While nuclear power and non-conventional energy from the sun, wind, and other as yet untested sources will be an essential part of India's energy security in the long run, there is no getting away from the fact that the short and medium term is going to be dominated by oil and gas. Despite some onshore oil finds and the promise of major flows of natural gas from the Krishna-Godavari basin, the country remains dependent on overseas producers for the bulk of its hydrocarbon needs. While the acquisition of oil and gas assets abroad has been an article of faith, India's efforts in this direction have been plagued by stiff competition from other global players, official indifference, and plain bad luck. Despite political goodwill, the country has not managed a major breakthrough in Russia. Energy relations with Iran remain fraught in the face of the threat of international sanctions. In Angola, Nigeria, and other oil-rich African nations, India seems unable to offer the sort of inducements Chinese companies manage with their larger foreign exchange reserves and flexible business practices. Likewise, big energy deals remain elusive in Central Asia. Even the initial efforts made to develop pan-Asian energy cooperation during 2004-05 have not been followed up. Despite heady talk of pipeline grids stretching from Turkmenistan and Iran to Myanmar and China, not one cubic foot of gas has crossed our land border so far.
Seen against this backdrop, the involvement of Indian companies in the Venezuela's Carabobo heavy oil project is good news indeed. Venezuelan President Hugo Chavez has long sought greater Indian involvement in his country's energy sector as a way of lessening its dependence on the United States and encouraging South-South cooperation. Last week, ONGC Videsh Ltd, IOC, and Oil India Limited committed themselves to investing more than $2 billion for their 18 per cent stake in the project that is expected to give India 3.6 million tonnes of crude a year. Venezuela's state oil company will own 60 per cent of the stakes, with the balance held by the Malaysian and Spanish national oil companies. Closer home, Indian companies are keen to make a big play in Iran, where the field is wide open, provided New Delhi is prepared to support them. Given the capital outlay required and the uncertainty over prices and politics, energy investments involving overseas partners will not be free from risk. The Manmohan Singh government is willing to gamble on nuclear cooperation with the U.S. despite glaring differences with Washington over how the bilateral agreement is to be interpreted. Surely, it can afford to be bolder in its hydrocarbon diplomacy, given the country's immediate energy requirements.