July 9, 2015
Tanchum: Energy is the Key to Modi’s Central Asia Reset
Prime Minister Narendra Modi's current tour of the five Central Asian republics will signal whether India has the capacity to become a major power in Eurasia. Occurring half on his way to the July 9-10 Shanghai Cooperation Organisation (SCO) Summit in Ufa, Russia, and the other half on his way back, Prime Minster Modi's tour is a critical opportunity for New Delhi to reverse the strategic setbacks India suffered in Central Asia under the previous government. India has already made some limited gains in its strategic cooperation with Central Asian partners, notably the March 2015 India-Kyrgyzstan joint military exercise held on Kyrgyz soil. Yet for New Delhi to achieve a strategic comeback in Eurasia's energy heartland, India will need to become a key player in Central Asian energy markets.
In the most significant blow dealt to India's "Connect Central Asia" policy, Beijing thwarted New Delhi's attempt to develop a stronger foothold in Central Asian energy by acquiring ConcoPhillips' 8.4 percent share in Kazakhstan's massive Kashagan oil field. Although Astana indicated that it would approve the $5 billion sale of ConocoPhillips' share to India's ONGC Videsh Ltd. (OVL) the Kazakhstani government blocked the transaction and bought ConocoPhillip's stake in July 2013. Kazakhstan then turned around in September 2013 and sold an 8.33 percent stake in Kashagan to China's CNPC for an equivalent $5 billion along with CNPC's agreement to provide $3 billion to cover half the cost of Kashagan's Phase 2 development.