India moves on long-term plans for Arctic investment

This year, India experienced economic turmoil that highlighted several obstacles to long-term growth. The rupee crash and slowed economic growth have led some to question whether the world’s largest democracy can live up to investors’ expectations. However, in many places, India is showing itself capable as a rapidly emerging power. Just look north beyond the chaotic politics of New Delhi. Far north, that is.

As other great powers move towards the far north, India also seeks a foothold in the Arctic. In May 2013, India was granted observer status on the Arctic Council, along with China, Japan, Singapore and Italy.  Other countries with longer-held observer status include France, the U.K., Poland, the Netherlands, Spain and Germany. Like other observers, India has agreed to recognize the sovereignty of Arctic states, respect indigenous peoples with their cultures and traditions, recognize the UN Convention of the Law of the Sea as the legal basis with which the Arctic will be managed and, finally, contribute to the Arctic Council itself.

Accepting observer status means playing a greater role, but it comes with certain constraints. India recognizes the preeminence of the Arctic Council, notably the littoral nations: Russia, Denmark, Norway, Canada and the United States. This limits the ability of India to exert a level of influence in Arctic policy-making similar to these countries. Yet, there is much to be gained from India’s participation as an observer.

By some estimates, the Arctic could account for 20 percent of the world’s undiscovered but recoverable oil and natural resources. According to a 2008 estimate by the U.S. Geological Service, the area may have 90 billion barrels of undiscovered and technically recoverable oil, 44 billion barrels of technically recoverable natural gas liquids and as much as 1,670 trillion cubic feet of technically recoverable natural gas. About 84 percent of the recoverable resources are thought to be offshore.

Previous exploration has been limited by technical difficulty, low cost petroleum and the region’s remoteness. Technology improvements and increased demand have made exploration of these resources more feasible, as has the dramatic melting of Arctic sea ice. With observer status, India is looking to maximize its ability to gain access.

New Delhi has taken a politically cautious approach to its Arctic interests. Upon news of India’s new status, a spokesperson from the Ministry of External Affairs (MEA) emphasised that “unlike China and South Korea which are going for commercial benefit, our interest is purely scientific.” The spokesperson further explained, “Look at the number of scientists we have sent and the number of articles that they have published, and you will get an idea about our main interest area.”

India has a desire to differentiate itself from its geopolitical rivals and competitors as well as its hopes to further contrast its less threatening emergence with that of China. Moreover, India’s position has the added potential to shore up support and potential partnerships with the littoral states by promising a non-threatening course that will not upset the status quo, while highlighting India’s growing strengths in research and development.

Still, it would be naive to think that New Delhi is not interested in the great energy and resource potential which the Arctic may have to offer.

In October 2013, India announced that the Indian state-owned Oil and Natural Gas Corporation (ONGC) will conduct studies with Russia for oil and gas exploration in the Arctic. A joint statement declared that the study will explore the possibility of pumping Russian hydrocarbons to India by pipeline and additionally stated the importance of sending Russian liquefied natural gas to India. Coming ahead of recent news that ONGC is looking at shale gas exploration domestically, this illustrates long-term investments by the corporation to meet drastically increased demand.

Geopolitically, the potential partnering of Russia and India makes sense both geographically and owing to historic economic ties. Furthermore, it may help to balance each nation’s concern over China’s growing strength as a player in the realm of energy and the Arctic. Still, at this point any official partnering is far from solidified, and potential gains from Indian investment in the Arctic are far from immediate.

As India looks towards finishing what has in some respects been a year that has served to temper investor expectations, encouraging signs about India in the long term have emerged. India has illustrated that it too seeks to be a player of consequence, despite little attention to its advances. Moving cautiously and quietly, India is seeking greater resource potential in accordance with its status as an emerging power. For investors with a long-range view, this is an encouraging sign.

More on the race for the Arctic from Gri:

Russia plans to win the Arctic race

China Moves on Arctic Resource Potential

Greenland’s Energy Slowly Reveals Itself

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Categories: Natural resources, Pacific Asia

Author:Sean Durns

Sean Durns has an MSc in History of International Relations from the London School of Economics and Political Sciences where he completed his dissertation on U.S. collective security policies in the Middle East. He has a B.A. in History and Political Sciences from the University of Arizona where his focus was on Latin American Politics and U.S. political history. His current academic interests are the intersections where U.S. foreign policy, security studies, and energy issues meet particularly in the areas of South Asia and Latin America.

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