nations shall come together to make sufficient quantities of resources available at lower prices for themselves. Hence oil interest shall act as a normalizer of inter state relations. Therefore, contrary to the widely held conflictual notion of energy security held by several scholars, it is quiet possible that the emerging energy linkage between Saudi Arabia India and China is heading towards a convergence of interest, and mutual accommodation. The imperative of changing energy market demands it. While the uncertainty factors like, boundary disputes, trade wars, political turmoil cannot be discounted, mutual accommodation of energy interest surpassing all these tensions, is yet a strong probability. The region has a large and growing oil deficit, already some 12 Million barrels, per roughly 60 Percent of its oil is imported with limited capacity to expand production in the region. Already China is the world's second largest consumer of energy, in 1997, India became sixth largest. By 2020, they will consume more that one third of world's total energy. This fact reflects the emerging pattern of common energy interests of these nations. In this context it makes some sense, when India and China, one of the largest oil consumers in Asia diligently tries to cultivate energy ties with the Saudis and other major Gulf producers. President Jiang Zemin made the first ever visit by a Chinese head of state to Saudi Arabia in November 1999, heading to Damman the heart of Saudi oil country after a stop in Riyadh vi, it isvii. An Indian team visited Saudi Arabia in 1998 to hold negotiations for finalizing the text of the bilateral investment promotion and protection agreement between the two countries cordiality between India and china is marked by the constitution of joint working group on boundary issue, to seek fair reasonable and mutually acceptable settlement of the boundary question. In 1998 a delegation of Chinese scholars participated in the Sino Indian Track II dialogue held at New Delhi. The Gulf and the Asian giants are aware of their respective positions on the new oil equation. The Saudi's wants customers for oil exports, and the Asia is in need to secure oil supplies. For the first time "we are focussing on Asia", says former Saudi oil minister and senior OPEC official Ahmed ZAki Yamani. In a keynote address to an annual London Energy Conference in 1998, Asia, Yamani explained, can play a crucial role in helping to improve OPEC's prospects Dollars in 1998 rose to 936.3 million US Dollars. There has been a comparative rise of trade between India and China also, while China imported 1097.7 value in million US Dollars in 1998 which rose to 2779.2 during 2002, its exports to India reached 1966.2. two Asian giants. The improvement in India's external accounts, both current and capital has exceeded the most optimistic forecasts with merchandise exports growing at 20% in dollar terms in fiscal 1994 growth has averaged over 9% a year. Liberal policies toward non-state enterprises proved a powerful catalyst for rapid growth in industrial output and exports In order to overcome the periodic energy shortages, both India and China are trying to develop new international markets that can provide stable supplies in tune with their domestic energy requirements. Energy security of these countries depends upon their ability to develop and consolidate existing energy ties. It also depends upon the ability of these countries to find markets for their products. And the most important factor that can provide energy security to these countries would be their ability to accommodate mutual interest - underplaying tensions and regional conflicts. In other words, interests in terms of energy sufficiency shall prevail over other divisive factors. The convergence of interests on energy security question shall viii. Theix. Saudi Arabia's exports to India from 774.0 million USx This explains the growing trade relationship between thexi. Since China's market oriented reforms began in 1978, its real GDPxii. compel these countries to go for an economic set up on common benefit sharing basis. The accommodation of interests of different stakeholders is in tune with the globalizing energy market. The joint investments and capital ventures which characterize the energy market today shall bring in this harmony. Energy is clearly one of the most important factor that shall forge normal cooperation. Each of the countries has specific needs in the energy sector that can at best be met by forging normal trade in energy. This is consistent with the national objectives of both of these countries: · To overcome energy deficit. · To reduce dependence on unstable energy sources. · One means of achieving this would be to boost intra regional and inter regional cooperation. It would provide specific energy benefits in terms of efficient and stable energy supplies, providing a boost to the regions growth and prosperity. There is a direct and straightforward relationship between energy growth and economic development. When and economy grows more energy is required. In the long run, therefore, it seems that the geoeconomics shall prevail over geopolitics. China's energy choices will deepen its integration with regional actors like India. In fact, in order to deal with the energy problem China has gradually moved towards market reforms, and shall continue to do so in future also. The energy sector cannot be fully understood outside the context of economic reforms. China should in the near future increasingly tie up with the Asian countries including India to ensure energy security. Sino- Indian similarities are particularly striking in regard to most aspects of their energy predicaments and their respective responses. The need to alter energy resource mix, energy deficits, challenges of economic reforms, geopolitical considerations shaping their energy situation structural problems, and difficult energy choices ahead before them. The success in all these respects largely depends upon their ability to cultivate good relations. India also, like China, is looking towards market solutions in order to meet its energy challenges. To seek new international market outlets for national oil companies.xiii, throws similar challenges India's policy response began to evolve with its 1991 economic reforms, initially by allowing private investment in the power sector, then tax holidays and easier access to 100% foreign equity projects also led to the same dependence on the Gulf / Middle East imports are coming from Saudi Arabia, Kuwait, UAE and Iran and this trend is likely to continue despite India's efforts to diversify oil supply. Over the long term geopolitical obstacles, even though they will not evaporate, shall certainly yield to the dynamics of energy requirements. Energy security will require long term contractual agreements with the Gulf oil producers and stockpiling precautions to hedge against short term disruptions relationship with the competitive neighbor - China. Furthermore it includes market oriented reforms, particularly, its growing receptivity to foreign investment, and its LNG policies suggest in broad strategic terms, that reliance on global markets and cross border investments is the core of India's approach to energy security Rising to the challenge of securing a stable energy future has become one of the central areas of challenge to these economies. Energy is a very critical industry attached with which, is the life and well being of all the three nations. Therefore they will craft a balanced policy which can accommodate mutual interests. At the same time they are aware of the fact that anything short will run the risk of national insecurity. In this context, Saudi Aramco president remarks, we look forward to strengthening our relationships with the Chinese and Indian petroleum sectors, and to help them meet the rapidly expanding energy needs for their home markets The energy industry has undergone many changes over the past few years from experiencing higher demand and prices, lower spare capacity and heightened geopolitical tensions in the Middle East security issues, which have recently emerged had made it a sort of compulsion for these three countries to come together with a common response. There emerges a convergence of interest in terms of energy security, energy supply, and energy demand. It is difficult to imagine an area where nations are more dependent than in the confluence of energy. xiv. Just like China, India's efforts to assure current and future oil supplies havexv. Currently, the bulk of Indian oilxvi . It will also include goodxvii.xviii.xix. Along with it the geopolitical issues, energy security issues and the supply Therefore irrespective of the apprehension of some scholars like Ratnam, Derek Bander, Heaton, that Chinese and Indian companies shall come into conflict in their search for new sources of oil and gas, may not be true. To quote Derek Bamber that, "faced with a growing energy shortage and unable to boost domestic production of oil and gas to any significant extent, India wants to import more gas from the Middle east and central Asia... While china appears to want all of central Asia's gas for it self" situation. We see a synergy emerging in their energy relationship, which can be cooperative and mutually accommodative due to common energy threat. The quest for energy of both these countries may not escalate into tensions. India dialogue on hydrocarbons cooperation by setting up a task force to identify areas of conflict and cooperation strengthening mutual ties. China itself, which has for decades looked at India with a mix of apathy and suspicion, is beginning to take note of India's economy and its attempts to beef up its armed forces. Attitudes in India have also changed and are trending towards positive sentiments. Policy makers in New Delhi increasingly talk of china as a core partner than a threat at Dollar 13 Billion in 2004 representing 1% of China's global trade and 9% of India's The prospects of increasing bilateral trade in future are immense. Indian companies want to reap in china's manufacturing prowess and Chinese companies' wants to learn from India's success in the services sector balance in Asia and with the Saudi Arabia. Owing to the fact that both nations India and China, faces stiff energy security, challenges, they shall try to overcome it by a cooperative response and through forging further stronger ties. The market driven solution to energy question in which economic interdependence is a key shall prevail over geopolitical tensions. While it is true that the globalization of oil markets offers more stability of supply to India than either a blue water navy or a nuclear arsenal is equally true that the geopolitical differences shall largely remain and they will continue; xx, may not necessarily lead to a conflictualThe Times of, reported last month that New Delhi was preparing "to accept Bejing's offer of axxi. The recent visit of Chinese premiere Wen Jiabao to New Delhi aims atxxii. The real motivator behind current thaw is bilateral trade and commerce which stoodxxiii.xxiv. This improved India - China ties shall forge sort of a softxxv. It from time to time impinge upon the geo-economics. The convergence of oil security interest of both these countries will lead to a harmonious evolution of bilateral approaches between them. However, for the time being, quest for stable energy supplies may not accelerate tensions and conflicts. Infact, the market may act as an integrative force, and the nations in Asia especially India and china might come up unitedly to secure stable energy supplies. The transnationalising energy market and the imperatives of energy demand may hold them intact. In the emerging energy economy the globalization process which is characterized by global capital and world wide decentralization of production may work as a unifying factor and bring these nations together into a single system by bringing about the organic integration of these countries into a global energy economy. ENDNOTES i Manning A. Robert, 2000, future The Asian Energy Factor: myths and dilemmas of energy security and the pacific, Palgrave publishers New York pVII ii Power, Instability: East Asia and United States After Cold War, in no 3, cited in Manning A. Robert, 2000, the pacific future Aron L. Friedberg, Ripe for Rivalry: Prospects for peace in a multipolar world, and Richard K. Betts WealthInternational Security Winter 1993/94 vol 18The Asian Energy Factor: myths and dilemmas of energy security and, Palgrave publishers New York, ibid. pVIII iii 1997, pp22-31 cited in Manning A. Robert, 2000, security and the pacific future William Martin Twin Challenges: Energy and Environment in Asia Harvard International Review SummerThe Asian Energy Factor: myths and dilemmas of energy, Palgrave publishers New York p20 iv ibid. p20 v ibid. p59 vi opp.cite v ii ibid. p74 viii Annual Report 1998-99, Ministry of external Affairs Government Of India. p 40 ix in Manning A. Robert, 2000, future Yamanis speech to the centre for Global Energy Studies, 8th Annual Conference, April 27, 1998, London, citedThe Asian Energy Factor: myths and dilemmas of energy security and the pacific, Palgrave publishers New York p77 x International Trade Statistics Yearbook 2002 , Volume 1 Published by United Nations 2004 New York xi 9 Trends in Developing Economies, 1995 published by World Bank Washington D.C xii ibid. opp.cite xiii future Manning A. Robert, 2000, The Asian Energy Factor: myths and dilemmas of energy security and the pacific, Palgrave publishers New York p119 x iv ibid. p127 x v ibid. p131 x vi ibid. p137 xvii ibid. p137 x viii Rising to the challenge of 'secure energy Future, OPEC Bulletin, March 2005 xix Rising to the challenge of secure energy Future, OPEC Bulletin, March 2005 xx Bamber Derek, Feeling Threatened, Petroleum Economist March 2005 p13 xxi Bamber Derek, Feeling Threatened, Petroleum Economist March 2005 p15 xxii 2005 vol 168 No 4 p 30 Mitre Pramit and Drew Thompson 'China and India: Rivals or Partners, Far Eastern Economic Review April xxiii ibid. p 31 xxiv ibid. p 31 xxv future Manning A. Robert, 2000, The Asian Energy Factor: myths and dilemmas of energy security and the pacific, Palgrave publishers New York p138

@wiki::11/ 2007-01-25 2007-01-25T22:49:26Z

Basir Ahmed Centre for West Asian and African Studies, School of International Studies, Jawaharlal Nehru University, New Delhi 110067 Technological progress has created enormous benefits for worlds energy consumers. It has enabled the global commercially viable resource base to grow, despite the so called Peak oil Production. According to certain estimates, it now takes 50% less energy to create a dollar of GDP than it did 30 years ago. Improved seismic mapping methods, deeper onshore and offshore drilling and production techniques, reservoir simulators and other advances have increased the accessibility of oil and natural gas. Not only that, technology has diversified supply sources by allowing more energy to be accessed in more locations around the world. The current Saudi Arabias move to store oil in china can be one example. Ice resistant and ice breaking innovations, new state of the art platforms and sub sea drilling technologies have the capacity to open rich reserves. Technology can also contribute towards reduction in environmental impact. Especially it can reduce carbon monoxide, sulphur, and particulates emissions. Security of energy supplies needs assimilation and understanding of emerging technologies and continued innovation. Secure, reliable, and affordable energy resources are fundamental to Indias sustained economic development. The threat of disruptive climate change, the erosion of energy security and Indias growing energy demand pose major challenges and, are transforming its energy system. Understanding and better use of new energy technologies will be crucial along with significant scientific innovation to spur growth. Urgent action is needed to rapidly advance energy efficiency and low carbon technologies and practices. There is a need to adopt emerging technologies, in hydrogen and fuel cells, advance renewables, search prospects for next generation biofuels, and enhance energy storage capacity. Today there are a number of existing scientific breakthroughs that could provide solutions to Indias energy challenges. These opportunities stem from innovations in technologies and instrumentation, computing, communications, biotechnology, nano- sciences, information technologies, and infrastructure. These opportunities can help in exploration, production, and use of energy at a lower cost and in a sustainable manner. Although the direction and pace of change are unpredictable, but the technological process is certain to continue. The deep waters of the Arabian Sea, hot and dusty deserts of Rajasthan, and undeveloped regions of North East are merely geographical challenges that Indian oil and gas industry is facing today. There are other challenges which are as serious. Certain new developments have created a highly volatile, rapidly fluctuating crude oil and gas market. Competition for depleting resources continues to drive the need to lower operating costs and increase finding and recovery rates. In this context, advanced technology such as 3D and 4D seismic downhole sensors, and bandwidth can provide vast amounts of near and real-time information that can help in meeting the domestic energy needs. Yet, still, there is a need to understand the emerging technologies. According to the International Energy Outlook 2006 (IEO2006), world marketed energy consumption will increase on average by 2.0 percent per year from 2003 to 2030. Although world oil prices in the reference case will remain between $47 and $59 per barrel (in real 2004 dollars). Total world energy use will continue to increase as a result of robust economic growth. Worldwide, total energy shall grow from 421 quadrillion British thermal units (Btu) in 2003 to 563 quadrillion Btu by 2015 and 722 quadrillion Btu by 2030, the most rapid growth in energy demand from 2003 to 2030 is projected for nations outside the Organization for Economic Cooperation and Development (non-OECD nations). Energy demand growth averages 3.7 percent per year for non-OECD Asia, which includes China and India[1]. World Marketed Energy Consumption By Region, 1980-2030 Source: History, Energy Information Administration, International Energy Outlook 2006 India, for instance, has emerged as a net energy importer, and with a growing population and continued economic growth, its energy consumption is growing accordingly. Self sufficiency in oil and gas will not be reached. Consequently, energy imports have become a vital interest for New Delhi. Its oil consumption in 2001 amounted to 2.07 mbbl/d, and is expected to reach 3 mbbl/d by 2010[2]. The transport sector is responsible for 70 percent of the rise in oil demand[3]. According to certain estimates its Energy Intensity stood at (2001E):25,307 Btu/$1995 (vs. U.S. value of 10,736 Btu/$1995. The Gas consumption for 2001 stood at 2.5 bcf/d. India imports around 70 percent of its oil and gas. The International Energy Agency, predicts that, its dependence on oil and gas will further grow to 91.6 percent by the year 2010 by 2010, India is expected to be the worlds fourth largest consumer of oil, absorbing 3.2 million barrels per day. This means that there will be increased competition no only for existing oil resources but also to discover and lock in new discoveries. Hence, search for new energy technologies have become an imperative. India  External oil dependency outlook[4] Source: IEA, March 2000 India- A Growing International Oil and Gas Player, p7 Enormous changes have occurred in the international energy market. It is partly driven by new energy technologies and partly by IT revolution. Indias increased energy demand coupled with rapid growth has created enormous challenge. It is obligated to expand access to the existing oil and gas reserves, search new reserves, go for alternative energy mix, and find even newer ways to increase production levels. Emerging new energy technologies along with Information Communication has emerged as an enabler that can help in resolving the issue. Indian society needs a robust, secure, and flexible Energy technology capability in order to meet its growing energy needs. The key for securing its energy future will be the strategic application of Emerging Energy technologies for its domestic energy needs. society is facing an increasingly globalized and competitive world in the new millennium. It is widely believed that, the coming decades will be characterized by even newer technologies in energy sector like Gas to Liquids (GTL) technology, E-drilling, Offshore energy technology, CTL, LNG technology, microelectronic based production systems, software/computer innovations, new management systems. Information highway will play an important role in meeting the energy demand and needs of Indian society. These new innovations in the energy sector, together with globalization process have brought both opportunities as well as challenges. Opportunities incur in the sense that, Indian society would substantially benefit from the wide dispersal of knowledge. With appropriate strategies, policies and programs, it can acquire, assimilate, and successfully apply new energy technologies to become more energy efficient society. Globalisation process and the emerging patterns of competition present a rare opportunity to bridge the energy divide prevailing between developing and the developed world. Failure to seize this opportunity will result in long term undesirable consequences. For instance, it would continue to fall far behind the international energy frontier with no access to alternate fuels and lack of cutting edge technologies to discover new oil and gas reserves, its aspiration to emerge as a superpower by 2020 shall be frustrated. Herein lies the challenge, how might Indian society could acquire and assimilate new energy technologies for sustainable development? What are the emerging new technologies in energy sector? Whether India is equipped enough to utilize them? And what implications these emerging technologies can have in meeting Indias energy demand? A major attempt of this paper is to identify and discuss various new energy technological opportunities that are potentially available to Indian society in the new millennium. This paper also analyses the perquisites and conditions for exploiting these opportunities and evaluates the implications emanating from their absorption. The overall objective is to ascertain the role of new energy technologies in meeting Indias energy security concerns and their implications for a sustainable development. Finally the paper suggests certain strategies, policies, and programs that India could adopt in order to successfully exploit the technological opportunities available today. NEW ENERGY TECHNOLOGIES New Energy technologies will play a critical role in achieving the objective of improving productivity and maximizing oil recovery in depleted, high pressure, high temperature reservoirs, and wells. These technologies have the capacity to power the growing Indian economy and satisfy increasing energy needs, while stabilising atmospheric CO2 concentrations in the long run. Although intellectuals may not agree, as to what is the best technology, or what future shape they may take, what follows is an honest appraisal of emerging energy technologies in the energy market today and it may be taken to represent the dominant opinion in the field. Of all the new technologies that have made forays into the energy industry, following features prominently: (1) Gas Injection Technique Gas injection technique increases the recovery of oil originally in place and therefore extends the economic life of the reservoir. As can be seen below, gas injection increases the mobility of oil. After gas/oil separation, the associated gas is reinjected into the reservoir at high pressure. As the reservoir pressure increases, the production flow rate increases[5]. CO2 injected into the oil reserve moves additional oil to the production well Source: IEA, (2005), Energy Technologies at the Cutting Edge (2) Fluidized Bed Combustion (FBC) Fluidized bed combustion (FBC) is used for converting the energy in fuels into electric power, process steam and building heat. A fluidized bed combustor is a vessel containing fine granular material that is held in suspension by air blown into the bottom of the vessel through uniformly distributed nozzles. The uniform upward flow of air keeps bed particles suspended in constant motion. Fuel fed into the vessel mixes uniformly throughout the bed (usually sand or limestone) of hot particles. This allows combustion of the fuel at lower nitrogen oxide emissions. At FBC conditions limestone reacts directly with sulphur dioxide gas, therefore using limestone as the granular bed material allows in bed removal of sulphur dioxide generated during combustion resulting in clean flue gas[6]. Burning in a fluidized bed offers the ability to turn a wide range of low grade and difficult fuels such as waste and biomass. Fluidized bed conversion technology offers an advantage over conventional technology in the sense that it principally lowers NOx emissions. Units operating with supercritical steam conditions offer the potential for power generation efficiencies as high as 45 percent[7]. Interior of a circulating fluidized bed combustor Source: IEA, IEA, (2005), Energy Technologies at the Cutting Edge (3) Multiphase Flow Technology Multiphase flow is the flow of a mixture of two or more of solids, liquids, or gasses (generally solid-liquid, solid-gas and liquid gas). It can help in achieving more efficient and cost effective energy production, and fuel transport and use technologies. Multiphase flow has many applications within the fossil fuel energy sector. It can help in discharging of a solid fuel such as coal from storage, its classification, and its combustion in a fuel flame. It is mostly useful in production, transport, and refining of oil and gas, particle separation from flue gasses, transport of solids fuel or waste products in slurry pipelines etc. (4) GTL Technology GTL technology has made great strides recently. GTL products, particularly GTL diesel has started playing major part in the emerging energy mix today. It is a production technology. The conversion of natural gas or any similar gaseous hydrocarbon into liquid transportation fuels and related petrochemicals is called GTL Technology. It involves an integrated three step process[8]: The conversion of natural gas, or another methane rich feed stock, through reforming into synthesis gas (syngas), a predetermined mixture of hydrogen and carbon monoxide. The synthesis of syngas through some form of proprietary Fischer- Tropsch (FT)[9] reactor with unique cobalt- based iron based or similar catalyst to produce a range of liquid hydrocarbons in the form of a synthetic version of crude oil (syncrude). The upgrading and refining of the subsequent syngas derived liquid hydrocarbons into specific slate of liquid fuels and or petrochemical products of intermediaries, according to a predetermined suite of refining plants and the preferred process of selectivity[10]. It is clear that GTL technology is a high potential emerging technology. However, it is visited by a major technological challenge, that is the need to lower the capital and operating costs of a GTL plant with a view to bringing daily per barrel capital cost below $20,000. Still, depending on geographic location, plant scale, cost of feedstock, site preparation costs and the extent of support utilities and infrastructure per barrel of installed capital cost could be reduced significantly. Costs will be further lowered as process know how improves, and as smarter, new engineering and construction techniques develop. Companies like ExxoMobil, Sasol, and Shell etc are continuously exploring newer and more advanced options. The environmental benefits of products generated from gas to Liquids (GTL) technology are widely recognised, low sulphur, low aromatic content diesel. However, there are more than environmental factors driving the development of GT, particularly the monetization of natural gas reserves[11]. Indias rapid growth in gas consumption over the past decade is set to continue. The broadly recognized environmental benefits of gas, compared with other energy sources, and advances in technology have elevated its role in meeting the energy needs. The adoption of GTL technology has made it easier to exploit natural gas in an environmental sustainable manner. The rationale for the adoption of GTL technology emerges from: (a). the expected long term change from a predominantly oil based energy sector towards increasing dependence on natural gas. (b). the continued dependence at least in the medium term on liquid fuels especially in the transport sector. (c). The increasing requirement for clean and clean burning fuels without sulphur, with minimum content of aromatics. (d). The distant location of many important gas fields from major energy consumption areas. (5) Oil Refining There has been some major changes in the refining industry recently, prompted in part by a significant decline in the quality of imported crude oil and by increasing environmental restrictions. The average sulfur content of crude oil imports have increased to 1.4 percent in 2005. Crude oil has also become more corrosive and heavier than they were in the past. The industry standard measure for oil density is API gravity, a lower gravity indicates higher density and a higher gravity indicates lower density. Over the past years the API gravity of crude oil has steadily declined. The standard measure for corrosiveness is the Total Acid number (TAN) indicating the number of milligrams of potassium hydroxide needed to neutralize the acid in 1 gram of oil[12]. New environmental rules require the refineries to reduce the amount of sulfur in most gasoline to 30 ppm by 2006, from over 400 ppm in the early 1990s and the sulfur content of highway diesel fuel to 15 ppm by October 2006. By 2014 virtually all diesel fuel must be below 15 ppm[13]. To meet this, refiners must produce low sulfur products. The principal method for reducing sulfur content in fuels is hydrotreating a chemical process in which hydrogen reacts with the sulfur in crude oil to create hydrogen sulfide gas that can easily be removed from the oil. Hydrotreaters are specialized for the refinery streams they process[14]. The lower sulfur specifications for petroleum fuels will require India to increase its hydrotreating capacity. India can convert heavy oil at the refinery directly into light products, through Thermal cocking process, in which heavy oil from a vacuum distillation unit is fed to a heating unit (cocker) that splits off lighter hydrocarbon chains and routs them to the traditional refinery units. The almost pure carbon remaining is coal like substance known as petroleum coke. The accumulated coke can be removed from the coking vessels during an off cycle and either sold, primarily as a fuel for electricity generation, or used in gasification units to provide power, steam, and or hydrogen for the refinery[15]. (6) Intelligent oil field The latest Information Technology innovation has made the Intelligent Oil field possible. Massive amounts of sensor data can now be stored and searched using advanced visualization technology allowing data to remain at the source and avoiding transmissions of massive data stores. Complex data patterns can be detected automatically, such as for sanding or carbonate, so the right person can be alerted and a response can be initiated before a production problem occurs. Visualization, modeling, and analytics have made it easier for the decision makers to understand the wealth of complex information leading to improved reservoir management. The technology groundwork has been already laid down for the intelligent oil field to become a reality[16]. Early warnings and alerts, along with suggested treatments can be sent to the designated command and control centers through the detection of complex data patterns from sensors. Oil and gas companies can access the wealth of data generated from the pertaining to assets, such as real-time sensors and trend histories, which can help them make more informed, predictive decisions. Wells and fields can be managed remotely, helping to save time and money, extend the leverage of skilled resources and increase recoverables[17]. Information and Technology can improve production and recovery rates with fewer people onsite and on platform. Information Technology has emerged as a driving force in energy operations, strategies, structures, ownership, and performance. IT innovations and applications have not only brought significant change into the nature of energy economics, but also, it has altered the energy space, conduct and performance. Real time sharing and distribution of knowledge and work without regard for geography distance and language has become a possibility. New technologies have paved the way for oil and gas companies to collect an increasing amount of information about their sub-surface assets. However, data must be catalogued, stored, backed-up and should be easily accessible, which means many companies engaged in India will have to re-evaluate their core infrastructure, including hard drive space, processor capacity, security applications and even disaster recovery plans. Energy plants need reliable communications for onshore and offshore locations, and even the smallest delay can potentially cost a millions of dollars loss. Wireless platform phones, and machine-to-machine communications using RFID are a few of the devices transforming wireless communication. Now there are w ireless broadband networks that can immediately transfer critical data and establish secure communications with remote teams. The integration of desktop, mobile, network system, applications, help desk and asset management with related configuration management tools has become easier. A greater contributor to plant efficiency has been the development of information technology systems, the so-called Distributed Control Systems (DCS), and the electronic automation. DCS were introduced in the late 1980s, enabling centralized process monitoring and control. DCS systems replaced integrated circuit board controllers. Inputs from field instruments and outputs to valves and pumps were converted to electronic signals. They were generally run short distances to cabinets in the process area which contained a manageable number of control loops. Each DCS cabinet was connected to a main control computer. Process instruments, output to pumps and valves, and controller settings driven from a computer console (dashboard) located in a central control room. This design also enabled monitoring and control from multiple (and redundant) locations, such as local control rooms, engineering offices, or even remote locations[18]. Since then, the system has grown in capability. (7) Floating LNG Technology Since 1970s a number of floating Production, storage, and off-take (FPSO) vessels have been used for oil production. Now a number of oil companies are using this technology to the LNG industry. In the case of LNG, existing production technology is combined with that of FPSO vessels. Under this concept, a weather vaning barge complete with gas processing, liquefaction and storage is moored in the immediate vicinity of gas field. The LNG produced is then offloaded on to standard vessels for transport to markets. Promoters of this concept are targeting offshore gas fields that are either too small or too remote to be developed economically on their own[19]. This technology will bring large project cost savings. And hence, allow the producers to tap the potential that would have gone undeveloped. The largest saving can be realised by reduce investments in related infrastructure. The use of floating production units eliminate the need to construct pipelines to shore as well as port facilities. And using subsea well completions removes the requirement for offshore production platform. On the processing side, CO2 can be removed earlier in the production chain than is the case with onshore facilities[20]. The floating LNG unit can be towed to a different location in case a fields life ends. Thereby it can eliminate the need to build anew all support structures to monetize new offshore field. Under the normal conditions, floating LNG units can remain on site for at least 20 years. And most importantly floating LNG export vessels along with offshore import and regassification terminals are less vulnerable to sabotage than onshore facilities[21]. It has assumed an important significance in a security conscious world. IMPLICATIONS FOR INDIA: TECHNOLOGY SOLUTIONS Indias rapid progress and increasing energy consumption has brought to the fore, the question of sustainable development. Sustainable development as defined by Brundtland Commission is the development that meets the needs of the present without compromising the ability of the future generations to meet their own needs[22]. Adequate and affordable energy supply is proving to be a key, to economic development and the transition from subsistence agricultural economy to modern industrial and service-oriented society. Energy is central to improved social and economic well-being, and is indispensable to industrial and commercial wealth generation. It is essential for relieving poverty, improving human welfare and raising living standards. But however essential it may be for development, it fulfills its goal only through the availability, utilization of and assimilation of emerging energy technologies. The goal of good health, high living standards, a sustainable economy, and a clean environment be achieved, only by a proper and defined structure, which directs these emerging technologies towards the stated ends. No form of energy coal, solar, nuclear, wind or any other is good or bad in itself; it is the level of technology which makes the difference. Assimilation/Integration In India, much of the current energy supply and use, based, as it is, on limited resources of fossil fuels, is deemed to be environmentally unsustainable. There is no adequate energy production or conversion technology. Somewhere along the energy chain from resource extraction to the provision of energy services pollutants are produced, emitted, and disposed of, often with severe health and environmental impacts. Integration of emerging energy efficient technologies can significantly reduce these hazards. Combustion of fossil fuels is chiefly responsible for urban air pollution, regional acidification and the risk of induced climate change. The growing acceptance of nuclear power has created a number of concerns, such as the storage or disposal of high-level radioactive waste. The noncommercial use of biomass is contributing to desertification and loss of biodiversity. Hence it has become quiet an imperative for India to search the available technological options. Rural India still largely relies on the use of animal power and non commercial fuels. Majority of them have no access to electricity. This lack of access to modern energy services severely limits the level of socioeconomic development. Nonetheless, because of improved technology and an increased understanding of the effects and impacts of energy and energy systems, a country like India can make early transition from an agricultural to a market economy, with much lower costs and with less environmental damage. The maintenance of above 9 percent growth rate will require, not only the judicious use of resources, but also- appropriate energy technologies with strategic policy planning. It will also require their assimilation. It is essential at this stage to know the countrys current status on the energy efficiency scale, the level of existing energy technologies and the emerging or new energy technologies in the international market. Then an attempt should be made towards integration of new technologies. Second it is important for policymakers to understand the implications of selected technologies and their impact on the shaping of development and on the feasibility of making this development sustainable. There is an imminent need for informed and balanced technology choices and their assimilation. Infrastructure There is an increasing need for energy technology infrastructure development. The planning and consenting system for R&D is complex. There is a need to ensure fair, transparent, and quality decision making. Delays (official/unofficial) in initiating new projects are a major problem. The timely official response plays an important role in generating support for emerging technologies. System for securing the necessary consents, including planning permission for potential developers should be made more flexible. New laboratories, maintaining adequate level of taskforce of scientists and researchers are a crucial element of energy technology infrastructure. Hence efforts should be directed to attain these objectives. The major challenge is to repair and expand energy technology infrastructure. The current outdated network of electric generators, transmission lines, pipelines and refineries that convert raw materials into usable presents a dismal picture. There is a need to build pipeline and refining technology capacity. Exploration and transportation of energy is hindered by lack of these adequate technologies. Investment Assimilation of emerging energy technologies, to a greater extent will depend on the adequacy of investments. Securing reliable investment will be quiet crucial for it. The availability of investments in research and development of energy technology infrastructure is a daunting task. A current rate of investment in this sector is not enough to meet the gap, which is expected to open up due to increased energy demand. Without sizable increases in capital investment in emerging energy technologies, oil and gas production will remain stagnant and prices will remain high. The current shortfall in investments, if continued will alter Indias energy balance. The government has to increasingly orient its policy towards attracting more FDI in this sector. In the last 10 years Indias energy situation has confronted many challenges, oil supply disruptions have led to oil price fluctuations and shaken its economy. In addition to sufficient Research and Development budget, it has to combine technology efforts and sharing costs on an international level. India can leverage and strengthen its national energy research and deployment efforts by:[23] Bring the abundance of existing Technologies closer to commercial deployment through technology learning. Identify the challenges in bringing viable medium term technologies forward (i.e enhanced oil recovery, carbon capture and storage, hydrogen and fuel cells) and Offer a successful, cost sharing structure for expensive exploratory research (i.e. fusion, gas hydrates). Reaching out to private sector would be crucial for energy solutions. Indian industry will ultimately test the economic efficiency of the existing energy technologies assimilating those which are market efficient. It will also define the next steps needed for cost efficient deployment of energy technologies. In addition to ensuring an ideal connection between the government and industry, it is immensely important that, India should reach out to rest of the world in energy research collaboration. The following figure shows that India do not figure anywhere in energy collaboration programme. It should join collaboration programmes such as offered by IEA. (energy technology collaboration programme). Participating countries in the IEA Energy Technology Collaboration programme. Source: IEA, (2005), Energy Technologies at the Cutting Edge India should participate in the international energy technology collaborations. It should devise adequate mechanism for joint ventures in R&D, exchange of experts and researchers should be promoted. Multilateral and bilateral institutions should be involved. Recognizing, says Naimi Minister of Petroleum and Mineral Resources of Saudi Arabia, that greater cooperation and coordination are indispensable elements of our energy future is the first step in making that vision of shared progress and prosperity a reality[24]. [1] Energy Information Administration, Washington, International Energy Outlook 2006,p1 [2] BP, Statistical Review of World Energy, 2002. [3] IEA, World Energy Outlook, 2002, p. 292. [4] Energy Information Administration, (March 2003), India- A Growing International Oil and Gas Player, Washington DC, p7 [5] IEA, (2005) Energy Technologies at the Cutting Edgep16 [6] Ibid, p17 [7] Ibid, p17 [8] Waddacor Michael, (2003),  Modern day gas alchemy yields cleaner fuels, in Fundamentals of Gas to Liquids Petroleum Economist, UK.p5 [9] For more information see Waddacor Michael, (2003) ibid,p5 [10] For more details see ibid, p5 [11] Mackenzie, Wood, (2003), The case of GTL: rationale, economics and the future in Fundamentals of Gas to Liquids Petroleum Economist, U.K. p14 [12] Energy Information Administration, Annual Energy Outlook 2006 p39 [13] Ibid, p40 [14] Ibid, p40 [15] Ibid, p40-41 [16] IBM Business Consulting Service, Meeting the Challenges of Todays oil and Gas Exploration and Production Industry, p1 [17] Ibid, p2 [18] U.S Department of Agriculture, Rural Development, Crooks Anthony and Dunn John, The Role of Information Technology in Fuel Ethanol Industry p36 [19] Poten and Partners, LNG In World Markets, , http://www.poten.com/s_lng_reports, date 10/12/2006 [20] Ibid, [21] ibid [22] WCED (World Commission on Environment and Development), 1987. Our Common Future. Oxford, UK: Oxford University Press. [23] IEA, (2005) Energy Technologies at the Cutting Edgep9 [24] Third OPEC International Seminar, OPEC Bulletin, 9-10-2006, p35

@wiki::10/ 2007-01-25 2007-01-26T01:56:29Z

BASIR AHMED (West Asian and African Studies, School of International Studies, Jawaharlal Nehru University New Delhi, 110067) Prime Minister Manmohan Singh left for St Petersburg later this week to attend the G-8 Summit of industrialized nations with a heavy agenda that includes meetings with Russian President Vladimir Putin and US President George W Bush. Indian Prime Minister also held talks with some of the other leaders of the G8 that comprises Britain, Japan, France, Germany, Italy and Canada, besides the US and Russia, on the sidelines of the July 15-17 Summit on Global Energy Security. Concerns regarding Indias energy and energy supplies was the major issue of his talks. In the context of rising oil prices and market instability, the focus of the meeting largely remained around Indias energy security. The sense of urgency was quiet evident, India felt that more should be done to deal with the growing domestic energy demand and sustain supply security. India's search for energy security has assumed challenging dimensions. In the broad framework of India's approach towards its regional neighbours like Russia, New Delhi explored the prospects of energy cooperation. Its bilateral relations with G-8 countries including Russia is by and large cordial and cooperative. It has adopted innovative market strategies to harness on the changing world energy space and the discovered energy potential of new areas. New Delhi also tried to prod Moscow on giving oil and Natural Gas Corporation a stake in the major Russian oilfields. India said that, it is prepared to invest in developing oilfields in Russia that will give India one Million Barrels of crude per day. Russia, that holds the presidency of the G-8, has already placed global energy security high on the agenda. In a message posted on the official G-8 website, President Putin said, this year we plan to urge our partners to redouble efforts to ensure global energy security. We believe that today, it is crucial to find a solution to a problem, which directly influences the social and economic developments of all countries without exception. The initiatives to hold trilateral meeting on the sidelines of G-8 Summit, is understood to have come from Russia, which is trying to position itself as a bridge between the Western world and the developing countries. Indias participation in the G-8 Summit at St. Petersburg reflects an effort to check the mounting domestic energy challenge. New Delhi availed this meeting as an opportunity for consultation on energy security issues, along with terrorism and stability in Central Asia. India also explored the potential areas for trilateral cooperation between India, China and Russia especially in the changing context of emerging energy markets in Asia. All the three parties agreed that, the efforts towards attaining energy sufficiency should be comprehensive and should stimulate stabilization of the global energy markets, development of innovation technologies, and use of renewable energy sources and protection of the environment. The trilateral meeting between India, Russia and China on the sidelines of G-8 Summit reflects the efforts to extract the energy market from the Western monopoly. Attempts were also being made to counter balance the unipolar world with a more decentralized multilateral system. The trilateral dialogue states that, there are big powers outside the region that has important stakes in the growing Energy Security challenges. How to secure stable and sufficient supplies of oil in an era of increased terrorist threat to energy infrastructure? Emerged as a major issue of concern in the meeting. India and China have been witnessing a steady increase in their energy consumption for over many years. Increasing economic growth characterized by high industrial activity has been the main reason behind it. Though consumption of coal accounts for a major share of the total energy use, imported petroleum takes an irreplaceable position in the energy mix of both countries. China's growth in oil consumption is now running close to 8 percent a year and, as a result, that country is now a major importer. Meanwhile, India, as the world's second-most-populous country, is also experiencing year-over-year consumption growth in excess of 8 percent. Hence, the key energy-related issues for these two countries are increasing energy dependency on imported oil, securities of energy supplies, and at affordable cost. India and China increasingly looks toward Russia for securities of their energy supplies. Russian energy has the capacity to feed India and China for the next several years. If India and China succeed in securing long term energy supplies through Russia, the whole South East Asia stands to gain. It will mean the continuation of the sizzling growth that has benefited the whole region. The recent participation of both these countries in St. Petersburg is the latest signal that geo-economics of energy is gaining over geopolitics of the region. India and China plan to sign pacts in the coming months for oil and gas projects in Russia. The geographical proximity of Russia and remoteness from the Persian Gulf energy geopolitics makes it more attractive destination for the import dependent countries in the Asian region. Indias ONGC has a 20% stake in exploration and development of the Sakhalin-I oil and gas field (in Russia), which has total recoverable reserves of 2.3 bn barrels of oil and 17 trillion cu ft of natural gas. Chinas energy strategy includes outmaneuvering other competitors from the region, especially India and Japan. Chinas $6 bn loan offer to Rosneft, its growing arms import from Russia, is a part of a larger strategy of cementing energy relations with Russia and keeping other competitors at bay. However, cooperation with China in jointly bidding for energy exports and increasing investments in Siberian and Sakhalin oil assets is certainly a good indication. Russia will have a considerable importance in Indias evolving energy calculus in the coming years, especially in the context of oil and gas imports. Apart from the stake in exploration and development in Sakhalin-I, India is keen to be involved in the Sakhalin-III project, operated by Royal Dutch Shell PLC and also to get a 20% stake in Yuganskneftgaz, a subsidiary of the now-expropriated Yukos oil company. India needs to take care of the following dimensions in considering energy import from Russia. First, Indias long-term energy interest in Russia, especially in the context of souring relations with Iran and growing instability in the West Asian region, Russia has come to holds a strategic importance, which shall continue over a period of time. Second, is the factor of Chinese competition in acquiring overseas energy. Irrespective of the fact that, China in principle supports joint bidding in oil and gas projects with India in Russia and around the world, its growing competition with India is a reality. For instance, India, was keen to import natural gas from Sakhalin, witnessed the heat of Chinese competition when the Russian oil company, Rosneft, asked it to make a commercially superior bid to the Chinese one to be considered for the export. Hence, India must frame its energy policy keeping in view the growing competition coming form China. Finally, Chinas energy strategy. Up till now China has displayed an aggressive energy policy. Its involvement in developing Gwadar Port on Pakistan's southwestern Makran coast of Balochistan, building Karakoram highway to bring oil and gas by road into western China. Its involvement in Myanmar to gain direct land access to the Southeast Asian nations and the Andaman Sea, in Angola, in Ecuador etc. indicates that India should tread cautiously. In this phase of rapid economic growth, the countries agreed that, they must deal with energy in the framework of a global partnership for sustainable economic development. Attempts were also made to find ways to improve the functioning of the oil and gas markets, facilitate energy transportation, promote dialogue between producers, consumers, and transit countries, accelerate the transition towards a post-oil era, and help the developing countries to move towards an ecologically responsible economic growth. Global threat requires global responses. It would be difficult to find a solution to the energy insecurity if different nations go on their own way, or go for unilateral and partial solutions. The world remains under the threat from supply disruptions. Hence the imperative for partnership in energy is even more today. Uninterrupted, sufficient, reliable, and secure supply of energy at prices reflecting economic fundamentals and market principles is one of the key development factors of the all national economies. There is a direct relationship between economic well being, way and quality of life and secure access to energy. The system of energy supply and demand has become truly global. This requires the strengthening of partnership between producing and consuming countries through continuous and constructive dialogue with common objective to ensure global energy security. Energy security should be pursued consistent with achieving the common developmental goals. It should aim at promoting adequate and reliable long term oil and gas supply to global markets, increasing energy efficiency both on the supply and demand side, improving environment, diversifying energy supply and demand mix.

@wiki::9/ 2007-01-25 2007-01-25T22:41:46Z

BASIR AHMED (Pursuing Research at, West Asian and African Studies, School of International Studies, Jawaharlal Nehru University, New Delhi) In the wake of the failure of Indo- Pak secretary level talks for ironing out the dispute over the 450 MW Baglihar power project, addressing a press conference, Pakistans Secretary for Water and Power Ashfaq Mehmood claimed that Islamabad had done everything and shown flexibility to resolve the issue bilaterally. Pakistan had approached the World Bank for a neutral expert to resolve the Baglihar hydro electric project tangle, claiming that the project located in Jammu and Kashmir does not conform to the Indus Water Treaty. He said that, Pakistan has waited for five years to resolve the dispute. It [the talks] was the final attempt but the situation is the same. Matters could not be resolved and our issues were not addressed, he added. Subsequently, Professor Raymond Lafitte, a Swiss national, civil engineer and professor at the Swiss Federal Institute of Technology in Lausanne, has been appointed as the "Neutral Expert" by the World Bank to decide on the fate of Baglihar project. Pakistan has apprised the World Bank of its objections and sought its help to pursue India to modify its design. It has listed three conditions under which Islamabad could hold talk with India:　　　　　　　　　　　　　　　　　　　　　　　　 "　　 India should immediately halt the construction of the project. And it should not allow any work on it. "　　 India must share the technical details of the dam, especially regarding dam height, design, nature of construction, work schedule etc. "　　 India should evolve a mechanism for the resolution of dispute. The Pakistani objection over the Baglihar project relates to Article V of the Indus Water Treaty. As per the provision, if India constructs any water drawing projects on the Western rivers, it will have to pay compensation to Pakistan in lieu of the losses incurred by later on water supplies for irrigation canals, which were dependent on the water flow from Eastern rivers. The Indus Water Treaty allowed Pakistan to construct a system of replacement canals to carry water from the western rivers into those areas in West Pakistan that were earlier dependent for their irrigation supplies on water from the eastern rivers. The Indian stand on this regard has been that, Since India has already paid its contribution of 62,060,000 pounds to the World Bank towards compensation to Pakistan under this clause, therefore the Article V is no more applicable. India had almost fulfilled all the three above mentioned objections raised by Pakistan as a precondition for any future talks with India. It stopped the construction of the dam till a joint agreement is reached with Pakistan. It shared the technical details regarding design and height of dam. It went ahead and tried to evolve a common mechanism for the bilateral resolution of the problem. Much beyond that, India, in a bid to persuade Pakistan to give up its objections, even allowed its experts to inspect the dam site and provided the additional data on the height and design of the dam. It held a series of talks officially and unofficially with Pakistan since January 2005. India had consistently maintained that the construction of Baglihar project does not violates the Indus Water Treaty. Mr. Dasmunshi in a recent press interview said, "In my understanding there is no violation of the Indus Water Treaty in any manner". The question of violation also does not arises, since India has already paid the due compensation to the world Bank emanating from Article V of the Indus Water Treaty. India affirmed that the Project is not intended to either dam the river or affect the flow of waters to Pakistan. The Baglihar project is important for India because it will meet the power requirements along with creating employment opportunities for the Kashmiri people. Jammu and Kashmir Finance Minister Muzaffar Hussain Baig told PTI that, ''our State is faced with acute power shortage but the water of our rivers is going to Pakistan''. It is officially estimated that the State is suffering a loss of Rs 6,500 crores a year. It is obvious that Pakistan wants to deny upper riparian Jammu and Kashmir the right to use its own rivers. Reacting strongly against Pakistan for approaching the World Bank on the controversial Baglihar project, moderate separatist leaders Syed Nazir Gilani and Dr. Shabir Choudhry have questioned Islamabads legal or moral right over the natural resources of Jammu and Kashmir. Water of Chenab and other rivers is a natural resource of Jammu and Kashmir and it must be used for the betterment of the people of the state. The people of Jammu and Kashmir have first priority over the use of this water. Pakistan should become a facilitator in the economic progress of the state by not objecting to the Baglihar hydro power project.

@wiki::8/ 2007-01-25 2007-01-25T22:39:21Z

BASIR AHMED (Pursuing Research in West Asian and African Studies, School of international Studies, Jawaharlal Nehru University, New Delhi 110067) The recently concluded 13 more than one sense. For the first time it has been witnessed that, there is an agreement among all the heads of state upon ensuring strong and substantive regional cooperation. It is well in tune with the demands created by the international economic developments. It partly explains South Asias urge to emerge as a copartner in, what honorable prime minister of India called Asian Resurgence. Reconnecting the subcontinent has become all more important due to the changing economic fundamentals of the world trade. Tariff wars, hidden subsidies, trade monopolies, and various other trade distorting practices which exist in the world trade composition today, demands that the developing countries of South Asian region must look for a regional economic union. The cost-effective future of South Asia undoubtedly lies in a regional market. South Asian common promote, besides meeting the domestic needs at low and affordable cost shall provide economic stability. Self reliant growth is what is important for the region at present and SAARC as an association for regional cooperation can go a long way in this direction. The recent consensus among member state over South Asian economic union is a good gesture. South Asian economic union will also undoubtedly help in bringing down the intra state and inter state conflicts. However this is not to say that the geopolitical tensions which currently engulfs the entire region will die out, but simply to put in that, given the current momentum, it is geo-economics which shall increasingly define the inter and intra state relations and shall impinge more and more upon the regional tensions. Bilateral Free Trade and Agreements between India and Sri Lanka, India and Nepal, Sri Lanka and Pakistan, is a good progression towards a common market. SAARC must speed up the initiatives on regional integration. Given the dynamism and improved political climate, it would be easier to draw significant benefits. SAARC must consolidate the existing bilateral Free Trade Agreements and fast initiate course towards South Asian Economic Union. SAARC should also insist on strengthening the physical, legal and technical infrastructure. Without it full realization of South Asian Economic union is not possible. If South Asia wants to fully integrate in the global market as a major trading bloc, addressing the infrastructural problem would be crucial for it. South Asia constitutes a largest consumer conglomerate in the world. It can use this advantage to address the infrastructure development challenges of the region. The incoming foreign investment which largely comes mainly due to its being a largest consumer can be directed towards infrastructure sector. The induction of Afghanistan as a new member of SAARC shall further help in its consolidation. Culturally and economically Afghanistan fits into the region, there was no point in keeping it outside. However, the greatest benefit that this step might entail, is that there is a probability that Afghanistan could in the long run, emerge as a bridge to Central Asia. Inviting China and Japan to become as observers, by according them observer Status shall certainly enrich SAARC and add a new dimension to the regional trade and investment. China and Japan are the fastest growing economies of the region. They can help in SAARCs common venture towards self and sustainable common growth. There are two basic challenges confronting the entire region, poverty and terrorism. SAARC member states have also focused on these issues at its recent Dhaka summit. Though the issue of poverty has been on SAARCs agenda for a quiet long time, there has not been any substantial progress. The recent Dhaka declaration has gone in for instituting a fund and a mechanism to work collectively by dedicating a decade towards the implementation of poverty eradication plans. It needs to be supplemented with genuine and sincere efforts. There is a close link between poverty, unemployment and instability, address poverty and growth will take care of itself. The menace of terrorism is another important issue which came up. Terrorism not only has economic consequences but also have huge social implications. Migration, high mortality etc. had a direct impact upon growth and stability of the entire region. Insecurity of life and livelihood restricts development. Therefore, in order to control terrorism it is important that the terrorist infrastructure is dismantled and their hideouts busted. For this to happen, there is a need of a joint and coordinated action backed by political will among member states. SAARC must take fast track initiatives to ensure it. References: Reconnect the subcontinent: Manmohan, Chandrika moots South Asian Economic Union, Leaders agree to enhance cooperation, th SAARC summit at Dhaka has been a landmark event inThe Hindu, Nov13, 2005, New Delhi.The Hindu, 13, 2005, New Delhi.The Times of India, 14 Nov, 2005, New Delhi.

@wiki::7/ 2007-01-25 2007-01-25T22:31:47Z

THE OPENING OF NATHU LA PASS: A BEGINNING OF NEW ERA IN SINO  INDIA RELATIONS BASIR AHMED (Pursuing Research in West Asian and African Studies, School of international Studies, Jawaharlal Nehru University, New Delhi 110067 India and China on Thursday, the 6th of July formally inaugurated trade through the Nathu La Pass, linking Sikkim and the Tibet Autonomous Region. The 4,310 metre high pass was closed 44 years ago after the 1962 conflict. One hundred Indian traders crossed into the Chinese territory and an equal number of Chinese traders crossed into the Indian territory after the inaugural session. Sikkim Chief Minister Pawan Kumar Chamling, while delivering the inaugural address said, let this trade route build trust, confidence, and wisdom in the consolidation of ever flourishing relations between India and China. Further more he said that, a beginning had been made for bigger things to come. People from both countries will stand to witness this event as the harbinger of flourishing trade, deeper understanding, wider cooperation and durable friendship between the two emerging world powers from Asia.[i] In the spirit of the India  China friendship year 2006, the two giant neighbours have engaged each other quiet intensively in strategic dialogue. The opening of Nathu La Pass recently, is a sign of maturity of that dialogue process between them. The agreement between India and China to open the border for trade at Nathu La Pass, proved to be important decision in two respects. First, owing to the complex nature of dispute between two countries, the very decision to open up the border showed their political will. Not to be held hostage to disputes over a line on a map. Second, trade and commerce would be given an extra attention, regardless of the pace of the bilateral settlement. The two countries are not only neighbours but also engines driving Asia forward in the world.[ii] India and China have agreed to give due consideration to the settled population in the border areas, as well as to each others strategic and reasonable interests. [iii] Besides, geo economics, the opening of Nathu La Pass also proves that, New Delhi is quiet keen to engage Beijing within a new strategic framework without any fixations about Pakistan, or the US. New Delhi has shown its willingness, not to see India  China relations through the prism of Pakistan. Similarly, China also seems to have agreed to overlook Indias growing involvement with USA. However, it is yet to be seen, whether, the Pakistan factor in case of India, and US factor in case of China, could be altogether divorced form the evolving India  China relationship. But, there is much commitment to Public diplomacy. The manner in which East Asia is emerging, the signals of optimism coming there from. The renewed emphasis of Indias credentials as a Nuclear armed state, worked as a motivation for China to strive for good relations with India. On the boundary issue, the Chinese leaders have also frequently expressed their desire to see the issue resolved, and they are keen to fashion a solution that could heighten the quality of the bilateral equation.[iv] The volume of border trade between India and china accounted for a million and a half dollars in 2002. the greater volume of trade over Himalayas is still routed through Nepal. The opening of Nathu La Pass will help in minimizing the distance of movement of goods between both countries. With helping in opening up new avenues for border trade, Nathu La Pass will further helped the two countries come closer. There is a need to constantly revise the number of items of trade and expand it further. Till now there has been agreement on only 29 items. It must be expanded to include other major items, as soon as possible. The creation of modern and robust infrastructure, on the border that could handle a major portion of bilateral trade between India and China is essential. The possibilities for Indian business to penetrate the Chinese markets are extensive. Compared to India, the Chinese market is rapidly expanding, thereby raising domestic consumer demand. There is a scope of Indian pharmaceutical and IT sectors also. The Nathu La Pass opens multiple avenues for the captains of Indian industry. The potential for increase in India- China trade can only be fulfilled if private enterprise is matched with government enterprise on both sides. While Indian traders and businessmen can invest and trade, few of these will survive, unless government comes out to provide necessary infrastructure, support private enterprises, establish fast track courts and provide conducive business environment suited for the expanding economic relations. The greatest advantage flowing from the opening of Nathu La Pass is peace dividend. We would like to use, says Mr. Chamling, the Nathu La trade route as a means to achieve much grater heights. We would like to be a major actor in the building of modern India. [v] [i] Nathu La Pass reopened, The Hindu, Friday, 7th July, 2006, Delhi [ii] On track with China, The Hindu, Friday, June 30, 2006, Delhi [iii] ibid [iv] A new entente, Frontline, February, 24, 2006,Chennai [v] Create Infrastructure on the Border, says Chamling, The Hindu, Friday, 7th July, 2006, Delhi

@wiki::6/ 2007-01-25 2007-01-25T22:28:25Z

ISSUES IN INDO- US NUCLEAR COOPERATION BASIR AHMED (Pursuing Research in West Asian and African Studies, School of international Studies, Jawaharlal Nehru University, New Delhi 110067) Abstract Nuclear transfers to a non-nuclear weapon state (NNWS) are conditioned on IAEA safeguards on all current and future peaceful nuclear activities, what are called the full-scope safeguards (FSS), or comprehensive safeguards. Since India is a NNWS according to the NPT definition, the NSG Guidelines as currently implemented would, therefore, invoke FSS if India seeks nuclear technology or nuclear power plants. The condition for any progress on the deal is the separation of civilian and military nuclear facilities that India has committed to and the sequencing of the reciprocal steps envisaged in the agreement. For the Indian department of atomic energy, however, meeting these seems to be a difficult proposition. In fact, the issue of Indo-US Nuclear Agreement and IAEA Safeguards is somewhat becoming controversial, arising chiefly from the manner in which the above part of the deal is being interpreted by the two parties. This paper attempts to probe the position of both parties and its geopolitical and strategic implications for India. The recently concluded Indo-US nuclear agreement raises more questions than it answers. It is now a well accepted fact that, the US offer of civilian nuclear cooperation carries hidden political, economic and strategic costs. The Indo- US agreement will lead to a cap or a constraint on Indias nuclear weapons arsenal. According to the House of Representatives Bill on nuclear cooperation, US should seek to achieve a moratorium on fissile material production by India, Pakistan, and China and promote the reduction and eventual elimination of Nuclear weapons in South Asia. The President shall report annually to the Congress about US efforts to get India and Pakistan to secure, cap and reduce their fissile material stockpiles. There may not be anything in any agreement that India has signed, which calls it to reduce or cap weapon grade fissile material stockpiles. However, USA may cite its domestic legal obligations as a reason to pressure India. And under such circumstances it would be quiet difficult for New Delhi to resist. After already having marched a certain distance, it would be quiet hard for India to refuse concurrence to US demands. India holds that, the July 18, 2005, agreement is about Energy and not Arms or arms control. The Americans too hold that the agreement is about Indias energy need and it did not intend to put a cap on Indias military program. But the fact speaks otherwise. From the very beginning a non proliferation undertone is reflected in US approach. The attitude of US has been to cash on the assurances of perpetual nuclear fuel supply to India into a no nuclear testing condition. In other words, India agreed not to conduct nuclear tests, in return of fuel supply. India unilaterally accepted, as evident on the July 18, 2005 joint statement, to put a moratorium on nuclear weapon testing, without ensuring a reciprocal commitment from United States. The Senate bill authorizing nuclear commerce with India, declares that the special considerations granted to India shall cease to be effective if India detonates a nuclear explosive device after the act comes into force. The Nuclear Suppliers Groups rule will also become null and void if India conducts an explosive nuclear test. However there are good reasons for India not to do so, due to the availability of recent technologies at New Delhis disposable like computer simulation, it is not necessary for India to conduct a nuclear test on the ground. New Delhi can still test Nuclear Weapon through computer simulation method. But what is important is not whether New Delhi can test Nuclear weapon on ground, or whether it is barred from conducting test? The important thing is that, these decisions are put down by a state that itself refuses to be bound by any legal no test concordat. It is about the moral justification, the binding nature and relevance of the clause. Whether a state which is itself not bound by a certain provisions, have a right to dictate those provisions on other states? Any unilateral test by India therefore, may not violate the agreement. And even if it does, there is no legal obligation on India not to conduct an explosive test. If India goes for the sub critical tests and the computer simulations, that US conducts in order to test its own weapons, does not entail any penalty. In a situation where the government of the day is felt to abandon the hold, and conducts on ground nuclear test. The USA and National Suppliers Group would end its nuclear cooperation with India. And if India withdraws it civilian facilities from IAEA safeguards, and if the clock in effect is turned to pre July 2005 status quo. It is India which is going to loose more. First, after already opening the civilian nuclear facilities for IAEA inspections and safeguards it would be difficult for India to withdraw. And even if it decides to withdraw, the purpose of withdrawal does not hold any meaning because the Indian nuclear secrets and sites will be quiet well known by USA and IAEA till then. And there is a possibility that our neighbours like Pakistan may benefit from the whole episode. To say that, India would return to pre July 2005, Status quo is easier said than done. It would be not possible for New Delhi to again unify the already separated the civilian and military nuclear program. So far Indias experience in US assurances is concerned, it is discouraging. India had agreed to in perpetuity safeguards for its indigenous civilian nuclear facilities in exchange for US assurances of perpetual fuel supply for all reactors under IAEA conditionality. It is difficult to trust in the assurances. Such assurances shall immediately dissipate if the relations between India and US strains up, or if New Delhi conducts a nuclear test. The greater the dependence on imported safeguarded reactors, the greater would be the cost associated with suspension of nuclear cooperation. Another manner in which the nuclear cooperation with USA entails heavy cost on Indias nuclear programme is, that the Indian nuclear weapons programme till now has been embedded in the civilian nuclear programme. This gave New Delhi the leverage and flexibility to accumulate fissile material. While New Delhi can still test nuclear bomb and build them. There is full danger that India would have to pay a heavy price in case it decides to depart from its voluntary moratorium and conducts another nuclear test. Starting with the US Transformational Diplomacy, one among the many objectives it outlines is Partnerships not Paternalism and transformation of old diplomatic institutions. US is now engaged in adjusting its domestic laws to enable civilian nuclear cooperation with India. However, its intends to extend Indias obligations beyond July 18 joint statement and the March 2 separation plan. The hidden motives may not be overruled altogether. There are unpalatable and obscure references in the recently passed American legislation. There is a chance of their being misinterpreted and used against India, when the relations are not so good. New Delhi should scrutinize and assess the legislation carefully, especially the binding provisions that finds their way into the 123 agreement (bilateral accord with the US) and the safeguards arrangement with the International Atomic Energy Agency. There is also a chance that, New Delhis plan to separate its civilian and military nuclear facilities would erode the dynamism of the countrys strategic deterrent. There may be budgetary difficulties, R&D problems and the danger of IAEA interference. Very recently, Russia and United States have committed themselves to expanding Nuclear energy cooperation with India and provide nuclear fuel on a commercial basis. They are also expected to facilitate the lifting of international curbs on nuclear technology transfer to New Delhi. In a joint statement on nuclear cooperation, released by Russian President Vladimir Putin and US president George W. Bush said that, we look forward to reinforcing our partnership with India. Furthermore he stated that, Washington and Moscow look toward Indias closer alignment with the non proliferation regime. He said that, attempts are being made to work with India on nuclear cooperation to address its energy requirements and further enhancing the global non proliferation regime. One thing which needs to be considered seriously is nuclear cooperation with the USA- but at what cost? If it comes at the cost of independent foreign and nuclear policy, it is better not to encourage the deal. One advantage to India from the nuclear agreement with USA is that, the explicit recognition of Indias nuclear status by the biggest nuclear power like USA may speed up the waiver of restrictions of the Nuclear Supplier Group on nuclear cooperation with the New Delhi. India also tried to identify effective measures to prevent transfer of sensitive nuclear equipment, materials, and technology to states that may seek to use them for weapons purposes, or allow them to fall into the terrorists hands. The agreement set, effective measures to control and foster a deeper probe into the leakage of nuclear technologies from Pakistan. The July 18 statement reflects New Delhis determination to put behind it an era of defensive diplomacy. According to Indias Foreign Secretary, if India is to become a credible candidate for permanent membership of the United Nations Security Council, New Delhi must adjust its traditional positions. Owing to the changing context of international politics better relations with United States may be in Indias national interest. United States is New Delhis largest trade partner, investor and an important technology source. Besides, USA is a preeminent power that guides to a greater extent, the future course of international politics. There are strong security convergences between India and the United States, a stronger bilateral relation with United States might help New Delhi to get a strategic edge. An adjustment of Indias foreign policy in the changing international order may help New Delhi to better accommodate its aspirations. New Delhi must proceed ahead while remaining critical about the deal. The text of U.S statement of Administration Policy on the nuclear cooperation Bill, H.R.5682 (United States and India Nuclear Cooperation Promotion Act of 2006) states that the legislation will facilitate nuclear energy cooperation between the worlds two largest democracies. It is a part of profound transformation in the way United States and India are partnering to promote energy security, prosperity, democracy, stability, and peace in the region and around the world. An important feature of this legislation is the procedure for a joint resolution of approval that ensures an up or down vote without amendment on a proposed nuclear energy cooperation agreement with India. Section 4 (d), which restricts nuclear transfers to India, codifies guidelines of the Nuclear Suppliers Group (NSG) for future supply to India, resulting that US would be the only NSG country legally bound by these requirements. According to the text (H.R 5682), such a provision will not advance U.S non- proliferation objectives and could prove counter productive, in effect limiting the ability of the United States to negotiate with other NSG members and weakening the voluntary, cooperative nature of the NSG regime. It is difficult to imagine how the deal proves antagonistic to the non- proliferation measures if it requires India to cap its production of fissile material. Furthermore, it states that Section 3, which purports to dictate the foreign policy of the United States with respect to critical national security issues, infringes upon the Presidents constitutional authority to conduct the nations foreign affairs. Section 4 (c), and (o), that requires the president to disclose the current status of, and future strategy for, diplomatic negotiations regarding non proliferation issues, also infringes upon the Presidents constitutional responsibility over the timing and contents of disclosure of sensitive diplomatic information. But it should be understood in this context that, U.S president was never free to conduct foreign policy so far as critical national security issues are concerned. He is bound with the Congress, whose approval is necessary in any critical foreign policy initiative. Section 4 (c), and (o), also does not infringe his constitutional responsibility, because President is constitutionally bound to disclose periodically the status and future strategies before the congress. India has agreed to support international efforts to limit the spread of enrichment and reprocessing technologies, including to states such as Iran. India as a responsible member of international community has supported the effort towards this by voting twice in the International Atomic Energy Agency (IAEA), Board of Governors meeting. to find Iran in non compliance with IAEA safeguards and to report the issue to the UN Security Council. But this step of India was guided by the traditional roots of its foreign policy. India voted against Iran in pursuance of its proclaimed foreign policy goal of nuclear disarmament in the region and around the world. It was guided by its own national interest, and should not be seen through the prism of Indo- US civilian nuclear cooperation. All said and done, the deal poses a number of questions about nuclear energy, disarmament, `promotion of democracy,' energy security and strategic stability in Asia. When it comes to Global energy stability, Indias interest does not align with those of the US. Above all it is the fear of quid pro quo, allowing access to U.S. nuclear material and equipment would make New Delhi more likely to help further American strategic goals in the region. It would buttress Indias potential utility as a hedge against a rising China, encourage India to pursue economic and strategic policies aligned with U.S. interests, and shape its choices in regard to global energy stability. The choice before India today is that, it could use its nuclear weapons status as a pry to push for a multipolar world system, which has been its major foreign policy objective, or it could use its status as an instrument to help perpetuate the current global order and to maintain the status quo.

@wiki::5/ 2007-01-25 2007-01-26T01:51:37Z

INDIO- JAPAN RELATIONS Mr. Basir Ahmed Centre for West Asian and African Studies School of International Studies Jawaharlal Nehru University New Delhi, 110067 Indian Prime Minister Dr. Manmohan Singhs arrival in Tokyo to begin a four day visit is expected to facilitate a new and dynamic era in the relations between India and Japan. New Delhi is seeking to expand its strategic and economic ties with Tokyo. A comprehensive economic engagement with Japan is high on the PMs agenda. India's Look East policy revolving around deepening economic engagement with the region will get a decisive boost. Japan has emerged as a focal point in India's Look East policy, which is set to enter a more vibrant and dynamic phase. Both India and Japan are taking a long-term and strategic view of their relations. There is a cross-party consensus in both countries for strengthening the bilateral relations. There are powerful movers behind the growing engagement between New Delhi and Tokyo. Indo-Japanese trade has grown tremendously to cross US $6.5 billion. Japan is the third major investor in India. FDI inflows from Japan since 2005 has crossed a whopping US $ 168 million mark. Major sectors attracting FDI inflows are Transportation Industry (55.58%), Electrical Equipments (6.83%), and Telecommunications (4.08%). Japan is the largest bilateral development partner of India. Therefore, it is quiet understandable, when Indian Prime Minister Manmohan Singh remarks, I wish to use my forthcoming visit to Japan to gain a better understanding of Prime minister Abes idea of closer cooperation&in the region. Japan, on the other hand, is keenly interested in upgrading its bilateral relations with India, so that the two can work together on the basis of global partnership and strategic affiliation. At present, the two countries are engaged in global partnership with a strategic focus. The summit is taking place in the emerging context of India's growing importance and influence for Japanese diplomacy. The historical growth of Japan as a global power seems to be guiding Indias strategic and economic considerations. It is quiet likely that, very soon India-Japan relations will overtake Japan-US and Japan-China relations. India has already replaced China as the largest recipient of Japanese aid. Maritime Security Tokyo is now exploring the possibility of inviting India to join Japan, U.S., and Australia for maintaining maritime security through anti-piracy and anti-terror cooperation. Controlling the piracy on sea lanes has emerged as a primary concern. Maritime security is an important aspect on which Japan and India are seeking to work together. This new initiative, while being relevant is still a fledgling idea with no clear indications to characterize the ensuing cooperation. Also there is no effort to institutionalize the initiative at this stage. The move may be just designed to bring about cooperation minus the military dimension. Nuclear Cooperation New Delhi is also seeking Japan's support for India-US civil nuclear deal in the 45-nation Nuclear Suppliers Group of which Tokyo is an influential member. Buoyant by the passage of a bill through the U.S. Congress to allow the shipping of civilian nuclear technologies to India, New Delhi urged on Japan to support lifting restrictions on India, as a member of the 45-nation Nuclear Suppliers Group. Referring that, India is a self-declared nuclear power that does not participate in the Nuclear Nonproliferation Treaty, Dr. Singh urged to "make a distinction" between democratic states such as India and "others who have pursued clandestine programs and indulged in proliferation." New Delhi has made it quiet clear that it shares Japan's concern about North Korea's nuclear weapon capabilities. On the issue of Japans support to Indias civil nuclear programme, Tokyo gave a mixed response. It held that as a general principle, the agreement between the United States and India is a good development. It has brought India into, at least, the international Non Proliferation Regime. Japan hoped that, the agreement would help make the Indian Civil nuclear regime more transparent and accountable. It expects that India as a power with nuclear capacity would remain very much committed to non proliferation. However, it is an ongoing conversation and the views are still evolving. It may be true, that economic interest has enhanced India-Japan engagement. But it is the strategic cooperation between these two countries, which is possibly transforming their bilateral relationship. They share certain shared strategic concerns. What may be vexing to both of them, is the growing China-Pakistan-North Korea cooperation in nuclear- and missile-technology. It is this shared concern, which is drawing Tokyo and Delhi closer. The growing proximity between India and Japan may be based on the understanding that, united they can restrain China, and divided they can be contained by China and its allies mainly North Korea and Pakistan.

@wiki::4/ 2007-01-25 2007-01-25T22:22:31Z

EMERGING ENERGY COOPERATION BETWEEN INDIA AND CHINA Basir Ahmed Centre for West Asian and African Studies, School of International Studies, Jawaharlal Nehru University, New Delhi 110067 The recent visit of Chinese President Hu Jintao was followed by a serious effort on both sides towards energy cooperation. It was time and again emphasised that, India and china can further develop energy cooperation by exploiting their mutual synergies. Events following the visit led the two countries agreeing to formalize an official mechanism for joint bid for oil fields across the globe. It was realised by both the parties that, a common approach towards oil has the potential to elevate bilateral ties. So far the two neighbours have been competing with each other in global oil acquisitions. But now, this competitive approach has started giving way to a cooperative approach. New Delhi and Beijing have started multiplying engagements with other countries to ensure energy security. Chinese President Hu Jintao said that, India and China would make joint efforts bilaterally and multilaterally to diversify the global energy mix. They have already jointly bid for energy projects in Sudan, Syria, and Colombia. India and China will have to depend increasingly on oil imports from outside the region, particularly from the Middle East, Africa, and Latin America, in order to meet this increase in energy demand. Energy cooperation shall therefore, emerge as an important alternative for both countries. China is emerging as a major player in the global energy system. It became a net importer of oil in 1993. According to certain estimates the consumption of oil is set to rise to almost 26 percent by 2020, with imports at 8 million barrels a day. Chinas rapid growth since market reforms began has sparked a surging demand for energy. Hence, imported energy, notably oil and gas has emerged as an attractive alternative. Continued dependence on imports has made it imperative for China to look towards energy cooperation as a foreign policy option. In a joint declaration, Prime Minister Manmohan Singh and Chinese President Hu Jintao said that, energy security constitutes a vital and strategic issue for both New Delhi and Beijing alike. It is consistent with the common interest of the two countries to establish an international energy order, which is fair, equitable, secure, and stable, and to the benefit of the entire international community. The need to ensure a stable, predictable and clean energy future, also calls for a mutual support in international civilian nuclear cooperation. Beijing held that it should be advanced through innovative and forward-looking approaches, while safeguarding the effectiveness of international non-proliferation principles. However, there is an apprehension in certain quarters that Chinas fostering cooperation with India may not be in Indias interest. Energy experts have become skeptical about Chinas intentions in fostering such cooperation with India especially after its actions in bidding for energy assets in Ecuador and Angola, where Indian companies had also bid, resulting in a considerable hike in the energy stake prices in host countries. The energy challenge for both China and India today has a very complex and complicated character. Both of them are facing already high and growing dependence on external sources of energy fuel. At the same time the energy mix of both of the countries is also not very far from ideal. For instance India is already facing a high level of urban air pollution. And also there is a well known danger of terrorist attacks on main sea lines for oil and gas transportation. Any disruption to smooth and timely supply of fuel for both countries can cause severe fluctuations of price and economic instability. Even more difficult is the task of ensuring long term energy security. Hence, in order to mitigate and eliminate the pending problem of secure energy resources, New Delhi and Beijing has found out the optimal best way of developing bilateral energy cooperation. Both countries have recognised the problems they have to deal with. Up to now they preferred to solve them by themselves, on individual basis. But now they have started thinking in terms of bilateral and multilateral energy cooperation. The current Energy cooperation between New Delhi and Beijing is driven by their quest to maintain high levels of economic growth. However, much depends on their ability to evolve a common understanding and equal partnership. Another important factor will be the ability of both political systems to address certain important bilateral issues, which contribute to significant tensions between them.