Central Asia and South Asia: Energy Cooperation and Transport Linkages

With Central Asia and the Caspian region having emerged as vital source of energy supply, there has been a new quest for alternative and shortest transportation routes to export oil/gas from this region to other countries, especially the South Asian countries. The middle east being in a flux, particularly after the Iraq conflict, the ongoing Iran imbroglio and now the war in Libya, energy-importing countries have been diversifying their sources of supply. Whereas Europe is looking towards Russian supplies, Japan and China are keen to tap the Russian Far East, Siberia, Kazakhstan and the Caspian region for their growing energy needs. China needs to boost its energy consumption by about 150 per cent to maintain its economic growth rate. For India, with its huge demand for energy, Central Asia in its extended neighbourhood presents a potential source of energy. Being the sixth largest energy consumer in the world, India’s crude imports are expected to double in a decade. India is facing logistic hazards due to lack of common border with Central Asian countries. The north-south transport corridor which seeks to restore the historic trade of conventional commodities between South Asia and Central Asia by facilitating faster and cheaper movement of goods from South Asia to Europe, and establishing a strategic transport link between Asia and Europe via Central Asia, Iran and Russia, is also beset with certain problems on the ground.

Cross-border energy projects have two major problems – investments and vulnerability to supply interruptions. The challenges like sovereignty of the nations, political barriers, security of supplies, lack of a holistic approach to energy security, paucity of infrastructure etc. need to be met in order to develop the security aspect of energy cooperation and gradually bring it into the socio-economic dynamics in Central and South Asia. Apart from dialogues, knowledge sharing mechanisms and bilateral agreements to develop energy and transport linkages, a comprehensive universal framework is required to facilitate energy transit and trade by providing a level playing field of member countries. The establishment of a Pan-Asian gas supplies system passing through Asia connecting the source country and consumer countries would be beneficial for the region. Energy security implies stable supply, developed market and secured transportation routes.