Potential of CARs to Supplement India's Energy Imports

Published Date: 06 Mar 2018

CHAPTER I

INTRODUCTION

Indian economy has grown at a rapid pace in the last five years and so has the demand for energy of a billion people. India imports 70% of its domestic crude oil requirements. The bulk of India's oil imports come from West Asia. The supply routes pass through the choke point of Strait of Hormuz. Any disruption in these will severely impact our national interest. Hence there is a need to diversify our supply sources in order to reduce our dependence on Gulf oil. Central Asian Region being rich in energy resources and located in our extended neighbourhood offer a tempting prospect.

The CARs situated on the eastern flank of the Caspian Sea have significant oil and natural gas reserves to be considered as a possible source of diversification for countries heavily dependent on energy imports from West Asia and elsewhere . While estimates of reserves vary widely across different sources, there is a consensus that the region has much potential.

Energy is the engine of economic growth. Availability of energy is the key to sustainable development, and has a direct impact in most aspects of our daily life. Inadequacy of energy supply affects very adversely vital and essential requirements of any society. Hence, there is an urgent need to enhance substantially the energy availability at a rapid pace so that aspirations of those who have remained at the fringes of development are able to benefit from access to this important input.

The Central Asian Republics comprising of Kazakhstan, Kyrgyzstan, Uzbekistan, Tajikistan and Turkmenistan encompass the vast geo- political space north of India. When part of the USSR, the region had stability and was thus of little interest to the international world order. Relations with India were determined with the framework of Indo-USSR relations as existed between New Delhi and Moscow. The post - USSR environment has changed all this, requiring New Delhi to re- establish relations with the five newly independent nation- states on the basis of new realities.

It is remarkable that while energy resources are getting increasingly scarce in the rest of the world, new oil fields are being discovered with great regularity in Central Asia. Some experts maintain that Central Asian resources may be difficult to reach because of it is the largest land mass in the world, which is land locked. This is both a challenge and an opportunity, because in today's technology driven world, it is not always necessary to transport material. This is the logic of investment abroad and organising production facilities there.

India has long-standing historical ties with Central Asia that encompasses the political, cultural, economic and religious dimensions. The impact of regional developments in Central Asia on India's history has been longstanding and substantial.

According to Mr. Yashwant Sinha, Former Minister of External Affairs, Government of India, "India's increasing engagement with Central Asia is aimed at promoting peace and mutual prosperity. Central Asia can once again be a bridge between the East and West, if its neighbourhood is peaceful and stable, and if the only interference from outside is one of beneficial economic inputs. The bridge can contribute to peace and prosperity and energy security in the wider world too."

METHODOLOGY

Statement of the Problem

To examine the potential of CARs to supplement India's Energy Imports & the possible routes through which Energy could flow to the South Asian Markets.

Hypothesis

Central Asian Republics as a region has been endowed with abundant energy resources. Their significance is due to their Geo-strategic loc as well as its rich energy deposits. The Geo- political developments in the region would perforce have an impact on India. Peace & stability in Central Asia is an imperative to harness the abundant energy resources. The Central Asian region represents a tempting prospect for diversification of supply sources to India, being located in its extended neighbourhood.

Justification of the Study

Indian economy has changed gears after the historic decision of liberalisation in 1991. Globalisation coupled with liberalisation ha s brought about a sea change in our lives .India has made rapid strides in industrialisation , IT industry , Telecom , Education, service industry and infrastructure development. Our energy consumption has far outpaced our domestic production. Most of our crude imports come from Gulf countries. The supply routes are prone to disruption and can severely impact our national interest. Although we have started acquiring energy stakes in Africa we need to diversify our energy sources.

While India is surrounded by energy rich neighbourhood-Pakistan, Bangladesh and Myanmar access to supply energy from these remain elusive. Political compulsions and indifferent relations are an impediment to energy imports through Bangladesh and Pakistan. In Myanmar ONGC has acquired exploration acreages. However any gas finds could make transportation a challenge unless Bangladesh allows transit through its territory.

In view of the above, energy imports from CARs in India's extended neighbourhood needs to be critically examined in order to optimise the full potential of Indo-CAR energy cooperation.

Scope

This study seeks to focus on the potential of INDO- CAR energy cooperation and identify the possible routes of energy flow from CAR to India.

Methods of Data Collection

The means of data collection has been number of books and papers by various prominent Indian and foreign authors, newspapers and many other wide ranging array of sources. Various internet sites have also been browsed for data collection .Books and websites consulted are listed in the bibliography.

Organisation of the Dissertation

It is proposed to study the subject in the following manner:-

• Chapter I: Introduction.
• Chapter II: Emergence of CAR as Nation States and their Geo -Strategic significance.
• Chapter III: India's Energy Sources.
• Chapter IV: Energy Potential of CAR.
• Chapter V: Interest of Global and Regional Players in Central Asia.
• Chapter VI: Challenges and Threats to Security of Central Asian Region.
• Chapter VII: India - Central Asia Energy Cooperation.
• Chapter VIII: India's Strategy.
• Chapter IX: Conclusion.

CHAPTER II

EMERGENCE OF CAR AS NATION STATES AND THEIR GEOSTRATEGIC SIGNIFICANCE

Emergence of CAR as Nation States

Disintegration of former USSR was a momentous occasion unprecedented in scale and unanticipated by any power of the world, which ended the cold war and saw the emergence of a unipolar world. The emergence of newly independent states in Central Asia has changed the balance of power in this region. Due to its geographical proximity to Russia, China, West Asia and South Asia, this region emerged as a distinct geopolitical entity.

Central Asian Republics at the dawn of independence were confronted with the numerous problems of state and nation building in a difficult milieu wherein various power centres competed for political power in a declining economy due to sudden severance of strong economic ties with Russia and consequent stoppages of Union subsidies. Rural unemployment and environmental degradation further contributed to aggravation of inter- ethnic relations. [1]

Central Asian leaders have proved wrong the Western apprehensions of balkanisation of the region. The Central Asian Republics have preserved intact their national independence and sovereignty and carved out a dignified place for themselves in the comity of nations. They have taken several positive diplomatic and political initiatives at the U.N. and other international fora. Their religious beliefs have not come in the way of developing mutually beneficial relations with Israel. The Central Asian Republics have cordial relations with China and India. They are members of Shanghai Cooperation Organisation (SCO) and the Commonwealth of Independent States Collective Security Treaty Organisation (CSTO) with the exception of Uzbekistan, which have contributed greatly to regional security environment. All of them except Turkmenistan are also members of Central Asian Cooperation Organisation (CACO). Their success in resolving the bloody internal conflict in Tajikistan by peacefully integrating the Islamic opposition into the mainstream politics of the republic is no mean feat. They have also evolved a strong joint response together with Russia and China to the threat of cross border terrorism and drugs and arms peddling."[2]

"Central Asia, a landlocked region in the heart of Asia, is unique because it was the counterpoint of British and Russian empires in 19th century and still has the same importance now, but among the other players. Two decades after independence, Central Asia is not a stable region and some political crisis is still unsolved here. This situation is created by some players which include trans-regional and regional players looking after their own interests. The interaction and countering of the players in the region have resulted in the present situation that created an undeveloped region, while potentially it is significant due its geopolitical, geo-strategic and economic point of view."[3]

Geostrategic Significance of Central Asian Republics

Central Asian Republics cover an area of 3,994,400 square kilometres. From the eastern shore of the Caspian sea , Central Asia extends eastwards to the Altai mountains along the Chinese border and from the southern border of the Russian Federation southwards upto the Tien Shan mountains and Afghanistan. (Map.1) Geographers have divided the region into four zones starting with the steppe zone of northern Kazakhstan and the Virgin lands (Tselana) ; semi deserts covering the rest of Kazakhstan; the desert zone upto the southern oases; and the southern mountains bordering all the republics which include the Kopet Dag, the Pamirs and the Tien Shan. [4]

From Kushka, the southernmost point of Central Asia, there is a narrow road to Afghanistan. Transit and transportation of goods and passengers between region and Afghanistan can be exchanged via this road. Marine routes of Caspian Sea facilitate the relations between Central Asian Republics with Caucasus, Iran and Russia and by Volga-Don waterway canal they can connect with free waters and many countries. In the north, vast Kazakh plain and lowlands and low-height mountains connect Central Asia via railroad and road network with Russia. This territory located between two great Asian power (China) and Asian-European (Russia) and regional players such as Iran, Pakistan, and India influenced and affected it and play their roles. To enter this land-locked territory one should pass the territory of neighbouring countries. From southwards one should pass Iran or Afghanistan. In the current situation, to cross through mountainous Afghanistan is not viable.[5]

One of the reasons for American presence in Afghanistan in east and Iraq in west of Iran is to surround Iran and Russia and to have access to Central Asia. Central Asia in north is bordered with Russia. Hence, to enter the heart of Russia is possible only via Central Asia and this is why Russia is against the presence of any foreign and trans-regional power in the region. Access to this territory from eastward is available by passing China's western part (XinJiang Uighur Region). China will never allow any trans-regional power to enter in its critical, geopolitically very important western region and from there to Central Asian territory at all. The only passage to enter Central Asia by foreign powers is Caucasus in the west of region which will be available via Caspian Sea. This is why Caucasus region has got a gateway situation and the Caspian Sea itself changed to the gate of Central Asia. Georgia in the west of Caucasus is located in the mouth of Caucasian natural corridor and is a gateway to enter Caucasus. During Cold War era, it was strongly defended by Soviet Union and Warsaw Pact powers. After the collapse of Soviet Union, Russia attempted hard to preserve it, but after one decade, the western powers by execution of Rose Revolution headed by Mikhail Saakashvili in2003 changed this position and allowed west to enter Caucasus. The formation of Shanghai Cooperation Organization in the territory of Central Asia and neighbouring countries is the outcome of this geo-strategic challenge between East and West. This seems to be counterweight against America's hegemonic movements.[6]

There are two movements in Central Asia and beyond. One is led by the West in west-east direction from Black Sea towards Central Asia through Caucasus, Caspian Sea and the other from North to South led by Russia in the vertical direction which cuts the west-east axis. The counter point of these two is Caspian Sea. This is why the Caspian Sea has vital importance for both sides.[7]

Russia within security and economic regional organizations has attempted to remove the American influence in the region and already has its effective means that America doesn't have. There are some initiatives in the region which plays basic roles on security and geo-strategic environment of Central Asia. In fact, the future of Central Asia depends on the outcome of the New Great Game between America and Russia. Economic, geopolitics and geo-strategy of the Central Asia are very complicated.[8]

CHAPTER III

INDIA'S ENERGY SOURCES

With 16 percent of the world's population and an emerging economy, India has become a significant consumer of energy resources. The majority of India energy needs are coal dependent . The shortage in supply of energy is met by energy imports from other countries. India is the world's eleventh-largest energy producer, with 2.4 percent of energy production, and the world's sixth-largest consumer, with 3.5 percent of global energy consumption. Domestic coal reserves account for 70 percent of India's energy needs. The remaining 30 percent is met by oil, with more than 65 percent of that oil being imported. Demand for energy is expected to double by 2025; by then, 90 percent of India's petroleum will be imported.[9]

Energy Sources

Coal. Coal accounts for more than half of India's total energy consumption followed by oil, which comprises 31% of total energy consumption. Natural gas and hydroelectric power accounts for 8 and 6 % of consumption respectively.[10] (Refer Figure.1) Nuclear power comprises a very small percentage of total energy consumption at present. Domestic supplies satisfy most of India's coal demand. According to the 2008 BP Statistical Energy Survey, India had 2007 coal consumption of 208 million tonnes oil equivalent. Unfortunately most of India's coal is characterised by high ash content, but the quality has other useful qualities such as low sulphur content (generally 0.5%), low iron content in ash, low refractory nature of ash, low chlorine content and low trace element concentration.[11] With 7 percent of the world's coal India has the fourth largest coal reserves. The Carbon Sequestration Leadership Forum (CSLF) estimates that at the current level of consumption and production, India's coal reserves will last for more than 200 years.[12]

Oil. According to Oil and Gas Journal (OGJ), India had 5.6 billion barrels of proven oil reserves as of January 2009, the second largest amount in the Asia- Pacific region after China. India produced roughly 880 thousand billion barrels per day (bbl/d) in 2008.In 2007 India consumed approximately 2.8million bbl/d making it the fifth largest consumer of oil in the world.[13] (Refer Figure .2) India's largest crude oil import partner is Saudi Arabia, followed by Iran. Nearly three-fourths of India's crude oil imports come from Middle East.[14] (Figure 3).

Natural Gas. According to Oil and Gas Journal (OGJ), India had 38 trillion cubic feet (Tcf) of proven natural Gas reserves as of Jan 2009. The EIA estimates that India produced 1.1 Tcf of natural gas in 2007, up only slightly from 2006 production levels. Although India's natural gas production has consistently increased, demand has outstripped supply making the country a net importer of natural gas since 2004.[15] (Refer Figure .4) India imports natural gas via Liquefied natural gas (LNG). LNG has not figured prominently in the energy mix, but is slowly increasing. Experts estimate that by 2012 India's LNG imports will be on par with Japan's current LNG imports of 60 million tonnes per annum. Although the Gas Authority of India Ltd. (GAIL) has already begun work on a National Gas Grid, there is considerable technological progress that has to be made in terms of extraction, transportation and delivery of LNG. It is estimated that once the grid is fully functional, LNG could offset a significant portion of India's energy demand.[16] Fuel-wise energy production iis given in Figure.5.

New Exploration Licensing Policy and New Discoveries. Exploration blocks were put on offer under the New Exploration-Licensing-Policy(NELP) in1999 in order to try and attract private investment. India has offered 110 oil and gas blocks and 16 coal-bed-methane blocks for exploration in an attempt to raise domestic energy production and reduce import dependence.[17] Under NELP, 71 oil and gas discoveries have been made in 21 exploration blocks.[18] Hydrocarbon accretion has been more than 600 million tonnes of oil equivalent.[19] Cairn Energy has made 25 discoveries in Rajasthan and currently has six fields under development. Initial attention is being concentrated on Mangala, Bhagyam and Aishwariya (MBA). Production from Mangala is scheduled to begin in third quarter 2009. Output from the MBA fields is estimated to peak at 175,000 barrels per day, which would represent at least 20% of India's total oil production[20].

Nuclear Power. India has a largely indigenous nuclear power programme and expects to have 20,000 megawatt electricity (MWe) nuclear capacity on line by 2020 and 63,000 MWe by 2032. It aims to supply 25% of electricity from nuclear power by 2050. Due to India's Nuclear isolation post 1974,for 34years India was largely excluded from trade in nuclear plant or materials, which has hampered its development of civil nuclear energy until the signing of Indo US Nuclear Deal in 2008. Due to these trade bans and lack of indigenous uranium, India has uniquely been developing a nuclear cycle to exploit its reserves of thorium. [21].

Nuclear PowerGeneration Capacity. India's present 2,720 MWe nuclear power plants include 14 reactors at 6 sites(Tarapur,Rawatbhatta, Kalapakkam,Narora,Kakrapar and Kaiga); ongoing 3,960 MWe nuclear power plants include 8 reactors at 4 sites (Tarapur,Kaiga, Rawatbhata and Kudankulam); and future nuclear plant include one Adwanced Heavy Water Reactor (AWHR) having a rating of 300MWe and a mix of 500MWe Fast Breeder Reactors,680 MWe Pressurised Heavy Water Reactors and 1000 MWe LWRs so as to reach a total of 20,000 MWe by 2020.[22]

Hydro Electricity. India has a large hydro-potential estimated at 84000 megawatt (MW) at 60% load factor. Less than one fourth of that has been tapped. Large hydro projects are also being stiffly opposed by environmentalist all over the country.[23]

India's Energy Policy. The India's energy policy states that the energy needs to be utilized not just from the conventional energy resources but also from other non-conventional sources like wind, water, geothermal, biomass etc. The India energy policy act emphasizes the need to develop newer energy sources that are more efficient and non-perishable. Since the energy sources levels are dropping with each passing day the energy of light (energy of a photon), energy of motion from the flowing water and geothermal energy and energy of an electron in chemical energy and other forms is the new energy units tapping solutions.[24]

CHAPTER IV

ENERGY POTENTIAL OF CAR

The CAR is abundantly endowed with energy resources (Refer Table.1) The hydrocarbon reserves are unevenly distributed among the five CARs (Refer Fig.6) and includes a number of petroleum basins that are different in their geological development, reservoir and hydrocarbon types and quantity of resources. Various sources have reported that the postulated oil resources of the region are comparable with those of Saudi Arabia and that the potential gas resources are equal to Iran's. Central Asia has been described as "one of the world's most strategic zones , between Russia , China and a troubled Middle East- a region coveted both by its larger neighbours and major world powers ."[25]

Energy Potential

Kazakhstan. It is the second largest producer of petroleum in CIS after Russia. The Kashagan deposit on Caspian seabed was discovered recently and is estimated to contain 13 billion barrels of oil. US and China have already signed deals to exploit the same. The most significant deposits of gas are at Karachaganak (black hole) in northwest Kazakhstan. It is estimated that production of gas will touch 36.1 billion cubic metres (bcm) by 2010. [27]

Kazakhstan's Gas Potential

Kazakhstan's Proven Reserves. BP estimates of 2008 place Kazakhstan's proven reserves at 1.90 trillion cubic metres (tcm) (1.1% of global share). There are two other gas producing nations in the former Soviet Union that surpass Kazakhstan in terms of proven gas reserves: Russia with its 44.65 tcm (25.5% of global share) and Turkmenistan with 2.67tcm (1.5% of global share).[28] While published figures vary widely, rising as high as 3 380 bcm in the 2007 reserves report from the BGR, it may be of some significance that Oil & Gas Journal's latest tabulation of world gas reserves (December 2008) shows a decrease in Kazakhstan from 2 832 bcm at 1 January 2008 to 2 407 bcm at 1 January 2009.[29]

Production Growth. Over the past decade, Kazakhstan's gas sector has achieved considerable production growth, from 4.34 bcm in 1994 to 29.63 bcm in 2007 (see Figure 7). Production in January-July 2008was 19.74 bcm, up 13% year-on-year, and full-year production could potentially exceed the energy ministry's estimate of 33.7 bcm . (Refer Figure 7)[30]

Kazakhstan's Oil Potential

Proven Hydrocarbon Reserves .Kazakhstan's combined onshore and offshore proven hydrocarbon reserves have been estimated between 9 and 40 billion barrels.[31]

Oil Production and Consumption. Kazakhstan produced approximately 1.45 million barrels per day (bbl/d) of oil in 2007 and consumed 250,000 bbl/d, resulting in petroleum net exports of around 1.2 million bbl/d. (Refer Figure.8)

Major Oil fields. Energy Information Authority expects oil production in Kazakhstan to average 1.54 and 1.71 million bbl/d in 2008 and 2009, respectively. Major producers include Karachaganak (250,000 bbl/d), Tengiz (280,000 bbl/d), CNPC-Aktobemunaigas (120,000 bbl/d), Uzenmunaigas (135,000 bbl/d), Mangistaumunaigas (115,000 bbl/d), and Kumkol (70,000 bbl/d). These producers account for 1million bbl/d (or around 70 percent) of liquids production in the country. Other production is centered in smaller fields.[32]

Nuclear Fuel Potential

Uranium. Kazakhstan has been an important source of uranium for more than fifty years. Over 2001-2008 production rose from 2000 to 8521 tonnes U per year, and further mine development is under way with a view to increase annual production upto18,000 tU/yr by 2010 and 30,000 tU by 2018. Production in 2009 is expected to be about 14,000 tU. Kazatompromis the national atomic company set up in 1997 and owned by the government. It controls all uranium exploration and mining as well as other nuclear-related activities, including imports and exports of nuclear materials. It announced in 2008 that it aims to supply 30% of the world uranium by 2015, and through joint ventures: 12% of uranium conversion market, 6% of enrichment, and 30% of the fuel fabrication market by then.[33]

Energy Potential of Uzbekistan

Uzbekistan. Uzbekistan is unique among the CARs as being the only republic that shares a border with the other four Kazakhstan to the north and west, Tajikstan and Kyrigzstan to the east and Turkmenistan to the south. . Uzbekistan currently produces 60 bcm of natural gas annually, an amount nearly equal to Turkmenistan's production. Uzbekistan's reserves are primarily concentrated in Qashqadaryo province and near Bukhara in the country's south-central region. During the 1970s Uzbekistan's largest natural gas deposit at Boyangora-Gadzhak was discovered in Surkhandaryia province north of the Afghan border.[34] Uzbekistan also has small coal reserves, located mainly near Angren, east of Tashkent. In 1990 the total coal yield was 6 million tons. Oil production has likewise been small; Uzbekistan has relied on Russia and Kazakstan for most of its supply.[35]According to Eshref F Trushin of the Institute of Macro Economics and Social Research (Uzbekistan), the Republic is fifth in the world in uranium production. It also produced 60 tonnes of Gold in 1996. However Capisani reports the 1996 production at between 80 to 110 tonnes. Gold deposits are found in the Fergana Valley at Altynkan and Kochbulak, in Uchkuduk(Zeravshan) and at Murantau. In February 1992, a protocol was signed with the Canadian firm , Newmont Gold for the development of Murantau deposit. Copper is extracted in the Almalyk region, as also iron minerals, zinc, lead , tungsten, molybdenum and uranium.[36]

Energy Potential of Turkmenistan

Turkmenistan's Oil Potential. Turkmenistan produces around 200,000 barrels per day of crude and is the biggest gas producer in the former Soviet Union after Russia with exports of around 50 billion cubic metres of gas a year, mainly to Russia and Ukraine. The country says its gas reserves are currently heavily underestimated and it can easily double and even triple production to supply gas to Europe and Asia.[37] According to U.S Energy Information Administration total oil production in the country in 2008 was 189.40 barrels per day. The crude oil production reached 170.26 barrels per day whereas the consumption of petroleum products and direct consumption of crude oil was 103 thousand barrels per day. The refining capacity is 237 million barrels per day and the Turkmenistan ranks world no 57 in its refining capacity. The proven reserves are 600 million barrels (Refer Table 2).

Turkmenistan's Gas Reserves. The production of natural gas in 2007 was 2,432 billion Cubic Feet as compared to domestic consumption of 688 Billion Cubic Feet. The country exported 1,745 Billion Cubic Feet Natural Gas in 2007. The Net proven reserves amount to huge 100,000 Billion Cubic Feet.[38]

Energy Potential of Kyrgyzstan

Kyrgyzstan. Kyrgyzstan currently does not have enough energy to provide reliable light and heat to its residents and factories. Although the country relies heavily on domestic sources of hydropower for much of its electricity, recent droughts and mismanagement drastically cut these supplies. Kyrgyzstan is increasingly seeking to identify and bring on line new sources of energy. The country currently imports most of the natural gas, petroleum products and coal that it consumes. At the same time, beyond hydro power, Kyrgyzstan has essentially no alternative energy production. Kyrgyzstan faces a variety of challenges in developing its energy sector. In the foreign policy sphere, Kyrgyzstan confronts problems that are a consequence of the extremely complex and volatile political landscape in Central Asia. Domestically, issues of economic crisis, organizational dysfunction, poorly written laws, and corruption hinder reform.[39]

Energy Potential of Tajikistan

Tajikistan's Proven Oil Reserves. Tajikistan has proven reserves of 12 million barrels of oil (Refer Table.2), most of which are located in the northern part of the country in the Leninobod Soghd Region. The national oil company is Tajikneftegaz, which handles oil exploration, drilling, and production. In 2001, Tajik oil production was only 350 barrels per day (b/d). There has been a long period of production decline since Tajikistan produced 1,311 b/d in 1992. This decrease has been attributed to the 1992-1997 civil war, economic troubles, and lack of investment in the oil infrastructure. Tajikistan consumes 29,000 b/d of oil products, almost all of which are imported. The main source is Uzbekistan, which provides 70% of Tajikistan's oil product imports. [40]

Tajikistan Gas Reserves. Tajikistan has 200 billion cubic feet (Bcf) of natural gas reserves, comprised of several fields. In 2000, Tajikistan began operations in the Khoja Sartez field in the southern Khatlon Region, and has also increased its activity in the Qizil Tumshuq deposit in the Kolkhozobod District of the southern Khatlon Region. Tajikistan has also tried to increase its own gas production, in 2000, by exploratory drilling in the Khatlon region. Apparently, some of the drilling has been successful enough to interest China in future drilling activities. The total natural gas production for Tajikistan in 2000 was 1.4 Bcf. With its small domestic production, Tajikistan must rely on imports for 95% of the natural gas it consumes. [41]

Viability of CARs to Serve as an Alternative to West Asia

If the CARs are to provide a viable source of supply diversification for energy importers, they must have an environment that sets them apart from the Gulf countries that currently supply bulk of the oil. The oil importers' sense of vulnerability stems from the fear of emergence of militant Islam in West Asia.[42]

Factors Affecting Viability. In this context, the CARs ability to provide a viable alternate to West Asia is subject to a variety of factors as under:-[43]

1. Proven Reserves. The known and proven reserves of West Asian oil account for 66%of global deposits whereas the proven and possible reserves of the entire Former Soviet Union (FSU) region are no more than 5.5%, of which Central Asia 's share is even less. When it comes of natural gas the FSU region of which Russia constitutes the chunk , accounts for 39%of global reserves but Central Asian share is only around 6%. Only about 3%of the global energy trade is accounted for by the Caspian region and the share of CARs is even less. Thus the CARs can only supplement, not supplant West Asian suppliers, whether it is oil or gas.
2. Drilling Costs. Drilling oil in CARs costs three to six times as much as it does in West Asia. While it can be as low as $1per barrel in Iraq or Saudi Arabia, it would cost up to $5 to produce a barrel of oil from the Northern Caspian. This implies that it is economically attractive to produce oil in CARs only when global oil prices reign above a certain threshold level and being a marginal producer the Caspian region will have to follow the prices set by OPEC and that they will not be in a position to influence prices to any significant extent. While gas production in the region is competitive with the rest of the world, the need to ferry it by long pipelines through difficult terrain offsets the cost advantages.
3. Connectivity. Unlike West Asia, which enjoys excellent connectivity with energy consumers all over the globe through well established sea routes and tanker infrastructure, the CARS are constrained by geography that limits not only existing ,but also future transit routes to global market.
4. Quality. The quality of crude from some wells in Caspian region demands extensive processing before it can be consumed. Not all refineries have the processing capacity which constrains the range of consumers who can buy CARs oil even when it is available.
5. Insurgency. Incipient insurgency in some parts of CARs renders them less attractive as an alternate source of supply. Uneven development of the different countries of the region and the ethnic diversities , instability in Chechnya and Afghanistan, US imposed economic sanctions in Iran are factors that impede safe transportation routes for the regions energy.
6. Authoritarian Regimes. The CARs tentative and at times whimsical approach does little to inspire confidence among potential investors about stability of the regulatory regimes.

Central Asian Pipelines Routes

The existing Central Asian pipelines are only capable of transporting limited oil and gas to market. Central Asian republics are anxious to sell more oil. Americans, Europeans, Chinese and Russians are keen to buy more, especially from non OPEC countries. Investors from Saudi Arabia and the United Arab Emirates are also anxious to begin transporting more oil out of Central Asia. Only secure pipelines are lacking. The most promising routes have been identified: (Refer Map.2)[44]

Northern Route. Russia favours a northern route. Kazakhstan would expand its existing pipelines to link them with the Russian network of pipelines. Azerbaijan would build a pipeline from Baku to Novorossisk. Critics worry about the pipeline's path through Chechnya and charge that if the project was successful, Russia would enjoy too great a control over Central Asian oil. [45]

Western Route. Azerbaijan, Turkey, Georgia, and the United States favour a western route. According to one variation, oil and gas would flow to the Georgian port of Supsa. From there, it would be shipped through the Black Sea and the Bosporus to Europe. Turkey has expressed worries about tanker traffic in the Bosporus, and worries about the damage an accident there might do to Istanbul. According to the Turkish variation on the western route, a pipeline should run from Baku to the port of Ceyhan on the Turkish Mediterranean coast. At over US$3 billion, the cost of constructing such a pipeline may turn out to be too expensive. [46]

Southern Route. The most direct, and cheapest, route is to south, across Iran to the Persian Gulf. Iran already has an extensive pipeline system, and the Gulf is a good exit to Asian markets. U.S. sanctions on Iran block this option. [47]

Eastern Route. Despite the exorbitant construction cost, China has constructed an oil pipeline across Kazakhstan to China.[48]

CHAPTER V

INTEREST OF GLOBAL AND REGIONAL PLAYERS IN CENTRAL ASIA

Developments in Central Asia have always had an effect in shaping India's history .The Soviet system provided geo-political stability to this region in India's north for over seventy years. Post disintegration of U.S.S.R led to the birth of five new nations in Central Asia leading to a geo political vacuum in the region. Global and regional players who kept away from this region during the Soviet regime saw new opportunities due to its geo-political, geo-strategic and economic significance.

EU and USA

USA. Access to Central Asia's energy resources is at the top of list of concerns followed by security concerns centred on the protection of NATO engagement in Afghanistan. US interests in CARs are political, economic and military, primarily focussed on energy security in terms of the commercial exploitation of hydrocarbons in the Caspian Sea. Grahams E Fuller, Senior Political Scientist at the RAND Corporation asserts that US interests are limited and has identified six basic areas. The US would seek to prevent the re-emergence of Russian radical or ideological expansionism, further break up of nations, nuclear proliferation, development of radical anti-western forms of political Islam and would support the growth human rights, democracy and free market economies , enabling the US to play a role in regional development especially of its raw material resources. [49]

The US philosophy on the extraction of hydrocarbons in the Caspian Sea seems to be focused on ensuring its availability on its own terms or of denial to others. US interests in Caspian oil originate from increasing domestic demand and need to diversify supply sources. US strategy is to reduce Western dependency on the Persian gulf, contain Iran's Islamic fundamentalism, restrain Russia's residual expansionist tendencies and nurture pro- west democracies with market -oriented economies in the region. The US quest for energy security compels it to develop client states in Central Asia. Overtures to the Pashtun Sunni Taliban leadership of Afghanistan was meant to further US interests in Turkmenistan, which borders Caspian sea. Towards this objective, US interests also lie in a presence in Uzbekistan and Tajikistan, which border Afghanistan. China also seeks to route pipelines through this area in which the US sees a challenge to its own Caspian pipeline project to Turkey via Azerbaijan.[50]

EU. Concern about drug trade and migration are other interests besides exploiting rich energy and mineral wealth of Central Asia. Beyond this the support for democratic norms and liberal market principles is grounded in the belief that they will bring long term economic benefits and stability to the region. These elements are reflected in the new EU Central Asia strategy which stresses along with stability in the region, propagation of "European values" and access to Central Asian energy resources.[51]

Russia and China

Russia. Russia's national interest, in the region are as follows:[52]

1. Ensuring stability in Central Asia.
2. Unrestricted utilisation of Central Asia's transit potential.
3. Unrestricted access to central asian markets necessary to the sell its own goods, as well as to accommodate stable flows of imports of a wide range of agricultural products from Central Asia. Russia also wants to be involved in decisions on the use of hydro-energy and raw materials in Central Asia.
4. Exploitation of the region's geo-strategic potential by seeking solutions to practical problems there and, at the same time, to issues concerning its status as an international and regional power.
5. Recognition by the states of the region and external powers of Russia's right to play a role in Central Asia.

In formulating Russia's foreign-policy strategy in Central Asia, the serious changes in the region's geopolitical circumstances emanating from the War on Terror in Afghanistan cannot be ignored. The most important of these is the sharp increase in the US military and political presence in Central Asia.[53]

China. The varied Chinese interests and goals have involved :-[54]

1. Borders and Security. China has sought to demarcate, demilitarize and stabilize borders with Russia, Kazakhstan, Kyrgyzstan, and Tajikistan. Border stability has been central to Chinese development .It sees common ground with regional governments in working against terrorist and criminal elements.
2. Economic. China's main economic interest in the region is energy— China has sought growing amounts of oil and gas abroad and Central Asia—especially Kazakhstan.
3. Regional Position. China's engagement with Central Asia, and Specifically the Shanghai Cooperation Organization, is part of China's overall effort to foster a stable and productive international environment around China's periphery while fostering a more widely accepted Chinese leadership role. Beijing's relations with Central Asia also aim to legitimate Chinese Positions on major international issues, strengthen relations with Russia, and serve as a counter to U.S. power and influence. China's Diplomacy in Central Asia aims to prevent the region from becoming a distraction from China's internal development and more important foreign policy goals.

Energy Security. Energy security is driving its increasing trade with Central Asia. Trade between Xinjiang and the Central Asian republics hasgrown rapidly, reaching US $950 million in 1998 and number of Chinese-Kazakh joint ventures continues to rise.[55]

Kazakhstan-China Oil and Gas Pipelines. The 613-mile-long, 813 mm, and 200,000-bbl/d capacity pipeline from Atasu, in northwestern Kazakhstan, to Alashankou in China's northwestern Xinjiang region is exporting Caspian oil to serve China's growing energy needs. (Refer Map.3)[56] China -Kazakhstan natural gas pipeline which is part of China -Central Asia pipeline was inaugurated by Chinese president Hu Jintao and his Kazakh counterpart on 12 Dec 2009.[57]

Shanghai Cooperation Organisation. The most efficient regional organization today in Central Asia is the Shanghai Cooperation Organization (SCO) which was founded in Shanghai in 1995 as the Shanghai Five by China, Russia, Kazakhstan, Tajikistan and Kyrgyzstan. The Chinese President Hu Jintao has declared that the Central Asian region is central to Chinese development. This could not only be seen in the increased number of military exercises and amount of political cooperation between China and the Central Asian states but also in the rapidly increasing trade and investments from China.[58]

Iran's Strategic Interests in Central Asia

Iran has long considered itself to be the first neighbour of Central Asia. It's interests in the region are:-[59]

1. Developing political relations with Central Asian Republics, to include expanded trade and investment.
2. Protect access to energy supplies, including the development of energy-based industries that complement rather than compete with domestic industry.
3. Building relationship to extricate itself from international isolation, in a unipolar world.

Economic Relations. Iran aims to accomplish the following:-[60]

1. Expand its infrastructure, especially its railway network;
2. Gain political and economic influence in CA through the Economic Cooperation Organization (ECO);
3. Acquire shares in a number of Caspian oil and gas development and Export venture. Railroads

Iran as a Gateway to Central Asia. Iran linked Russia and Central Asia to Persian Gulf with the following transportation network:-.

1. Bafgh-Bandar Abbas (700 Km) in1995.
2. Mashhad-Sarakhs-Tejen (300 Km) in 1996.
3. Bafgh-Mashhad (650 Km) in 2005
4. The first train from Almaty moved to Istanbul in 2002.
5. With the completion of Delaram -Zaranj road its Bandar Abbas port is now connected to Afghanistan.

Sarakhs-Bandar Abbas route which connects Central Asia to international waterways, reduces the transit time of 6 days to 4 days and distance of 2431 km to 1617 km. Reduction in distance will cut transportation costs and add to tonnage increase and foreign exchange income.[61]

Pakistan's Interest in Central Asia

Pakistan. Pakistan's objectives in Central Asia are determined by its political and security imperatives; its economic and commercial gains; countering India's influence and its desire to be an energy transit-corridor in South Asia and the Asia-Pacific region. Pakistan has always desired to expand its influence in Afghanistan and beyond. Central Asia is seen as an area of natural expansion for Pakistan. Geo strategic and economic factors have shaped Pakistan's policy towards Central Asia, but fear of India's influence in this region remains a predominant factor in the formulation of its strategies.[62] Pakistan's desire to be the leader of the Islamic bloc is premised on the consideration that this would enhance Pakistan's influence in the Islamic bloc, which, in turn, can be used against India. Pakistan has always tried to project itself as the only country that can stand up to India in the region. This has been the cornerstone of Islamabad's strategic thinking. [63]

Quest for "Strategic Depth". The emergence of Central Asia was viewed as an opportunity for Pakistan to spread its sphere of influence beyond Afghanistan thus providing "strategic depth" against India.[64]

Islam as a Tool. Religion is seen as an important factor in developing relations between Pakistan and the Central Asian states. Pak thinks that since the majority of the Muslim people living in most of the CARs were Sunnis, they would naturally gravitate towards Pakistan.[65]

India's Aspirations and Interests in Central Asia

Central Asia holds strategic, military, and economic interests for India. The Central Asian states of Uzbekistan, Kazakhstan, and Turkmenistan are energy-rich and India is energy deficient. India's rapidly growing economy continually requires more and more natural resources. Kazakhstan, Turkmenistan and Uzbekistan can provide oil and gas and hydroelectric potential of Kyrgyzstan and Tajikistan can be harnessed. [66]

Geo Strategic Location of Central Asia. The geostrategic location of Central Asian states makes it imperative for India to have concrete presence in the region. India cannot lag behind while others devour Central Asia's resources and bolster strategic bases.[67]

Regional Stability and Islamic Fundamentalism. The region is vital in India's own fight against terrorism, as it holds several Islamic terrorist groups that may find their way to India's homeland or local interest holdings, such as future pipelines or bases.[68]

India's Presence in the Region. Post 9/11 part of New Delhi's assistance to the Northern Alliance included a military hospital in Ayni, Tajikistan, which was later converted into India's first military base outside of its national borders in 2003. The Indian Air Force (IAF) holds a fleet of MiG-29 fighter planes, and a small fleet of helicopters, at the base which is located near the Tajik-Afghan border. The Ayni base is reportedly close to main staging areas for militant Islamic jihadist groups. The base provides India a strategic foothold in the region from which they can expand their influence.[69]

In April 2008, India and Kazakhstan which is among the top ten countries in terms of hydrocarbon energy reserves as also mineral resources including uranium, agreed to enhance bilateral trade and economic cooperation particularly in the hydrocarbon sector. OVL already has a 15 percent holding in Kazakhstan's Alibekmola oil fields and a 10 percent holding in the country's Kurmangazi fields.[70]

Despite its good relations with the CARs, India will have to manage its relations under the complexity of the situation, where at one end it will have to engage Pakistan and at other level increase its involvement in Afghanistan and Central Asia without getting into direct confrontation with any power, regional or extra regional, in the region. Today, confrontation is not the buzzword; rather engagement and cooperation are the drivers for foreign policymakers. Would India and Pakistan see themselves cooperating in the Central Asian region in this changing security paradigm? So far, India-Pakistan relations have evolved in an atmosphere where misperceptions, suspicions and misunderstandings have been the dominant factors. However, today some mechanism can be formulated, where geo-economics finds an appropriate place for managing these relations. Such a mechanism would provide a win-win situation for India, Pakistan, and Central Asia.[71]

CHAPTER VI

CHALLENGES AND THREATS TO SECURITY OF CENTRAL ASIAN REGION

Central Asian Republics were suddenly thrust on the scene due to the disintegration of U.S.S.R. The tyranny of geography as well as the Great game being re-enacted by extra regional and regional players to get a major chunk of the natural resource pie coupled with the sudden opening of closed and impoverished economies have thrown a gamut of varied challenges to the security of Central Asia.

Destabilizing Effects of Unresolved Disputes Over Water. A real cause of concern in Central Asia is increasing irregularities in water supply due to change in weather patterns caused by global warming .In 2008 a serious drought combined with an extremely cold winter resulted in a compound water-energy-food crisis in Tajikistan and Kyrgyzstan. The situation has not improved in 2009. [72]

Ecological Challenges. The shrinking of the Aral Sea has caused forced migration of hundreds of thousands of people and the massive degradation of arable land.[73]

The Rise of Militant Islam. Islamic revival in the CARs has emerged in the form of the Partiya Islamskovo Vozrozhhenia (Islamic Rebirth Party or IRP), which has branches in all the Republics and has the stated objective of creating Islamic republics in Central Asia. Although it has focused on economic hardships and has not yet adopted a militant approach .Poverty and unemployment and ensuing frustration could spark militant fundamentalism.[74]

Authoritarianism. The US led war on terror in Afghanistan has encouraged authoritarian soviet style power structures in these countries. Political opposition is virtually banned in some countries while opposition leaders are subject to intimidation in others.[75]

Regional Destabilization by the Georgia War. The Georgian War was the biggest interventionist act by Russia since its occupation of Afghanistan three decades ago which took the world by surprise. The "Putin doctrine" has sought the restoration of Russian domination over the former Soviet Union, leaving these republics with a stark choice of accepting either a status of Russian dominion or pushing ahead with independent foreign policies risking Georgia like fate.[76]

Ethnic makeup and unresolved Border Conflicts. Central Asia has more than hundred different ethnicities and even more language groups. Arbitrary border demarcation during the soviet era has complicated the situation especially in the densely populated central Asian Fergana valley belonging to Uzbekistan, Kyrgystan and Tajikistan.[77]

Impact of Drug trafficking. Drug trafficking has seriously destabilized the transit countries and has strengthening the state-mafia nexus and having a serious social impact due to drug abuse. Afghan opium production has seen a 600 fold increase in AIDS cases in Central Asia between 1994 to 2001 due to intravenous drug abuse.[78]

NATO's Eastward Expansion. US interests in taking the NATO to the Russian doorsteps has created further animosity between the two large powers and has further destabilized the region. [79]

Recommendation. India should play a more active role in Central Asia as it has strategic interest in the stability of the region.

CHAPTER VII

INDIA-CENTRAL ASIA ENERGY COOPERATION

India is seeking oil assets in countries such as Kazakhstan, Sudan, Vietnam, Iran and Ecuador through Oil and Natural Gas Corporation Videsh Ltd. (OVL). Presently, OVL has stakes in 24 oil and gas projects spread across 14 countries including Vietnam, Myanmar, and Sudan. It is believed that Central Asian Republics can reduce India's dependence on the West Asian oil supplies. However, many experts believe that Kazakhstan, Turkmenistan and Uzbekistan are not likely to ease up their energy-export advantage due to their geo-political disadvantage[80]

Presidential Visit to Tajikistan and Russia. New Delhi has been active in joint oil exploration and having its stakes in energy producing region. The recent visit by the Mrs Pratibha Patil to Russia and Tajikistan from2nd to the 8th September, 2009 was not only meant to enhance goodwill, trust and mutual confidence but also to explore the opportunities related to economic cooperation and energy security. The President was accompanied by the Minister of Petroleum and Natural Gas Murli Deora and other high-level delegation.[81]

TAPI. On 25 April 2008, Turkmenistan, Afghanistan, Pakistan and India (TAPI) signed a Gas Pipeline Framework Agreement, committing to the construction of an ambitious 1,680km-long pipeline to transport 30 billion cubic meters of natural gas every year by 2015, at a cost of US$7.6 billion. TAPI is vital to sustain India's growth momentum while the fragile and cash-strapped Afghan government hopes to earn US$160 million in annual transit fees and inject some life into its economy. Meanwhile, the US appeared to be inching closer to achieving its implicit goals of keeping Iran isolated by pushing the rival Iran-Pakistan-India (IPI) pipeline onto the backburner and encouraging a diversification of Central Asia's energy markets and thus also undermining the Russian hegemony over the region's energy sources. [82] During the visit of External Affairs Minister to Turkmenistan the proposed Turkmenistan-Afghanistan-Pakistan-India (TAPI) project was discussed during meetings Mr. S M Krishna had with Turkmenistan President Gurbanguly Berdimuhamedow, as part of deliberations to enhance cooperation between India and Turkmenistan in hydrocarbon sector. The pipeline would carry Turkmen gas through Afghanistan and Pakistan to India, with all three countries drawing supplies proportionate to their needs.[83] This pipeline would be passing through taliban dominated territories in Afghanistan and Pakistan and would be a lucrative target.[84](Refer Map4)

Obstacles to IPI. Washington opposes India, Pakistan and Iran's 2,700-kilometer IPI pipeline that is likely to transfer Iranian natural gas from its South Pars field to India via Pakistan. However, India hasn't agreed to join the project. At the same time New Delhi would like Washington's involvement in the project for the smooth supply of gas to India by exerting pressure on Pakistan if need be. Iran is now working towards extending the project to China instead of India due to delays in finalising modalities and the fluctuating relations and mutual suspicion between India and Pakistan.[85]

Exploiting Hdyro- Electricity Potential. Export of electricity to India has also been under discussion. Tajikistan and Kyrgyzstan have developed only a relatively low percentage of their potential hydro- electricity generating capacity. Their period of surplus production is in the summer, typically a time of unmet demand in northern India. Moving electricity to India would require a substantial investment in new dams and generating plants, as well as new transmission lines going through Afghanistan and Pakistan, with the security problems with our hostile neighbours[86].

Indo-Kazakhstan Nuclear Cooperation Pact. During the visit of President Nursultan Nazabayev from 24 to 27 Jan 2009 Indo Kazakh Civil Nuclear agreement was signed .[87] Under the proposed agreement 120 tonnes of Uranium will be imported from Kazakhstan by Nuclear Power Corporation of India.[88]

Indo-Kazakh Bilateral Trade. Bilateral trade between the two countries ha s increased from $78.91Million US in 2003 to $ 210.25 million US in 2006.[89] Kazakhstan is India's largest trading partner in Central Asia with both countries looking to develop bilateral trade beyond mechanical engineering, pharmaceuticals and defence sectors.[90]

Indo-Kazakh Agreement on Satpayev Oil Block. Both nations have agreed to sign an agreement on exploration and production for the Satpayev oil block in the Caspian sea at an early date before the new subsoil use law is adopted in Kazakhstan.[91]

ONGC Videsh Limited (OVL). The international arm of ONGC, has been actively acquiring energy contracts and exploration and drilling rights abroad. In 1997, the Oil and Natural Gas Commision Videsh Ltd received a five year license for oil exploration covering an area of 9085 sq km in the Palvodar region of northern Kazakhstan.[92] In Central Asia, ONGC has made significant inroads into Iran, Kazakhstan, Turkmenistan, and most recently in Tajikistan. It has formally bid on Tengiz and Kashaugan oil fields and the Kurmangazy and Darkhan exploration blocks in Kazakhstan.[93] . OVL already has a 15 percent holding in Kazakhstan's Alibekmola oil fields and a 10 percent holding in the country's Kurmangazi fields.

Likely Transportation Routes to India

The shortest and economically attractive route for Central Asian energy to reach India is through Iran. While oil can be shipped to India from the Iranian port of Bander Abbas in the Persian Gulf, gas will have to transit through Afghanistan and Pakistan to reach India.[94]

Importing Kazakh Oil via Turkmenistan to Port Of Bander Abbas. India could explore the feasibility of importing Kazakh oil via Turkmenistan to the Iranian port of Bander Abbas from where it can be shipped to Jamnagar refinery. India's ONGC already has stake in Farsi exploration block in Iran. This arrangement would benefit all the players involved.[95]

Swap Arrangements with Iran. There are arrangements to supply Central Asian oil to Iran's Northern refineries while Iran supplies the same quantities at its gulf ports through swap arrangements. India already utilizes this arrangement to a limited extent. But both the options of either transportation through Iran or the swap arrangements do not diversify transportation routes away from Straits of Hormuz.[96]

Kazakhstan- Sino -Indian Cooperation. India could seriously explore the prospects of laying a new pipeline from Central Asia via Xinjiang and Tibet into Ladakh or Himachal Pradesh.[97] Feasibility studies need to be undertaken to explore this possibility. India and Kazakhstan could explore different variants of transport connectivity which are realistically attainable. One such alignment could be the road that directly follows an alignment in a North-South direction along the existing railway lines and roads in Kazakhstan, Western China and India include: Almaty, Korgas, Yinning, Kuqa, Aksu, Kashgar, Yarkand, Yecheng (along the Xinjiang-Tibet Highway No. 219) Mazar, Shahidulla, Sumxi, Derub, Resum, Shiquanhe, Gar, Kailash, Burang, Lepu-lekh. The total distance is less than 3,000 kilometres as compared to the over 5,000 kilometre long route via Iran. Importantly, the route under consideration (Kazakhstan, China, India) already exists and it is only a matter of cross-border connectivity. A linkage through Ladakh is the shortest, but China's sensitivity to any engagement in Jammu & Kashmir may rule out that option. Alternatively, Lipu-Lekh Pass in Uttarakhand, which has been opened for border trade with China since 1992, could be an entry point.[98]

International Electricity Transmission. India could set up Combined Cycle Gas Turbine (CCGT) power plants in Uzbekistan, Turkmenistan and Kazakhstan and India's Power Grid Corporation could lay the high voltage lines that can transmit electricity to Himachal Pradesh via China which would be far cheaper than construction of pipelines to ferry gas.[99]

Hydro Power Generation. Hydel potential of Kyrgyzstan is 163bnkWh per year of which only a fraction is being utilized. India could consider harnessing this vast untapped potential.[100] Similarly Tajikistan has 30000MW capacity generation capability. Indian companies could establish plants there and be mutually benefitted.[101]

Setting up Refineries in Central Asia. India can also consider setting up refineries in Central Asia to process crude as well as gas. India's National Oil Companies have the experience in setting up and operating refineries .[102] This could be a commercially viable venture with the recent surge in crude prices.

Energy flow from CARs to India is hampered due to geography, economics political and security considerations. Despite all these constraints some imaginative and pragmatic political solutions can be turned into mutually beneficial opportunities to all the players in the region.

CHAPTERVIII

INDIA'S STRATEGY

India has a strategic stake in ensuring that Central Asian region remains geo-politically and economically stable. India should enter into relationship with CARs that promote regional stability, bilateral trade, effective management of religious fundamentalism, terrorism, elimination of drug mafia and freedom from big power rivalry.

In this context, some general recommendations about structuring India's relations with Central Asian Countries are given in succeeding paragraphs.

Attitudinal Change. India has to make an attitudinal change towards Central Asia. It must perceive the Central Asian countries as an integral part of its neighborhood.[103]

India's policies towards Central Asia should be predicated on the perception that multi faceted relations with Central Asia are essential for the security and stability of the integrated strategic region extending from the northern limits of Central Asian Republics to the southern extremities of South Asian region.[104]

India must actively pursue the establishment of economic, scientific, technological and defence supplies cooperation with these countries. These efforts must be backed by substantive programmes and projects of educational, cultural, scientific and technological cooperation.[105]

India must actively associate with new economic cooperation and regional security arrangements being formed in the Central Asian Region including anti-terrorism and combating narcotics trafficking.[106]

India can play an active part in helping CARs in development of their transportation infrastructure.[107] India should establish direct civil aviation links with all Central Asian countries.

India must examine the benefits that accrue from a focus on geo-political gain vis-à-vis an approach restricted to viewing all relations with CARs through an economic lens.[108]

India Kazakhstan and China, should consider using the existing facilitation agreements for transit transport at the multilateral, bilateral, trilateral, and sub-regional levels. The proposal could also be perused within the Shanghai Organization Cooperation (SCO) framework, as well as under the Asia Cooperation Dialogue (ACD) mechanism. Several intergovernmental agreements on the Asian Highway Network already exist under the UN-ESCAP programme. [109]

India, China and the Central Asian republics should develop a sub-regional framework agreement designed to facilitate cross-border transit trade along the measures adopted by ASEAN, Greater Mekong Subregion, TRACECA, ECO, BIMSTEC, and others.[110]

India and Kazakhstan already have a Joint Working Group on Transport which should be activated to include the above proposal so that exploration process and implementation could be initiated early. It is pertinent that a trilateral (India, Kazakhstan, China) joint study group is set up urgently for undertaking a feasibility study.[111]

Conducting a Feasibility Study on Central Asia -India Economic Cooperation Agreement and increasing Inter-governmental Exchange of Technical Experts Relating to Science and Technology Projects aimed at Economic Development.[112]

Indo-CARs relationship has tremendous potential. Our commonality of interests include regional stability, economic prosperity and a secular outlook. India must take the initiative in realising this potential. India must engage with Central Asia in a more fruitful and mutually beneficial manner so as to derive maximum benefits.

CHAPTER IX

CONCLUSION

With high rates of economic growth and over 15 percent of the world's population, India has become a significant consumer of energy resources. Our energy consumption has far outpaced our domestic production. . India imports 70% of its domestic crude oil requirements. The bulk of India's oil imports come from West Asia. The CARs have significant oil and natural gas reserves to be considered as a possible source of diversification.

The Central Asian Republics comprising of Kazakhstan, Kyrgyzstan, Uzbekistan, Tajikistan and Turkmenistan encompass the vast geo- political space north of India. India has long-standing historical ties with Central Asia . Regional developments in Central Asia have far reaching affects on India. India has many reasons to desire greater influence in Central Asia as it holds strategic, military, and economic interests for the nation. The Central Asian states of Uzbekistan, Kazakhstan, and Turkmenistan are energy-rich. India's thriving economy, continually requires more and more natural resources. Turkmenistan, Uzbekistan, and Kazakhstan can provide gas and oil and Kyrgyzstan and Tajikistan hold great hydroelectric potential for New Delhi.

The geostrategic location of Central Asian states makes it vital for India to have a solid presence in the region. India cannot afford to be left out in the cold while China, Russia, Pakistan, and even the EU devour Central Asia's resources and cement strategic bases.

The CARs ability to provide a viable alternate to West A