Context

With its abundant energy sources and appetite for trade diversification, Russia could be an ultimate long-term partner of India as it tries to diversify its trade relations.

Energy partnership

• Indian Prime Minister in a virtual address at 6th Eastern Economic Forum (EEF) in Russia’s Vladivostok said that “India-Russia energy partnership can help bring stability to the global energy market.”
• Indian and Russian Energy Ministers announced that the countries’ companies have been pushing for greater cooperation in the oil and gas sector beyond the U.S.$32 billion already invested in joint projects.
• India’s Minister for Petroleum and Natural Gas Hardeep Singh Puri referred to Russia as the largest investor in India’s energy sector.
• One of the examples of cooperation between the two countries in energy transformation is the joint venture between India’s Reliance Industries Ltd. and Russia’s Sibur, the country’s largest petrochemicals producer.
• Apart from accounting for most of the Indian butyl rubber market, Reliance Sibur Elastomers exports its products to Asia, Europe, the United States, Brazil and other countries.
• A few years ago, Rosneft invested U.S.$12.9 billion in India’s second-largest private oil refiner, Essar Oil, renamed Nayara Energy, marking it one of the most significant foreign investments in years.
• Partnership in renewable: In efforts to transition to green energy, India has recently achieved a significant milestone of completing the countrywide installation of 100 gigawatts of total installed renewable energy capacity, excluding large hydro.
• A recent Deloitte report has forecasted that India could gain U.S.$11 trillion in economic value over the next 50 years by limiting rising global temperatures and realising its potential to ‘export decarbonization’.
• Unknowns of climate change and threats of a new pandemic suggest that the country should accelerate its energy transition. Russia, one of the key global players across the energy market, could emerge as an indispensable partner for such a transition.
• Partnership in nuclear energy: Russian companies have been involved in the construction of six nuclear reactors in the Kudankulam nuclear power project at Tamil Nadu.
• India and Russia secure the potential of designing a nuclear reactor specifically for developing countries, which is a promising area of cooperation.
• India’s nuclear power generation capacity of 6,780 MW may increase to 22,480 MW by 2031, contributing to the country’s efforts to turn to green energy.

Way forward

• In September, almost all of Russia’s major energy companies were interested in projects in India, Russia’s Energy Minister said at the Vladivostok forum in September, adding that he sees prospects for energy cooperation in all areas.
• However, the current bilateral exchange rate needs to accelerate for India to grasp its potential from energy transformation.

Conclusion

To meet its growing energy demand and succeed in green transformation, India needs approximately U.S.$500 billion of investments in wind and solar infrastructure, grid expansion, and storage to reach the 450 GW capacity target by 2030. Therefore, more efforts are needed to expand cooperation with such partners as Russia.

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