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No Change In India Energy Policy

The New Indian oil minister, Murli Deora "will adopt a less strident approach to the India-Pakistan-Iran gas pipeline because he does not like (seeing) India's improving relations with the U.S. worsened," said Amitav Ranjan of the Indian Express newspaper.
By Kushal Jeena
New Delhi (UPI) Feb 08, 2006
India's new business-friendly oil minister, Murli Deora, is unlikely to make any drastic changes to the country's energy policy, Indian energy analysts said Wednesday.

"(Deora) will adopt a less strident approach to the India-Pakistan-Iran gas pipeline because he does not like (seeing) India's improving relations with the U.S. worsened," said Amitav Ranjan of the Indian Express newspaper.

Ranjan said Deora, unlike his energetic predecessor, Mani Shankar Aiyar, will shift his ministry's focus homeward and will also attempt to make state-run refineries and oil companies profitable.

There will be better coordination between the foreign office and the oil ministry, as Deora has hinted he would like better coordination on overseas energy issues.

The appointment of a senior Congress leader from western Maharashtra state as the new oil minister is to replace Aiyar, who was axed from the post apparently for his strong support for the India-Pakistan-Iran gas pipeline. The Indian foreign ministry was uncomfortable with Aiyar's support for the controversial pipeline as the United States was opposed to the venture and India did not want a confrontation on the issue.

Deora, currently co-chairman of an Indo-U.S. parliamentary group, is known in Indian political circles for his close contacts in the United States.

"The pro-reformist image of Deora will help India meet its energy quest," said an oil ministry official, speaking on condition of anonymity.

India, Asia's third-largest economy, is in a global quest for energy in a bid to feed its ever-growing economy. The $7 billion gas pipeline was to run from Iran, through Pakistan, to India. Without it, the country will have to import an additional 600,000 barrels of crude oil per day.

The change in the oil portfolio assumes significance as it was made a few days ahead of the crucial meeting of the governing board of the International Atomic Energy Agency in Vienna, where India voted for a resolution to report Iran's nuclear program to the U.N. Security Council.

"The IAEA vote affects the petroleum ministry more than any other ministry as it has a direct impact on the energy security of the country," Deora said. "India is one of the fastest-growing economies of the world and our government's economic policies are aimed at ensuring and even bettering the country's growth over the next several years.

"As a result of this economic growth, the country's fuel and energy needs are also growing significantly. I will continue to steer the ministry to achieve this strategy of ensuring the fuel supplies and energy security of our nation," Deora said.

Indeed, India's economy grew at 8 percent last year and there are no signs of a slowdown. The country's benchmark Sensex stock index grew 40 percent last year and on Tuesday closed at above 10,000 for the first time in its history.

The appointment of Deora as India's new oil minister is part of a balancing act undertaken by Prime Minister Manmohan Singh - who as finance minister in the early 1990s began India's economic liberalization program -- as the new minister has close ties with both Washington and India's corporate sector.

Still, some experts say the pipeline from Iran may not be dead in the water.

"India is not giving in on the pipeline idea, but it may go slower on it," said political commentator Pran Chopra. "By changing the petroleum portfolio, the government has given a positive gesture to the United States."

Indeed, Deora himself said Wednesday he would continue to work on the project.

"I will continue to pursue this pipeline and ensure that the project is fructified," he said in New Delhi on Wednesday.

Analysts say Deora will likely take a more diplomatic approach, and, unlike Aiyar, may not antagonize senior officials of India's state-run oil companies.

During his tenure as petroleum and natural gas minister, Aiyar clashed several times with Subir Raha, chairman of the Oil and Natural Gas Corp. Singh is said to have intervened in the disputes.

Improving the financial condition and profitability of government-owned Indian oil companies, their track record in exploration and the issue of fuel subsidies will be priorities for the new energy minister.

"The track record of public sector oil companies in exploration is not good," Deora said. "I don't want to take names of any PSU (public sector undertakings), but we need to step up our exploration activities to achieve energy security."

Another complicated aspect of Deora's new job is the India-Bangladesh-Myanmar gas pipeline, an idea floated by Aiyar despite opposition from the prime minister's office and the foreign office.

Deora said he will extend his full support to the ONGC's bids for the acquisition of overseas oil fields. ONGC has said it will bid for Exxon Mobil Corp.'s 30 percent stake in a Brazilian project.

Aiyar was a strong supporter of Indo-Chinese energy cooperation. His replacement by Deora will now tilt the balance in favor of the United States.

Aiyar aggressively lobbied for India to shore up energy resources both in India and abroad. Deora will instead concentrate on strengthening the domestic oil sector.

While the new energy minister is sure to represent a shift in focus and interests, and is likely to make use of his contacts at home and abroad, senior government officials have ruled out any major shifts in India's energy policy on the grounds the federal Cabinet had already approved all the decisions taken with regard to the energy sector.

Source: United Press International

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