India may become a 'second China' for Russia in the energy sector

14 november 2016

In the last few years the Russian-Indian cooperation in the energy sector has been gaining path and India may become a "second China" for Russia in this sphere, according to the experts who are writing for the new energy industry bulletin "International Cooperation: The Road to India". This has also been corroborated by the documents signed to summarize the results of the Russo-Indian summit held on October15 in Goa. The most promising cooperation areas will be the nuclear and the oil industries.

There are many obstacles along this road, however, the main ones, according to the experts, being the increasing competition on the global energy markets and the gradual re-orientation of India towards prioritized development of renewable energy sources. Specialists point out that, along with the above mentioned factors, geographical remoteness also makes the bilateral cooperation prospects controversial.

Analysts remind that there remains a big difference in the production structures and in the economic development levels. "The USSR built a steel plant in Bhilai and assisted India in developing its higher technical education, which, to a large extent, currently serves as the basis for preparing software specialists. But what can Russia offer India today? For the most part, it is hydrocarbon supplies and construction of NPPs, which are not cheap. The structure of India's economy is strongly offset towards production and export of services, and it is here that common interests are possible. With respect to hydrocarbons, India is 'jammed' between the acute need to overcome the energy poverty of its rural population and its obligations under the 2015 Paris Agreements on prevention of the planet's climate changes", write the bulletin's authors.

Formation of Asian gas hubs as a natural stage in the growth of gas consumption and trading also remains a topical issue . The analysts believe that we can expect an interesting competition between the potential Japanese and Chinese hubs and Singapore. Whereas Japan and China, with their large imported gas consumption volumes, are still in the process of their internal gas market liberalization, Singapore can counter its competitors with a well developed financial system and a serious interest in increasing its role of an economic intermediary in Asia.

The bulletin also touches upon the topic of technical regulation in Russia's oil and gas complex. The specialists are convinced that there is a growing need to reform the industry-specific technical regulation system in the conditions of active development of the Russian oil and gas complex and taking into account the adopted import substitution policy.

More details in the  International Cooperation: The Road to India bulletin.

Other energy bulletins are available in the Publications section.