DYNAMICS of PM Narendra Modi's Visit- Middle East

Author : Ajay Kumar Chairman Fox Petroleum

The Prime Minister HE Shri Narendra Modi is in the form of Dynamic Mahatma Gandhi of India; The Father of our nation Mahatma Gandhi wanted to join with world without any border or color or power; But Our Prime Minister has difficult task, He is joining world with Border and with Business; He is dynamic in doing so, but adopted no casualty; Our Father of the Nation & Our Prime Minister both are from Gujrat, and both knows their Business with respect to time very perfectly in pursuit of the nation; I feel our Prime Minister has dynamism to join the world with borders to India; 

My Prime Ministers is the biggest Geopolitical Planner before the world leader; And He has shown it since last two years; GEOPOLITICAL IMPACT OF PRIME MINISTER HE SHRI NAREDRA MODI DUE TO HIS VISIT IN THE MIDDLE EAST WILL MAKE INDIA ANOTHER HUB IN ASIA FOR PERSIAN AND ARAB BUSINESS; He has joined Countries with economic ties which is more reliable ties than blood relations; For example – LNG with Qatar, Investment from Dubai; Crude and Gateway to central Asia with Iran, and very important tie with Saudi Arabia; Like I said,  LNG has made impact relating to politics, especially international relations, as influenced by geographical factors. Because, Crude Oil and Refined Petroleum products has been in control with almost all countries with the Governments, and further they have added Natural Gas business too into Government Subject. Private Players are merely working like an investor and contributing 3-4% average in developing countries. And in developed countries too, their investment share is not too high and that too depend on Government’s preference. That is why, Oil & Gas business is playing major role in Geopolitics - rivalry or promise settlement; I mean, the counties are friendly can import Crude Oil and LNG if they have good relation where the American Stamp is in favor of both; If not, the deal is at risk; You know what I am talking, Iran is an example; Russia is an Example for Europe supply with dominance. 

Now, India played the biggest economic geopolitical ties with Iran during Our Prime minister visit to Iran; It has turned Gas market to single point India; Iran’s Chahbahar Port will be linking Turkmenistan Gas Resource at the same time the natural resource of Afghanistan will be open to market and Afghanistan will end one day on foreign subsidy, that is the beauty of the Indian Prime Minister’s visit to Iran; As far as I know Iran is the persistent “elephant in the room” of international gas trade. The country could well become, one day, a major game changer of international gas markets but today its potential still remains fundamentally untapped due to a number of geopolitical and commercial reasons. Iran owns the first largest proven gas reserves in the world, but since 1997 it is basically a net-importer of gas. In fact, a full resolution of the nuclear issue will unlikely automatically change the Iranian gas market in the short term, as a number of commercial issues will continue to remain on the table. In other words, the “elephant” will need a bit of time to move. However, it is sure that its movement will ultimately have a profound and longlasting impact on international gas markets.

Afghanistan has approximately $3 trillion USD worth of exploitable minerals, gems, oil and gas within its borders. There is considerable interest from the international community and the local government in exploiting this natural resource to ensure that Afghanistan has a future after the international community withdraws its financial support. The win win situation is for Afghanistan; And as an Indian we are happy to see Afghanistan our neighbor rising; Afghanistan rising means India will have more presence in Central Asia;

The other most dynamic impact will be a flow of natural gas towards India from Central Asia; I mean from Turkmenistan; Among the Central Asian countries, Turkmenistan has the largest natural gas reserves and the world’s sixth largest reserves that amount 13,7 tcm. In 2015, Turkmenistan expects a total 48 bcm of natural gas exports comparing to 2014 figures of 45,1 bcm. At the same time, the country forecasted a 9 percent increase in natural gas production to 83,8 bcm in 2015. That means that Turkmenistan would have 35,8 bcm of natural gas for local consumption. That amount of gas might be too high for Turkmenistan’s domestic consumption, because the country burned roughly 22,3 bcm in 2013. Therefore, the margin between the production, consumption and export demonstrates that Turkmenistan has a significant potential to increase the export of its energy source.

To export natural gas to different markets, Turkmenistan needs to improve its pipeline infrastructure with Iran. It means Turkmenistan will have three networks for Hydro Carbon Business and safe too; At the time, there are two pipeline routes; one going to China with the current capacity of 55 bcm per year and another going to Russia with a capacity of 80 bcm. That too via Afghanistan to Chabahar Port;  

Let me explain you what Geopolitics means for me…. “Geopolitics” meant “the study of how factors such as geography and economics influence politics and relations between nations.” Now it means politics among (not just between) nations and rivalries for international power. A geopolitically successful nation delivers on promises to allies and threats to rivals or loses allies and strengthens rivals. And, earlier weapon was Crude Oil and now it’s is LNG, an added weapon to settle the score between the Countries.

Let me take this LNG Geopolitics in two parts – Firstly, Geopolitics of American – Europe and Russian impact. Sinking oil prices have put extra pressure on Russia’s government. Over two-thirds of Moscow’s state budgets come from taxes on Russian oil and gas firms. Destabilized oil revenues have caused the Ruble to fall 41 percent against the Dollar over the past year, creating fear that the economy could fall into a recession in 2015 which is worst then the past recession hit in the region. The World Bank sees a recession as likely, indicating it expects the Russian economy to shrink by .7 percent. Fears over Russia’s economic vitality have caused mass capital outflow, totaling to some $85 billion in 2014. And with lucrative energy projects like the South Stream pipeline on hold, Russian Government have to find ways to lessen his country’s exposure to turbulent oil markets. Thus European nations are increasingly - and justifiably - worried about the impending winter months when Russia could ratchet up the pressure on Europe, as it has done in the past, by imposing another gas halt with the consequent loss of life and negative economic impacts. However, instead of sending a clear message that LNG export licenses and American energy leadership are coming, the U.S. Senate has put off addressing legislation on LNG exports until September, a risky delay when U.S. LNG could be a life-saving game-changer for Europe.

And secondly Geopolitics of Arab World – Indian Sub Continent – Africa and Australian ; However, access to energy sources is not the problem today for India, but India does face a problem, given its heavy dependence on the Persian Gulf countries and Iran for sourcing its oil and LNG. And, the problem is Sanction. A new theme is finding its way to the Indian discourses on energy security, as is bound to happen, drifting in from the West. Simply put, the United States is ending its dependence on oil imports from the Middle East and the geopolitics of the Middle East could never be the same again. The facts that could go into buttressing the thesis are rather meager and yet a fairly good case can be made out of them. New sources of fossil energy have appeared such as shale gas and new gas fields are being discovered. Besides, the US, the world’s number one consumer, is attaining self-sufficiency in LNG that may last for at least one century ahead. This comes as a game changer. The old assumptions regarding the West’s dependence on the steady flow of cheap oil from the Middle East and the politics that devolved upon it is becoming redundant. Also, the Middle East’s share of the global recoverable reserves is itself declining and is already below 16% while the locus is shifting to the US, Canada, Brazil, Russia, Central Asia and other countries. Conceivably, therefore, there is a method in the madness of the West and it does not seem to be very different from what George Kennan wrote over half a century ago – that control of the Middle East’s oil is extremely vital for the West’s prosperity. So, far Oil Reserve is concerned middle east can feed 5 Trillion Dollars Business every year, and this will enhance the relationship with the world; If India makes the business with – Saudi Arabia, Qatar, UAE and Oman for making a way to import LNG to India by proposed Oman India Pipeline or by Ship; It will make – a- Geopolitical impact in Asia; Because Gas imported in India will serve all SAARC Nations too. The major Geopolitical impact of LNG supply to India will be more realistic ties with Arab World with Republic of India leading to Australian Continent; Sinking crude oil price as less demand from Middle East to USA and Europe as well as India & China will force them to open their LNG supply to the market; Private Players are ready to bag the contract; Let’s see who is lucky; Thank You.