Turkey offers oil pipe lifeline to India
By Sudha Ramachandran
BANGALORE - Turkey has offered - during a visit by Foreign Minister Ali Babacan
to India this month - to facilitate the supply of oil to India from Central
Asia via Israel through a combination of overland pipelines and super tankers.
Under the plan, oil transported through Turkey's extensive pipeline
infrastructure from Central Asia to its Ceyhan port would be sent across the
Mediterranean Sea by tanker to Israel's port of Ashkelon. There it would be fed
into Israel's Ashkelon-Eilat 254-kilometer pipeline. From Eilat port, again by
tanker, it would be sent through the Gulf of Aqaba and the Red Sea via the Gulf
of Aden and the Arabian Sea to India. Neither Israel nor the US have commented
on the proposal.
The Turkish offer holds out the promise of a well-established route
by which energy-hungry India could access
Central Asian reserves, in contrast to less-practical alternatives.
India imports about 70% of its oil requirements, a dependence that may increase
to over 91% by 2020. About 45% of present needs comes from the Gulf Cooperation
Council countries - Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United
Arab Emirates - according to Indian Planning Commission figures, and
if one includes oil imports from other parts of the Middle East, the region
accounts for about 67% of India's oil imports.
India, anxious to reduce this dependence on the Middle East for its fuel, given
the political volatility of the region, is looking to Myanmar and Vietnam in
its more immediate neighborhood, Sudan and Nigeria in Africa, and Turkmenistan
in Central Asia to secure oil and also gas supplies.
The success of those efforts have been mixed. It won significant stakes in
Russia's Sakhalin I oilfields, but lost out - often to China - in bids for
assets in Nigeria, Kazakhstan, Myanmar and Canada
over the past two years. No less easy have been India's efforts to clinch oil
pipeline deals.
A plan to bring gas from Myanmar, to the east, by pipeline through Bangladesh
fell apart when Dhaka wanted India in return to agree to a free-trade corridor
to Nepal and to remove existing trade barriers between India and Bangladesh. It
also demanded what India saw as exorbitant transit fees. India now hopes to
route a pipeline from Myanmar that bypasses Bangladesh, running through India's
northeastern states before reaching Kolkata.
If the pipeline to India's east has been a non-starter, a plan for one to its
west - the Iran-Pakistan-India (IPI) pipeline - is looking almost as tenuous.
Strongly opposed by the US because of Washington's differences with Tehran, the
US$7.5 billion IPI pipeline also faces difficulties over Iran's pricing of the
oil and transit fees demanded by Pakistan.
The prospects of a $4 billion Turkmenistan-Afghanistan-Pakistan (TAP) project
are slightly brighter, if only because it is backed by the US and international
financial institutions. India was invited to join the project last year. On the
down side, Turkmenistan, whose total gas output is about 60 billion cubic
meters (bcm), recently agreed to increase gas deliveries to Russia's Gazprom to
about 50 bcm. That would leave little gas for transport through the TAP
pipeline, making it an unviable proposition.
In this context, Turkey's offer to India has considerable potential - at least
the pipelines that might bring Central Asian oil to India already exist. The
1,768-kilometer Baku-Tbilisi-Ceyhan pipeline, which carries a million barrels
of oil a day from Azeri and Kazakh oil fields and the Caspian Sea - the world's
third-largest oil and gas reserve - to the Turkish Mediterranean port of
Ceyhan, has been in operation since 2006.
The Ashkelon-Eilat pipeline, also known as the Trans-Israel pipeline or
Tipline, has been functioning for several years. Built in 1968 to transport oil
from Iran - then under the Shah - to Israel, it was largely unused except to
carry transshipments of Egyptian oil. In other words, it carried oil from the
Red Sea to the Mediterranean. The direction of the flow was reversed a few
years ago when Russia began transporting oil through Israel's overland
pipeline. It was then picked up by tankers that traveled through the Gulf of
Aqaba and the Red Sea to Asian markets.
Using the Ashkelon-Eilat pipeline and the Gulf of Aqaba would let India's
supplies skip the Suez route, with several advantages.
Israeli ports, already supplied by super tankers, accommodate larger vessels
than those that can pass through the Suez Canal, and tariffs for the
Ashkelon-Eilat pipeline are lower than those charged by Egypt for shipping
through the Suez, itself a more congested route than the Gulf of Aqaba. Costs
could fall further if a proposed undersea pipeline connecting Ceyhan with
Israel goes ahead. Babacan said in Delhi that a feasibility report on the
project will be conducted soon.
Making Ankara's offer even more attractive to India is that the pipelines
involved do not run through Pakistan and are not at risk of being disrupted in
the event of a souring of India-Pakistan relations.
A supply deal with Turkey would extend India's links with both that country and
Israel. The Indian Oil Corporation has picked up a 12.5% stake in a pipeline
from Turkey's Black Sea port of Samsun to the Ceyhan pipeline, while India's
ties with Israel have already deepened dramatically over the past decade or so.
Securing oil for the pipeline deal is another matter. India's ambitions to win
stakes in the oilfields of Central Asian countries have so far outpaced its
achievements.
OMEL, an Indian joint venture of state-run ONGC-Videsh Ltd, the overseas arm of
Oil and Natural Gas Corp (ONGC) and Mittal Energy Ltd, has been looking for
stakes in Kazakhstan, Turkmenistan and Azerbaijan. These are at different
stages of progress and a finalization of any deals remains elusive.
In Kazakhstan, after losing to China in 2005 in its effort to buy a Canadian
company, PetroKazakhstan, that had stakes in Kazakh oil fields, India is now
eyeing a stake in the Satpayev oil block in the Caspian Sea. The Kazakh
government is said to be willing to sell 50% to OMEL, with Kazakh national
company KazMunaiGaz (KMG) holding the balance.
The Indian Mittal group last year acquired Russian oil firm Lukoil's 50% stake
in Caspian Investments Resources for $980 million. The acquisition was
initially proposed to be done by OMEL. Mittal has since said that it will
transfer the assets to OMEL but ONGC officials are skeptical that it will do
so.
In Azerbaijan, Tata Petrodyne Ltd, a wholly owned subsidiary of India's Tata
Sons, has linked up with state refiner Indian Oil Corporation and exploration
firm Oil India Ltd to make a bid for a 51% stake in Shivran Oil Operating
Company held by Caspian Energy Group (CEG). Shivran runs the Kyurovdag oil
field in Azerbaijan. Earlier, OMEL failed with a $300 million bid.
In Turkmenistan, OMEL has acquired a 30% stake in Block No 11 and 12 in the
Turkmen sector of the Caspian Sea. Other stakeholders in the block are the
Danish company Maersk Oil (36%) and the German company Wintershall 34%.
Sudha Ramachandran is an independent
journalist/researcher based in Bangalore.
Head
Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
Central, Hong Kong Thailand Bureau:
11/13 Petchkasem Road, Hua Hin, Prachuab Kirikhan, Thailand 77110
if one includes oil imports from other parts of the Middle East, the region
accounts for about 67% of India's oil imports.
