How India lost a gas pipeline to China

A tripartite ministerial meeting between India, Myanmar and Bangladesh held in Yangon in January 2005 agreed to import natural gas through a pipeline from Myanmar via Bangladesh. Gas was to be brought from the newly explored fields in adjoining Rakhine state of Myanmar. It mentioned that the ‘government of Myanmar agrees to export natural gas to India by a pipeline through the territory of Bangladesh and India to be operated by an international consortium… The route of the pipeline may be determined by mutual agreement of the three governments with a view to ensure adequate access, maximum security and optimal economic utilisation’.

Bangladesh and India had the ‘right to access the pipeline as and when required, including injecting and siphoning off their own natural gas’. The three governments agreed to establish a Techno-Commercial Working Committee which shall identify areas of cooperation, collaboration and investment to develop natural gas resources, infrastructure and marketing in the region; and, deliberate and advise the three governments on policy issues such as pipeline routing, access-related issues as well as technical and commercial matters.

On primarily three grounds, this trilateral project was considered to be a major policy shift particularly in the Indian approach to issues of cooperation in the region. Firstly, it was a clear move away from the traditional bilateral approach to a new tripartite approach in a project located in a contiguous sub-region. Secondly, this was a deal which was negotiated and managed by the concerned line ministries and ministers-in-charge. And thirdly, this brought together three countries on a specific project from two cross-regional groupings of the South Asian Association for Regional Cooperation (SAARC) and the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) thereby making it an inter-(sub)regional initiative.

The deal, however, could not be implemented purportedly because India actually did not immediately agree to Bangladesh’s three demands—transmission of hydro-electricity from Nepal and Bhutan to Bangladesh through Indian territory; corridor for the supply of commodities between Nepal, Bhutan and Bangladesh through Indian territory; and adoption of necessary measures to reduce the trade imbalance between the two countries. This was discussed on the sidelines of the tripartite deal, and a formal joint bilateral press statement was even issued.

However, there were serious political reasons why the entire deal collapsed. The then Bangladesh Nationalist Party-led Khaleda Zia government (2001-06) had mostly been against any meaningful cooperation with India as she apprehended that the latter was deeply and historically disposed to the opposition party Awami League led by Sheikh Hasina. Zia had also provided shelter to Indian militants from the north-eastern region and had consistently called them ‘freedom fighters’. She protractedly denied any access to India to the north-eastern region through Bangladesh despite India asking for the same several times.

Leader-centric foreign policy

However, Bangladesh’s three demands related apprehensions were substantially addressed within the next six years when the India-Bangladesh Framework Agreement of 2011 was signed after Sheikh Hasina again became the prime minister of Bangladesh (2006 onwards). The effective implementations of some of the projects related to electricity, unilateral free trade access and land deals did prove that Begum Zia’s regime was actually a critical block in India’s disinterest in this trilateral pipeline project.

In a graphic narration, the then Indian minister for petroleum and natural gas Mani Shankar Aiyar, who was negotiating this deal, recounted, ‘We had done it in one meeting, just one meeting! But back in India there was a problem. I couldn’t go to Dhaka because I was told we had to support Begum Sheikh Hasina and the credit mustn’t go to Begum Khaleda Zia. So please wait, don’t rush into these things. So I sat and waited till September to go. In September, I was received royally by Khaleda Zia, and the entire cabinet came to the dinner given in my honour. However, I found my officers had not worked out a proper agreement. So sitting at that dinner I wrote out the agreement of what were actually the minutes of the previous meeting. After I read the agreement, they said they would study it; but I told them, no, we are going to sign it now because it’s the minutes of something we had agreed upon. Then these are the minutes which would be translated into an agreement. So they all agreed. And I said right there, “Let’s get it typed”. When I reached Delhi, I became furious because the ambassador of India had typed “DRAFT” on the agreement because she was anti-Khaleda Zia and the Ministry of External Affairs was anti-Khaleda Zia. So they destroyed our hopes. The Ministry of External Affairs was adamant that we won’t allow gas to pass through Burma, Bangladesh and then into India’.

China owns the pipeline

This trilateral gas pipeline deal could never be retrieved. China National Petroleum Corporation signed a 30-year hydrocarbons purchase and sale agreement with Daewoo International in December 2008 to draw gas extracted from the Shwe gas project located offshore in the Bay of Bengal. The Shwe gas project off Rakhine (Arakan) state is owned by a joint venture between Daewoo International, Oil and Natural Gas Corporation Videsh of India and Gas Authority of India, Myanmar Oil and Gas Enterprise and Korea Gas Corporation. The 793-km gas pipeline starts at Myanmar’s Ramree Island and ends at Ruili in China’s Yunnan Province. In China, this $1.04 billion gas pipeline runs 1,727 km through Guizhou, Chongqing and Guangxi provinces.

Running parallel with the Myanmar-China Crude Oil Pipeline, this gas pipeline became operational in July 2013, and started delivering natural gas also to the Myanmar market through its off-take stations at Kyaukphyu, Yenangyaung, Taungtha and Mandalay. By 2019, China had imported 3.4 million tonnes of gas from Myanmar valued at $1.76 billion. Ironically, both the natural gas and the oil fields that provided pipeline flows to China had distinct imprints of part ownership of Indian giants like Oil and Natural Gas Corporation and GAIL. China and India were then negotiating to cooperate in securing crude oil resources overseas mainly in Africa. Like other failed projects, the trilateral gas project indeed was another major opportunity lost at the sub-regional level.

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Source : The Kathmandu

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