India in the Arctic: A Cost-Benefit Analysis

In a previous article, I discussed India’s increasing interests in the Arctic – stemming from both geopolitical interests and domestic compulsions. Now, I will discuss the costs and benefits of India’s increasing role in this region.

According to a United States Geological Survey estimate, the Arctic contains 90 billion barrels of oil, 1,670 trillion cubic feet of natural gas, and 44 billion barrels of natural gas , which is approximately 13% of the world’s undiscovered oil resources, 30% of its undiscovered natural gas resources, and 20% of its undiscovered natural gas.

India, being the fourth-largest energy consumer in the world, can explore the hydrocarbon potential of this region now that it has gained entry to the Arctic Council.

As reported by the United States’ National Snow and Ice Data Center, an escalating trend has been seen in the contraction of the Arctic ice cap. This has made the Arctic waters navigable, turning the resource-rich region into an alternative to the Suez Canal. However, these environmental changes can also pose a serious threat to India.

With both risks and rewards in mind, India is thoroughly engaged in the Arctic. Presently, however, more consideration is being given to the potential benefits India could gain – in the form of hydrocarbons – as opposed to the risks – many relating to climate change – emanating from this region.


India and Russia

During Russian President Vladimir Putin’s visit to India, a number of agreements were signed between the two countries. One such commendable agreement was signed between India’s Essar and Rosneft. Rosneft agreed on the long-term supply of nearly 10 million tons of crude annually at a discount to its Indian counterpart. This will help India reduce its energy dependence and cut down imports from Iran.

Although this was a positive sign, the other deal between ONGC and Rosneft could not be sealed. India’s ONGC wanted to purchase a 25% stake in Rosneft’s East Siberian oil and gas fields which was also likely to serve the Chinese market via the ESPO pipeline. However Rosneft offered only 10%.

The Diplomat reported that “the Russians want India to make up-front off-take commitments for risky offshore fields in the Arctic as well as for LNG export projects. Putin even commented just prior to the visit that LNG is likely to prove cheaper than a gas pipeline from Russia to India, and this too is going to be explored.” Thus, there are chances of much bigger deals in the future, keeping in mind India and Russia’s needs in the current oil-to-gas transition.


India and Norway

The Indian President’s tour of Norway underlines the importance of India’s bilateral approach to Arctic issues. President Mukherjee signed over a dozen agreements with Norway, speeding up cooperation in defense, science and technology, education, and other sectors.

Norway is the world’s third largest exporter of hydrocarbons and has expertise in exploration and drilling. Closer cooperation with Norway will reduce India’s energy dependence on any one region and help meet its growing demand for energy. This will prove beneficial for Norway as well by providing it with a huge Indian consumer market.

According to Priya Kumari, research associate at the National Maritime Foundation, Norway has an opportunity to invest US$ 20 billion to 40 billion in India. Presently, a meagre US$ 4 billion of the Norwegian Pension Fund, also known as ‘Oil Fund’ has been invested in India. There are also prospects for cooperation with Norway in shipbuilding and port-development. This will be useful for India, which has plans to build its first icebreaker to conduct ‘scientific and business exploration’ in the Polar Regions.”


India and Finland

In October, the Indian President returned from a successful trip to Norway and Finland. India and Finland, a crucial supporter of India’s entry into the Arctic Council, share friendly relations. Bilateral talks included discussions on trade and investment, clean technology and IT, and deep sea fishing and ports.

Finland and Norway, both integral members of the Arctic Council, will help India develop closer multilateral cooperation with the Arctic littorals. This will help India gain influence in the region as it faces off with other non-Arctic Asian countries at future Arctic meetings.

With increased Indian engagement in the Arctic neighborhood and exploration of hydrocarbons, the country has less to worry about when trying to meet its current energy needs. Interviewing Dr. Shailesh Nayak, secretary of the Ministry of Earth Sciences, The Hindu reports that “the deployment of IndARC, the country’s first underwater moored observatory in the Kongsfjorden fjord, half way between Norway and the North Pole, represents a major milestone in India’s scientific endeavours in the Arctic region.” According to Dr. Shailesh Nayak, Secretary, Ministry of Earth Sciences, the observatory is situated 192 meters deep and has 10 oceanographic sensors that collect real-time data on seawater temperature, salinity and ocean currents. He noted that IndARC would help studying and understanding how the Arctic processes influence the Indian monsoon system.


India, the Arctic, and Climate Change

India stands to gain much from the region, but there are also risks to be had. One key area is climate change.  According to the National Centre for Antarctic and Ocean Research (NCAOR), Ministry of Earth Sciences, “there is a connection between the northern polar region and the Indian Monsoon.” According to Dr S Rajan, director, NCOAR, “warm water currents move from tropics to the poles where they turn cold, increasing the salinity of oceans, causing water to sink and releasing heat. This keeps much of western Europe warm. But melting polar ice disrupts this cycle by flushing fresh water into the oceans at the poles. Due to this, salinity of oceans decreases, preventing warm water from sinking and releasing warmth. This results in cold waves across Europe. This water then travels southwards, increasing the temperature difference between land and oceans in the tropics, leading to changes in Monsoon patterns.”

The aforementioned phenomenon of melting ice may add to the problem of global warming by releasing methane into the atmosphere. This worries Indian scientists, as they know that any imminent change in the Arctic will affect the monsoons in India, which will have negative effects on the agrarian economy.

Melting ice also results in increased sea levels. Melting glacial water that flows into tributaries of Himalayan Rivers may heavily impact Indian coastal areas and cause them to become submerged, affecting its transport system and power networks.

Although the deployment of IndARC will help with understanding the influence the Arctic processes have on the Indian monsoon system, more needs to be done. The need of the hour is to maintain an effective balance between addressing global warming and meeting India’s need for increased hydrocarbons.


Image: Gopal Singh Rawat, Flickr

Posted in , Energy, Environment, India, Policy

Saneya Arif

Saneya Arif is currently a researcher on the Middle East desk at Wikistrat. She worked as a Global Security Analyst - India and West Asia at New York-based IndraStra Global from April through September 2015. She also served as a research intern at the Institute of Peace and Conflict Studies from June through December 2014, in New Delhi. Her primary areas of research include terrorism and radicalisation-related issues in South Asia and West Asia. She holds MA and BA degrees in Political Science (Hons) from the Department of Political Science, St Xavier’s College Ranchi, Jharkhand. She has served as a contributor at The Pioneer, Jharkhand Edition. She has presented two research papers, “Challenges of Good Governance in India” and “Non-aligned Movement: India and the Changing World Order,” in the UGC-sponsored national and international seminars respectively, organised by the Department of Political Science and Public Administration of Ranchi University. Both papers were subsequently published.

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2 thoughts on “India in the Arctic: A Cost-Benefit Analysis

  1. Hi Saneya –

    Very interesting article. India’s interest in Arctic hydrocarbons is very high, and it has to meet its energy demands somehow. However, there seems to be a large consensus that increasing fossil fuel consumption is not compatible with reaching climate targets, and other sources like nuclear energy are very costly in comparison. IndARC will be a great tool for telling us what we already know – hydrocarbons contribute to climate change. It will be interesting to see if India will decide meeting its short term challenges trumps climate concerns.

  2. Saneya,
    Thank you for contributing to SAV.
    Where I live, a gallon of water is about as expensive as a gallon of gasoline. Huge amounts of water are being used in fracking operations — in some locations, causing the incidence of earthquakes to spike.
    I’m not well versed in climate science, but I am struck by trends associated with one scarce commodity- water — and one not-so-scarce commodity, energy reserves.
    My sense is that water will become far more valuable than oil or natural gas for the rest of my lifetime and beyond.
    A ten-year NASA study, just released, used satellite data to determine the health of the world’s aquifers. The results are not good.
    Here is a fragment of the Associated Press story:

    Satellite data show people are overdrawing water from some of the world’s largest groundwater basins.

    Researchers from the University of California, Irvine say it’s unclear how much water is left in the most overburdened aquifers. The problem is expected to worsen with climate change and population growth.

    Using measurements taken by NASA’s twin Grace satellites, scientists found the most overstressed groundwater basins were located in the driest regions.

    Arabian Aquifer System in the Middle East, which serves more than 60 million people, was considered the most stressed in the world followed by the Indus Basin aquifer of northwestern India and Pakistan.

    The farm-rich Central Valley in California was considered highly stressed.

    The two studies were published online Tuesday in Water Resources Research, a journal of the American Geophysical Union.


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