The contribution of the Indo-Iranian energy relationship to India’s energy security : a geopolitical economic analysis

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The contribution of the Indo-Iranian energy relationship to

India’s energy security: a geopolitical economic analysis

By Max Tetteroo (11265957)

MSc Political Science (International Relations)

Research Project: The Political Economy of Energy

Master Thesis

Supervisor: Dr. Mehdi P. Amineh

Date: 21-06-2019 Second Reader: Dr. Robin, J. Pistorius

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Abstract

This paper aims to analyze whether India’s engagement in and with Iran’s energy sector contributes to India’s energy security. Through a theoretical framework of Geopolitical Economy, it concludes that from an energy security perspective, Iran’s very low supply stability do not improve India’s energy security in the short-term. Especially in the light of the Maximum Pressure Campaign by the United States, India’s and its SOE’s short-term interests in developing the highly underperforming Iranian energy sector have faded. However, the analysis concludes, Iran remains pivotal in India’s geostrategic and long-term energy supply objectives and is as such indispensable to the sustainability of India’s long-term energy security.

Key Words: Sustainable energy supply security - Geopolitical Economy - India and Iran – Contender states – Energy diplomacy

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Acknowledgements

This thesis marks the end of my Master’s in International Relations. I think I have been very fortunate to be introduced to the Political Economy of Energy, and the energy politics of India and Iran specifically. Spending five months analyzing India and Iran has not only broadened my knowledge of and interest in their energy relationship, but has also resulted in a personal fascination for both countries and energy security in general. I am very motivated to develop these interests after my thesis.

First, I would like to thank Dr. Mehdi P. Amineh for his continuous support during this research project. His experience and feedback helped me to find focus and to complete this final thesis. Also, I would like to express my admiration for his dedication and his professional yet open attitude, which helped me to structurally work on this thesis. I would not have been able to have done this without him. I also want to thank my second reader, Dr. Robin J. Pistorius, for taking the time and effort to read and evaluate my thesis.

I would also like to thank Mr. A. van Wiggen and Dr. M. Forough for their time and effort to participate in my research as well as my parents and siblings for their support. Last but not least, I want to thank my dear friends Caspar, Victor, Josh, Mia, Evin and Lara as well as the people in my research group, for the countless brainstorm sessions and late nights in the library.

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Maps

Map 1 – India and South Asia

Source. CIA (2001a)

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Map 2 – Iran

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Map 3 – The Middle East

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Map 4 – Central Asia

List of Tables, Maps and Figures

Tables

Table 2.1 India’s energy demand per resource and share of TPED, from 2000-2040 40 Table 2.2 Oil and gas reserves, production, export and shares of world total (2016-17) 43 Table 2.3 Contribution of natural resources to export earning state budget and GDP (%) 47 Table 3.1 Main trade statistics India with Iran (2000-2018) 59 Table 3.2 Agreements and MoUs related to the Chabahar Port, signed at Prime Minister

Modi’s visit to Iran in May 2016

64

Table 3.3 Proved oil and gas reserves in Russia, Azerbaijan and Central Asia 65 Table 3.4 Market potential of Eurasian Heartland countries (in billion current US$) 66 Table 4.1 Centralized distribution of world’s proven oil and gas reserves (2017) 75 Table 4.2 Supply stability indicator for energy security of India’s main and alternative

supplier countries

89

Figures

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Figure 1.1 Conceptual model of Geopolitical Economy 23 Figure 1.2 Siccama’s stylistic representation of the Power Cycle of ten powers (1950-2010) 27 Figure 2.1 Energy consumption relative to GDP on per capita besis in 2000, 2015 and 2040 35

Figure 2.2 India’s energy mix in 2017 (in Mtoe and %) 36

Figure 2.3 India’s production and consumption; Coal, oil and gas. 2000-2017 (Mtoe) 37 Figure 2.4 India’s energy imports in Mtoe; Coal, oil and gas (2000-2016) 39 Figure 2.5 Energy Policy Administration in India’s energy sector 41 Figure 4.1 Relative economic share of global and regional powers in the Eurasian continent 73 Figure 4.2 Trajectory of relative economic power share (%) of industrialized and

industrializing countries, between 1950-206

74

Maps

Map 3.1 Iran’s existing connections to Russia and Central Asia 68 Map 3.2 India’s current sear route and the proposed International North-South Transport

Corridor

68

Map 4.1 Geopolitical Fronts in the Middle East 76

Map 4.2 The “String of Pearls” and China’s oil and gas shipping lanes 82

Abbreviations

Bbl Barrel

Bcm Billion cubic metres

BRICS (Organization of) Brazil, Russia, India, China and South Africa CARs Central Asian Republics

CBI Central Bank Iran

CDTIC Construction and Development of Transportation Infrastructures Company CIS Commonwealth of Independent States

CISADA Comprehensive Iran Sanctions, Accountability and Divestment Act Cu/m Cubic metres

EIA Energy Information Administration EOR Enhanced Oil Recovering

EU European Union

FDI Foreign Direct Investment GAIL Gas Authority of India Limited GCC Gulf Cooperation Council GDP Gross Domestic Product GoI Government of India

IAEA International Atomic Energy Agency IEA International Energy Agency

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INDC Intended Nationally Determined Distribution INSTC International North-South Transportation Corridor IOCL Indian Oil Corporation Limited

IPE International Political Economy IPI Iran-Pakistan-India Pipeline IRI Islamic Republic of Iran

IRGC Islamic Revolutionary Guard Corps

IS Islamic State

JCPOA Joint Comprehensive Plan of Action LNG Liquefied Natural Gas

Mbd Million barrels daily MoC Ministry of Coal

MoNRES Ministry of New and Renewable Energy Sources MoPNG Ministry of Petroleum and Natural Gas

MoP Ministry of Power

MoU Memorandum of Understanding

Mt Million tonnes

Mtoe Million tonnes of oil equivalent NIGEC National Iranian Gas Export Company NIOC National Iranian Oil Company

NOC National Oil Company NPT Non-Proliferation Treaty OIL Oil India Limited

ONGC Oil and Natural Gas Cooperation Limited OPEC Organization of Petroleum Exporting Countries OSF Oil Stabilization Fund

OVI Oil Vulnerability Index

OVL ONGC Videsh Limited

P5 + 1 Permanent members of the UNSC + Germany PMO Ports and Maritime Organization

PSU Public Sector Undertaking PTT Power Transition Theory

RITES Rail India Technical and Economic Service SAGE South Asian Gas Enterprise Private Limited SCO Shanghai Cooperation Organisation

SOE State-Owned Enterprise

TAPI Turkmenistan-Afghanistan-Pakistan-India pipeline Tcf Trillion Cubic Feet

TPEC Total Primary Energy Consumption TPED Total Primary Energy Demand TRC Theory of Relative Capability UAE Unite Arab Emirates

UN United Nations

UNDP United Nations Development Programme

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1. Research Design

1.1 Introduction

India’s rapid state-led industrial development has led to a growing economy with a fast-growing population. Despite its abundance of coal, India is heavily dependent on the increasing imports of oil and gas and about 80 per cent of India’s oil is shipped in from beyond its borders. The large share of imported energy to keep the economic engine running goes hand in hand with increasing levels of import-dependency, making undisrupted supplies a primary concern for policy makers. In the search for energy supply security, actors have two options; to reduce dependency by lowering demand or to improve the security of energy imports. It is inevitable for India to keep importing energy resources and it is therefore not surprising that India has been trying to strengthen its grip on Iran, which holds the fourth largest oil reserves and second largest gas reserves in the world. With 11 percent, Iran was India’s third biggest oil supplier 2017.

However, a variety of domestic, regional and transnational factors and forces threaten the supply security from Iran to India; most notably the recent US withdrawal from the JCPOA. Security threats and supply disruptions, however, are not alien to the region, which sparks the question whether engaging in certain countries actually contributes to supply security. Consequently, this thesis aims to analyse how India is trying to manage the supply security from Iran, and whether this contributes to its energy security. As such, this research analyses the energy relationship between India and Iran, over the period of 2000 till May 2019. The year 2000 has been chosen as the early 2000s mark the start of energy relations between India and Iran (with the Tehran and New Delhi declarations in 2001 and 2003 respectively). May 2019 is chosen to find a definitive point for analysis, as during the period of writing this thesis the rivalry between the US and Iran continued.

Research Objectives

The central objective of this research is to investigate the Indo-Iranian energy relationship and to examine whether India’s cross-border activities in and with Iran contribute to increased energy security.

To do this, the first part of this thesis will analyze India’s energy situation and its process of energy policy formulation, in order to explain why India engages in Iran’s energy sector. Then, it is important to better understand the context in which India is operating in Iran, and to investigate the political economic incentives and limitations for Iran to connect with India.

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To analyze the current situation of the Indo-Iranian energy relationship and to get a better understanding of how the energy relationship fits within both countries’ larger political economic interests, the second part will have to examine the tools and instruments that are used by India and Iran to strengthen the energy relationship, referred to as energy diplomacy. Geopolitical tensions in the Middle East and South Asia pose barriers for establishing energy trade infrastructure and bring the risk of provoking other state and non-state actors. The dynamics between the actors in these regions further complexifies this context and potentially threaten the region’s supply security and the Indo-Iranian energy relationship. Therefore, the third part will investigate the geopolitical forces that threaten the sustainability of the Indo-Iranian energy relationship and India’s related energy security interests as a consequence.

Research question

On different levels of analyses, the three sections will therefore try to identify the main challenges for India’s sustainable energy security, emerging from both internal and external developments of geopolitical and economic nature. This led to the following research question:

What are the internal drivers and external forces that configurate the Indo-Iranian energy relationship and to what extent does India’s involvement in Iran’s energy sector contribute to its sustainable energy security?

To be able to answer this question in the conclusion, the body of the thesis is broken down to three chapters answering corresponding sub-questions. Chapter 2; India’s energy situation and the Iranian energy sector will try to answer: What is India’s energy situation and why does it

need to acquire resources from overseas? and What is the current state of Iran’s energy sector and what is the political economy of its energy governance? Chapter 3; Indo-Iranian

energy diplomacy in a Political Economic background, will answer: What characterizes

India’s diplomacy and how is this used to engage in Iran’s energy sector? Chapter 4; Energy

diplomacy, geopolitics and contending forces, finally, will try to give an answer to the question: Which are the geopolitical economical risks/impediments that threaten the

sustainability of the Indo-Iranian energy relationship?

1.2 Literature Review

In order to answer these questions effectively, it is of the essence to understand what research exists and which views have been posed by different scholars in existing literature on the topic. First, this literature review will discuss the different views on energy security,

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narrowing down to how this relates to the Indo-Iranian case specifically. Then, an overview will be given of what is written on the relation between states and state-owned enterprises, and how this spills over in the energy sector. Finally, the literature on the Indo-Iranian energy relation will be discussed, followed by a literature gap.

What is energy security and how does this relate to Indo-Iranian relations?

Energy security is a concept that has been widely discussed and is central to many books (Ahswarya, 2017; Victor, Hults and Thurber, 2011; Noronha, Liga & Sudershan, 2009), strategic reports (IEA, 2014) and literature (Moerkerk and Crijns-Graus, 2016; Kruyt et al., 2009; Cherp & Jewell, 2011; Kumar & Chatnani, 2018). Many models and frameworks have been created, used and defended by scholars, such as the well established ‘4 A’s of energy security’ framework, partially used by the IEA (2014, p. 13) and more thoroughly discussed amongst others by Kruyt (2009), Chester (2010) and Cherp and Jewell (2014). However, energy security as a concept has evolved over time and consequently, a growing group of scholars have argued for a revision of the conventional definition of energy security and related models. Some scholars have argued to include additional variables to energy security, such as importance of high oil prices and geopolitical tensions (Kruyt et al., 2009; Löschel et al, 2010; Gupta, 2008) as well as environmental impact and sustainability (Raut, Narkhede & Gardas, 2017). Others point at preconditions of energy security, such as that measures are only effective if they do not jeopardize national values and objectives (Yergin, 1982, p. 111). From all these differences, however, it becomes clear that there is no universally accepted definition of energy security and that specific cases require different sets of indicators. Kruyt (2009, p. 2171) suggests that the adequacy and relevance of different indicators depends on the perspectives of the actors trying to ensure their energy security. India might be much more concerned about security indicators associated with affordability rather than affordability. This is also supported by Reddy (2015, p. 2-4), who suggests that developing countries require a different definition of energy security than already industrialized countries. As such, Cherp and Jewell stress the importance of asking the questions: Security for whom, for which values and from what threats? These need to be clear to clearly understand the involved actors. This makes the question ‘what is energy (supply) security to India (and Iran) specifically’ of such great importance.

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The objective of this research is to outline whether India’s engagement in Iran’s energy sector contributes to India’s sustainable energy security, and as such the definition of it should reflect this objective. India’s government refers to energy security as the ensuring

uninterrupted supply of energy to support the economic and commercial activities necessary for sustained economic growth (Planning Commission, 2002, p. 134). However, the more

comprehensive definition by the United Nations Development Program (UNDP, 2000, p. 113) defines energy security as the continuous availability of energy in varied forms, in sufficient

quantities, and at reasonable prices. Energy security has multiple dimensions in time; the

short-term is often associated with disruptions and strategies to reduce the vulnerability to these disruptions, while the latter deals with the causes of these disruptions and the structural forces of the energy system (Kruyt et al, 2009, p. 2167). There is a consensus in literature that actors can follow two main policies to pursue energy supply. First, domestically, by increasing energy efficiency and lowering demand. These policies would reduce the dependency on imports. Second, by increasing supply security, which refers to the security of energy imports from beyond state borders. Much has been written on what India can do domestically to improve its energy security, primarily emphasizing India’s great need to improve it energy efficiency (Narula et al, 2017; Kumar, 2017). However, even in the most positive outcomes of such domestic policies, India’s import dependence will remain very high (Reddy, 2015) and as such, these domestic improvements exceed the focus of this analysis.

Kumar and Chatnani (2018, p. 13) have argued that India can enhance its energy security by, amongst others, acquiring equity-based stakes in foreign oil resources, as these diversify the supply sources and thus provide energy security. Also, it is discussed that for the relatively shorter term, India should include the creation of infrastructure to make the use of gas more effective and increase the potential of LNG (Kumar & Chatnani, 2018, p. 13). India is very accessible through sea routes and therefore shipments of energy in the form of crude oil and LNG are much more feasible than pipelines (Kumar & Chatnani, 2018, p. 12). How these relate to this case study will be more thoroughly discussed in the Indo-Iranian relations section of this chapter.

Iran’s dependence on resource endowments

Even though the import side has been at the center of most energy security literature (Chester, 2010), there are also scholars who discuss that energy security is not always one-way and supply-focussed. Many economies of oil exporting nations still heavily rely on a large share of these exports in their GDP, which makes these economies to be very vulnerable

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to price fluctuations and disruptions in their energy export revenue. This demand security, i.e. availability of a steady demand for energy exports at competitive market prices (Dike, 2013, p. 594), of which its importance to symmetrical energy security and its related indicators are more elaborately discussed in Schrattenholzer (2009), Minullin and Schrattenholzer (2011, p. 58-59) and Reddy (2015). Cherp & Jewell (2011, p. 204) suggest this vulnerability is especially true for Middle Eastern countries, because of rentier states’ rigid reliance on natural resources. Dike (2013) agrees with the fact that exporting countries are subjected to demand security and calculated the crude oil demand security risk of each OPEC member state. Contrary to Cherp and Jewell (2011), however, his analysis suggests that Iran has a relatively small demand security risk (Ibid, p. 598). However, literature on ‘Iran’s resource curse’ suggests that its increased government revenue from oil sales has had a negative influence on the country’s economy and process towards democracy (Fardmanesh, 1991; Khajedpour, 2001).

Thus, many scholars agree that energy security is not a one-way process. Minullin and Schrattenholzer (2011) argue that fundamentally, both the supplying and the consuming countries aim for energy security and have a shared goal of reducing risk. Sun (2014, p. 398-399) argues that states in their pursuit of energy security are limited by self help rationale and thus rely on securing overseas energy acquisition mainly through bilateral (governmental) contracts with oil-producing countries. It is therefore that, especially in a world of increasing interdependence, energy security depends much on how countries manage their relations with one another (Reddy, 2015, p. 22). Growing industrialized countries need sufficient energy supply at reasonable prices to meet their growing energy demand (i.e. energy supply security) and resource rich countries need markets for their energy commodities to secure stable and sufficient revenue flows (i.e. energy demand security). However, as will be argued in the theoretical framework, the state is not the only or a unitary actor.

The role of state-owned enterprises

Following the successful state-led industrialization of China, much literature has been written on the role of state-owned enterprises (SOEs) and their role in energy supply. The relation between the state and its SOEs, or National Oil Companies (NOCs) more specifically, depends on the relation between state and society. Victor Huts and Thurber (2011, p. 3) suggest that there is a shifting balance between the market and the state. Nolan and Thurber (2011, p. 122) suggest that the preference and dependency of states on private companies or state-owned companies is caused by 1) the significance of petroleum to the country and the

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motive of the government to control it, 2) risk of outcomes and 3) the state’s capacity to shoulder these risks. The effectiveness, focus and purpose of SOEs is dependent on the outcome of this relationship.

The role of SOEs in India’s growth strategy has been thoroughly discussed (Waterbury, 1993, Ahuja & Kapur, 2018, p. 81, Madan, 2007). Ahuja and Kapur (2018, p. 82, 83) showed that India’s statecraft and therefore external policy aligns with its deeper integration into the global economy, which has grown its acknowledgement of economic diplomacy. With the growing importance on energy imports, this spilled over in the state employing diplomatic efforts to facilitate the activities of their NOCs (Wu, 2018, p. 109). Chatterjee (2018, p. 85-86) adds that despite India’s three decades of liberalization, SOEs continued to play a significant role in the Indian economy and remained central to Indian political economy. However, she argues, through the liberalization process, the political economic relation between the state and these SOEs has transformed India from a state-led to a state steered form of state capitalism, or state capitalism 2.0. In accordance with the theory of Geopolitical Economy (See chapter 1.3: Theoretical Framework), this suggests that in the analysis of India’s energy security and its overseas relations, both state and market actors play a significant and integrated/interconnected role. The effectiveness of NOCs’ involvement abroad, however, is to be questioned. The EIA (2016, p. 4) suggests that even though Indian oil companies have been able to acquire equity stakes overseas, they have been relatively unsuccessful in the Middle East.

Geopolitical risk to supply security

Geopolitical issues critically affect a country’s energy security. Outbreaks of wars, destabilized regimes and failing states as well as regional tensions and embargoes heavily affect the security of supply (Ang et al., 2015, p. 1081). The Clingendael Institute argues that geopolitical risk to supply security happens when the international political and economic system is strained or in turmoil as a result of power politics and competition among leading states, or when a local or regional conflict leads to a collapse in the rule of law in parts of the international system (CIEP, 2004, p. 43). Geopolitical energy supply risk can be divided in short-term and long-term risks. Short-term geopolitical risks refer to events that affect the operational security, such as weather conditions, localized terrorist attacks (Gupta, 2008, p. 1197). Long-term risk geopolitical risk refers to supply disruption caused by changes in the larger political set-up, such as strategic actions of producing actors, major damage to production facilities or reservoirs, structural decline in investments in the energy sector and

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market and government failures (Gupta, 2008, p. 1197). Geopolitical rivalry in a region and a supplier’s exposure to geopolitical risk are often used as indicators to analyze whether a particular supplier can be considered as a stable supply source (Kruyt et al., 2009; Löschel et al, 2010; Gupta, 2008).

Indo-Iranian relations

The Indo-Iranian relations are far more complex than only energy. Being in close geographic proximity, their relation is characterized by economic, social, cultural and security ties (Ashwarya, 2017, Erhan & Petre, 2018, Fair, 2007, Cheema, 2010, p. 389, Fair et al., 2004) as well as nuclear and military ties (Erhan & Petre, 2018). Consequently, Ashwarya (2017) makes a strong case that energy ties cannot be separated from these other dimensions. From Iran’s perspective, it is argued that India is crucial in Iran’s need to solve its domestic and regional issues that prevent it to transition from a rigid, fossil-fuel based economy towards a pro-market one (Erhan & Petre, 2018, p. 1040).

The most notable project in these regards and much discussed topic in Indo-Iranian relations related to energy is India’s interest in the expansion of the strategically located Chabahar Port (Iyengar, 2016). It is primarily discussed focussing on the Indian role in building the Chabahar Port as a strategic measure to counterbalance China’s investments in the Gwadar Port in Southern Pakistan (Ganguly, 2018, p. 37, Dadwal, 2016, p. 203, Erhan & Petre, 2018) or an economically driven plan to circumvent Pakistan and open up a route to landlocked Central Asia (Dadwal, 2016, p. 203, Hughes, 2016). However, more directly related to energy, it is also suggested that it is a sign of commitment to existing oil ties (Erhan & Petre, 2018, Desai & Dormandy, 2008) and it is argued that the Chabahar Port provides a vital link to the resource- and mineral-rich Central Asian Republics, such as Turkmenistan, and to the large potential market of Afghanistan (Gupta & Mullen, 2018, p. 29, Erhan & Petre, 2018, Hughes, 2016). Finally, there is also a technological gain for Iran, as India’s experience with refining low sulfurous oil could be beneficial in replacing or upgrading some of Iran’s outdated oil refineries (Hughes, 2016).

All these advantages considered, there is no consensus on whether Iran is significant enough for India to be/get further involved in or whether they should be ‘sidelined’ on the governments’ agenda. Multiple scholars argue that India is in a balancing act between its energy relationship with Iran and its other regional and global objectives (Pant & Mehta, 2018; Dadwal, 2012; Kumaraswamy, 2013; Dadwal, 2016; Fair, 2007). For example,

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numerous scholars have argued that India’s interests in becoming a legitimate nuclear power has led to the withdrawal of the India from the Iran-Pakistan-India (IPI) pipeline. Next to the nuclear sanctions, another argument given for why India is not prioritizing Iran is because it needs to find a balance with its other main suppliers, the CCG Countries (Pant & Mehta, 2018, p. 673). Instability in the Middle East could affect India’s large diaspora in these countries (Erhan & Petre, 2018), but more importantly it can lead to decreased energy security from its main suppliers in the Persian Gulf region (Pant & Mehta, 2018, p. 673-674). Stronger Indo-Iranian ties could potentially trigger discontent in this for India important resource rich region (Ibid), which is especially problematic as scholars have identified the UAE as India’s most preferred nation to import crude oil from (Dalei, Roy & Gupta, 2017, p. 1).

Literature gap

Following literature, there seems to be a natural convergence between India and Iran for strengthening their energy relations. However, literature on energy security tends to be Sino-centered and relatively little is written on Indo-Iranian energy ties specifically. Even though many write about the Indo-Iranian relations and discuss energy relations as a factor (Erhan & Petre, 2018; Ashwarya, 2017; Dadwal, 2012; Fair, 2007), only a handful of scholars have written about the relationship with having energy security as start and end of the analysis, such as Wu (2018). While there is an abundance of news coverage on the developments in the Indo-Iranian energy relationship, not as much scientific research has been done on the forces shaping its configuration and whether the relation contributes to India’s energy supply security. As discussed by the literature review, a lot has been written about energy security, the importance of supply security to India and demand security to Iran, and how State-Owned Enterprises are used as tools to establish such security. This thesis distinguishes from existing literature as it takes energy security as both the starting and ending point in multiple layers of analysis; domestic, bilateral and geopolitical. Additionally, the analysis of the case will be framed in a theoretical framework of Geopolitical Economy, which accounts for both the state as well as the society actors and will be more thoroughly discussed in the Theoretical Framework part of this chapter.

1.3 Theoretical Framework

The literature analysis shows that analyzing security for a specific country requires the identification of the relevant dimensions and indicators that can capture its diverse aspects. Previous literature has analyzed the geopolitics and geo-economics of both countries as well as the impacts on their relation, but often treating states as unitary actors with rational foreign

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policy making. However, with the trans-nationalization of SOEs, it is of great importance to account for the role of societal actors and their interrelation with the foreign policies of states. Similarly, when the International Political Economy (IPE) of the relation is discussed, the interrelation between the state and the market is treated separate of or excluding geographic spatiality. Therefore, it was decided to conduct the analysis of the Indo-Iranian energy relation in the context of the theoretical framework of Geopolitical Economy (GPE), which connects these dimensions by resting upon the key contributions of IPE, realist geopolitics and critical geopolitics. Additionally, The Power Transition Theory (PTT) and the Theory of Relative Capability (TRC) are used to amend the analytical framework and foster a better understanding for how the global system influences foreign policy.

This section will justify this decision by first pointing at the key contributions of the grand theories in IPE and critical geopolitics more specifically, as well as their respective drawbacks for analyzing the case study central in this thesis. Then, the theoretical framework of GPE, PTT and TRC, and related concepts will be explained.

2.1.1 Grand theories in IPE

The oldest theory in IPE is Economic Nationalism, which argues that there is a strong connection between the state and the economy but that the state is the primary and unitary actor. The state can use the economy as a means to increase its power, which protects the state in a anarchic, zero-sum world system. Subordinated to state actors, the global economy is merely a product of the interests of the rational choices made by states (O’Brien & Williams, 2016, p 8-10). However, with the trans-nationalization of NOCs, it is of great importance to account for the role of societal actors and their interrelation with the foreign policies of states. This would not be possible by treating states as unitary actors. The second theory in IPE is Economic Liberalism, which suggests that the economy operates spontaneously, based on individual actors’ self interest to maximize their profit, leading to a positive sum. The role of the state should be limited, as intervention will disrupt the mechanisms of the economy, which negatively affects progress, cooperation and prosperity (O’Brien & Williams, 2016, p. 8-13; Jackson & Sorenson, 1999, p. 180-181). However, both India and Iran try to maintain a certain level of control over their respective energy sectors and following state-led development, their economies are not managed by market forces. The third grand theory in IPE is Critical Theory, which diverted from the other two as it treats the state and the world system as subjected to market forces. The international system is a zero-sum game, in which the international system is a product of the capitalists’ drive for profit, class struggle and

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oppression. An important distinction between critical theory and the other two theories is its focuses on institutions and regimes of global governance, international markets and non-state actors, rather than solely national actors (O’Brien & Williams, 2016, p. 18).

Critical geopolitics

The revival of state capitalism and SOEs at the end of the Cold War led to states having more economic resources and the deep integration of global trade links and financial markets made geoeconomic tools more powerful, causing scholars to emphasize the importance of geoeconomic power (Petsinger, 2016). Critical geopolitics applied this appreciation for the geo-economic and geopolitical dimensions to Critical Theory and used it to emphasize the importance integrate the strong geographical dimensions to analyse complex system realities (Amineh & Yang, 2018, p. 29). As such, it focusses on the wider context of socio-economic and human development (Mercille, 2008, p. 572-573), and therefore not only analyzes the material spatial practices of IPE, but also how this is represented and contested (Amineh, 2003, p. 21). By this it acknowledges the role of both state and non-state actors, such as multinational enterprises (Agnew, 2010, p. 571). However, critical geopolitics treats the geo-economic dimension as separate of the IPE.

2.1.2 Geopolitical Economy

Geopolitical Economy (GPE) follows from critical geopolitics and is more relevant to this paper as it reintegrates this spatiality and multi-actor approach of critical geopolitics with IPE. Building on David Harvey’s (1985) concepts of territorial logic of power and capitalist logic of power it emphasizes the interplay between the institutional affiliations of elite groups and the workings of the political economic systems. Two logics are central to GPE; 1) the

territorial (geopolitical) logic of power, which is the power projection of officials of statecraft

and their need to maintain credibility both domestically and abroad, and 2) the capitalist

(geo-economic) logic of power, which is about wealth creation and capital accumulation, derived

from the tendency of capital to expand geographically and cross-borders. The interaction between these two logics is seen as the primary force that sets the configuration of the global system. Because of this importance to the global system, Amineh and Yang (2018) applied the theoretical framework of GPE to energy studies and developed the following conceptual model (Figure 1.1)

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Unit of analysis: the state-society complex

In GPE, the state-society complex is essential to understand the forces that drive energy policy and is therefore the central unit of analysis. The state-society complex is the structure of the interaction between state (i.e. the government) and society actors (i.e. civil society and business elite). There are two ‘ideal types’; the liberal state-society complex and the

centralized state-society complex (Amineh & Yang, 2018, p. 12). The former refers to

self-regulating societies, which have already gone through the process of industrialization and the market is able to operate relatively autonomously of the state. In the centralized state-society complex, however, the society actors are either non-existent or relatively limited in their ability to act independently from the state. Generally, the state maintains its authority over the executive and legislative branches of key economic sectors, which often results in a nationalized energy sector with very limited space for the independent business class. In a centralized state-society complex the business/capitalist class is relatively non-existent or undeveloped and is therefore too weak to act independently of the state. Therefore, the state-class determines the long-term strategy of society, especially in the case of sensitive policies such as energy supply security (Amineh & Yang, 2018, p. 13). This spills over in the relationship between the state and energy corporations. While in a liberal state-society complex privately owned corporations are relatively independent of the state, energy companies and enterprises in centralized states are either directed by or owned by the state

Source: Amineh, 2018

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(Ibid, p. 14). The two ideal types are not polar opposites and as such different states can have different configurations of state-society complexes on a spectrum between the two extremes (Amineh & Yang, 2018, p. 11).

Sequential industrialization, contender states and power projection

The two ideal types of state-society complexes are a product of a process called sequential

industrialization. Sequential industrialization can be defined as the sequence in time in which

some societies succeed in their transition towards an industrially based politics, society and economy, and began to close the productivity-power gap with the earlier already industrialized societies (Amineh, 2007, p. 4). The earlier, already industrialized countries have been through the industrialization process and the state-society complex has been successful in shaping the institutions that allowed the society to become self-regulating. However, on system level, the gradual transition from rural to industrialized economies is leading to increased demand for fossil energy sources (Amineh & Houweling, 2007, p. 363). Because the demand for these resources is growing faster than supply, both the industrialized and the industrializing countries aim to secure their energy supplies, which creates a global competition to control fossil fuels. Because the newly industrializing countries have to resist being marginalized and excluded from the world economy by the already industrialized, dominant countries others, they require a state-led ‘catch up’-strategy. These are therefore characterized by a centralized state-society complex.

The concept contender state is used to refer to states that are able to resist marginalization by challenging the hegemonic world order. One way in which contender states challenge the existing global order is by efforts to bring the global-level arrangements in line with their specific domestic wealth-power structure (Amineh & Yang, 2018, p. 12). In other words, challenging the hegemons’ self-made rules and related institutions by setting ‘alternative’ rules and institutions, leading to conflict between states about the rules of interaction in the IPE (Amineh & Yang, 2018, p. 10-11).

In turn, following a geopolitical logic, the officials of statecraft of the hegemony try to contain these contender states in order to maintain their international credibility, which they do by signalling that challenges to the hegemonic order will be resisted (Mercill & Jones, 2009, p. 857-858). Therefore, when sequential industrialization pushes contender states to enter the stage of IPE to secure cross-border energy supplies and seek to project their power on target actors (in this study resource rich host countries), the existing order will aim to resist

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and contain these efforts, manifesting through geopolitics and geo-economics. Therefore, not only the hegemonic and industrializing countries seek to project their power, but also regional contender states, such as Iran.

Technological change, resource scarcity and lateral pressure

Since the Industrial Revolution, states have become increasingly reliant on fossil fuels. Industrializing economies go through technological change and therefore become more reliant on energy to sustain the fundamental elements for economic growth and domestic stability, such as infrastructure and food supplies. GDP growth, population growth, rising per capita income and mass production keep increasing energy consumption and this is mostly reliant on fossil fuels. This led to two consequences; resource scarcity and environmental problems. The effects of resource scarcity and environmental problems can build up socio-economic pressure on state-society complexes to expand socio-economic activities beyond state boundaries, which is referred to as lateral pressure (Amineh & Yang, 2018, p. 22).

Resource scarcity is the inability to secure the necessary resources to meet increasing

demand for energy. Because energy is still dominated by fossil fuels, fossil energy is identified as a strategic commodity in IPE (Amineh & Yang, 2018, p. 14). As such, energy

security, the continuous availability of energy in various forms, in sufficient quantities at

affordable prices has become an essential part of domestic and foreign policy. Resource scarcity threatens energy security. Amineh and Yang (2018, p. 14-15) define three types of scarcity. Demand induced scarcity is the decreasing availability of energy per capita, leading to a higher demand for resources. This is caused due to population growth, a rising per capita income or the pricing of substitutes. Supply induced scarcity is when there is a decline in available resources and/or when the competition for certain resources increases. Consequently, supply induced scarcity can lead to regional processes of competitive power projections. Structural scarcity is deliberately imposed supply-induced scarcity by a major industrialized power, by producer-cartels such as OPEC or by powerful state-led NOCs of resource-rich countries (Amineh & Yang, 2018, p. 18).

Energy diplomacy

One way in which government policy and lateral pressure converge is through energy diplomacy. Energy diplomacy can be defined as energy-consuming countries’ employment of political, economic, military and diplomatic measures to facilitate their NOCs seeking overseas energy assets (Wu, 2018, p. 109). Even though this concept is not derived directly

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from GPE theory, it fits well within the analytical framework of GPE, as it helps to understand state behavior in accordance with lateral pressure.

2.1.3 Power Transition Theory and Theory of Relative Capability

Organski and Kugler (1980, p. 19-22) relate sequential industrialization to the interstate system and capability distribution, using the Power Transition Theory (PTT). Based on this theory, they suggest that the world entered the industrializing phase after the Industrial Revolution, which allowed states to increase their economic power, expand military capabilities and grow their population. They suggest that these economic, military and demographic capabilities constitute a state’s overall capability (Oranski & Kugler, 1980, p. 33-35). In line with sequential industrialization they argue that because some states industrialize more successfully than others, a certain world order is created based on a certain capability distribution. When states successfully accrete the capabilities to challenge the dominant power(s), intentionally or unintentionally, it could lead to a power transition in the world system (Organski & Kugler, 1980, p. 19-22).

With the Theory of Relative Capability (TRC), Doran and Parsons (1980, p. 947) suggest that industrializing powers go through a cycle of relative capability of ascendancy,

maturation and decline. The capacity of a state to influence international politics and to assert

a certain foreign policy role is determined in large part by its position on the relative capability cycle (Ibid, p. 949); an ascending power aims to maximize growth by increasing market share, penetrate foreign markets and by protecting their own sphere, whereas dominant powers (not able to expand market share) aim to protect their existing share (Doran, 2000, p. 353). Siccama (2011, p. 355) builds on the TRC and simplifies Doran and Parsons’ (1980, p. 948) ‘curve of relative capability’ to show the relative rise and decline of industrialized and industrializing powers after 1950. Figure 1.X shows Siccama’s (2011, p. 355) stylized representation of this ‘power cylce’ and shows the relative uprising and decline of ten powers between 1950 and 2010.

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As such, these theories help to elaborate on the concept of sequential industrialization and are very helpful to explain certain geopolitical behavior of state-society complexes in specific regions. From their realist approach, Organski and Kugler (1980, p. 123) suggest that to understand the effect of conflict to the distribution of international power it is important to look only at the behavior of states. However, taking GPE as primary theory to analyze this case study, states will not be treated as unitary, rational actors. These views are not mutually exclusive. The scholars themselves admit: Were one interested in questions related to causes

and outcomes, particularly the former, it might be meet to observe the views and behavior of military leaders, politicians, diplomats, industrial and labor officials, and mass publics.

Accordingly, this thesis will use the insights these theories as a tool to illustrate the effects of sequential industrialization on power distribution and how this partially determines state behaviour. However, a recognition for institutional affiliations of elite groups, non-state actors and the workings of the political economic system will remain central to the analysis.

Source: Siccama (2011,p. 355)

Note: Bra = Brazil; US = United States; F = France; UK = United Kingdom; G = Germany; J = Japan; SU/RUS = Soviet Union/Russia

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1.4 Argumentation and hypotheses

This section will operationalize the abstract concepts of the theoretical framework and explains how these will be relevant to analyze the Indo-Iranian energy relationship. First, the unit of analysis, the state-society complex, will be operationalized, to introduce the social entities and actors that are under study throughout this thesis. Then the concept of energy security will be defined in accordance to the case study and will be linked to the scarcity concepts and related indicators. Then, the main concepts of GPE, PTT and TRC will be operationalized and linked to the case study, which will form the foundation and structure of the analysis. Finally, a hypothesis will be formulated, which will be tested in the final concluding chapter.

Social entities and actors

The state-society complex entails that the outward expansion is not a mere function of the state’s interests, but an interaction between the state and societal actors subjected to the forces of a globalized energy market. As such, ‘the state’ is not necessarily treated as a unitary actor, which means that the power structure of a state can be an interplay of different state and para-statal actors. Therefore, the actors that will be researched will be the national governments of India and Iran, including their relevant ministries (e.g. the Ministry of Petroleum and Gas), but also the role of non-ministerial actors that are part of the states’ power structure, such as the bonyads and Islamic Revolutionary Guard Corps and civil society. The theoretical framework showed that for centralized state-society complexes, the societal entities are either non-existent or relatively too weak to significantly influence policy, the energy sector is under control of the government and the major oil and gas companies are state-owned. For India these are the Oil and Natural Gas Corporation Limited (ONGC), and more specifically its overseas branch ONGC Videsh Limited (OVL), Oil India Limited (OIL), Indian Oil Corporation Limited (IOCL), Gas Authority of India Limited (GAIL) as well as related financial SOEs, such as India’s EXIM Bank. For Iran the major SOE related to energy is the National Iranian Oil Company (NIOC). However, as the literature showed the significance of investments in ports and infrastructure to the relation, there will also be a focus on the Iranian Ports and Maritime Organization (PMO) and the Construction and Development of Transportation Infrastructures Company (CDTIC) and the Central Bank of Iran (CBI).

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Energy security and indicators

The aim of this thesis is to analyze the role of Iran to India’s sustainable energy security, which means the effects of interaction should be understood in relation to both its short-term and long-term energy security. With regards to this time frame, energy security will be defined according to the definition of the UNDP (2000, p. 113), the continuous availability of

energy in varied forms, in sufficient quantities and at reasonable prices. This definition

accounts for multiple aspects that are important to analyze the contribution of the Indo-Iranian energy relationship to India’s sustainable energy security. First, it considers the availability of local and imported resources to meet growing demand over time at reasonable prices, as well as the limited vulnerability to transient or longer disruptions of imported supplies (Ibid). The literature showed that there are many different indicators for energy security and that the adequacy and relevance of different indicators depends on the perspectives of the actors trying to ensure their energy security. This research focusses on India’s activities and engagement beyond its border to improve its energy supply and therefore requires a set of concepts and indicators that help explain the forces behind 1) India’s engagement in overseas energy sectors, 2) its interests and its interactions with Iran and 3) the related domestic and geopolitical factors and forces that threaten the supply security from Iran and India’s overall energy supply security. Following the theoretical framework, this thesis will discuss India’s energy security through the three dimensions of resource scarcity concepts; demand induced scarcity, supply induced scarcity and structurally induced scarcity.

India’s engagement in overseas energy sectors

At the foundation of India’s need to secure energy from beyond its borders are the territorial (geopolitical) and capitalist (geo-economic) logics of power. Wealth creation and capital accumulation force industrializing states to secure energy imports from resource-rich countries. The main reason for India why it is not able to sustain its development domestically is demand induced scarcity. Demand induced scarcity can be operationalized using: 1) indicators describing its increasing reliance on fossil fuels, which are a) India’s industrialization and its economy’s increasing dependence on fossil fuel imports to sustain its power wealth structure, b) India’s rapid population growth and c) rising per capita income. 2) indicators relating to rising import dependence, which are a) India’s domestic scarcity of reserves and b) India’s total energy production, consumption and net imports per source.

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Interests and interactions with Iran

However, sequential industrialization means that gradually more and more states transition from rural to industrialized economies, leading to increased demand for fossil fuels. Accordingly, in an increased competition for fossil fuels, India is faced with potential supply disruption caused by supply induced scarcity and structurally induced scarcity. Supply induced scarcity will be operationalized using: 1) indicators relating to resource estimates, which are a) global reserves and b) their gradual depletion and 2) indicators relating to diversification, which are a) India’s diversity in energy types and b) India’s diversity in geographical sources. Finally, structurally induced scarcity can be operationalized using: 1) indicators relating to political stability, a) Iran’s supply stability and b) Iran’s exposure to geopolitical oil market concentration risks and 2) relating to diversification a) India’s overall reliance on OPEC.

As such, these expansionist logics leads to power projectors (in this case India’s state-society complex) to seek control over markets and resources in resource rich countries (in this case Iran) in order to improve their energy security. This can be done using energy diplomacy, which is conceptualized as the employment political, economic, military and diplomatic tools to facilitate NOCs to acquire overseas energy assets. These relations can be set up through

diplomatic, economic and military tools. Diplomatic tools can be analyzed as official and

ministerial visits between the two countries, as well as their (official) statements about each other. Economic tools are generally operationalized by analyzing the flows of trade, investment and finance between the two parties.

Mediating factors and forces

However, India’s dimensions of control are mediated by the actors in target locations, the situations in the societies that the power projector is aiming to bring under its control and the timing of power projection (Amineh & Yang, 2018, p. 15). As such, the effectiveness of the relation is not only a product of India’s expansionism and energy diplomacy, but also require an analysis of the actors in Iran that influence the effectiveness of the energy relations. The configuration of the state-society complex has important implications for the governance of energy security, as it determines the ability of a state to intervene in the market to achieve political and strategic objectives. As Iran is a centralized state-society complex with a nationalized energy sector, this can be further understood by analyzing Iran’s political economy of energy. The Indo-Iranian relation connects two geographic areas, the Middle East

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and South Asia. Following the theory, India needs to have a certain level of control over these areas to secure its energy supplies from Iran to India. Literature, however, shows the negative impacts of rivalry between India and Pakistan to construct gas infrastructure to and with Iran. Additionally, the highly instable situation and geopolitical rivalry in the Middle East are likely to have a strong impact on India’s ability to secure its energy supplies from Iran.

The last mitigating factor relates to timing and can be related to the PTT and the TRC. In a process of sequential industrialization, there are more important energy consuming countries alongside India that aim to secure their energy supplies. This puts pressures on the supply of fossil fuel resources, but as an uneven distribution and gradual depletion of the world’s energy reserves might not be able to sustain this growth, a competition for these resources is expected. As such, in theory, it is important for these importing countries to project their power to maintain their grip on the resource rich countries, in order to secure their share and prevent other actors from disrupting it. Siccama’s (2011, p. 355) curve of relative economic power shows that both China and India are rising powers at the expense of the US. Therefore, the role of the US and their foreign policy in the Middle East and South Asia is expected to play a significant role to the Indo-Iranian energy relationship.

With an increasing threat of supply and structurally induced scarcity the diversification of resources and sources has become an essential component for India to continue its sustainable energy supply. By accessing the resources in Central Asia, India can diversify in both energy type and geographic source to decrease its vulnerability in the case of either forms of supply disruptions. Being blocked by its neighbours, ‘the Iranian pivot’ seems one of the only alternative for India to diversify its energy supplies.

Hypothesis

Based on the previous sections, a hypothesis can be formulated as answer to the research question: What are the internal drivers and external forces that configurate the

Indo-Iranian energy relationship, and to what extent does India’s involvement in Iran’s energy sector contribute to sustainable energy security?

Hypothesis: Efforts by the two countries to strengthen the Indo-Iranian energy relationship do contribute positively to India’s energy supply security but India’s dimensions of control are mediated by domestic and geopolitical economic threats.

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1.5 Research Method

The research will be conducted using both qualitative and quantitative research methods; using primary data sources, interviews, analyses of government statements as well as statements and visits by high officials.

Most data will be collected through extensive desk-research; including literature studies of both primary and secondary sources. This consists of literature published in or by journals, books, government sources and institutions. The energy situations of India and Iran will be analyzed by analyzing state strategies (e.g. India’s 12th

Five Year Plan) and data and analyses provided by primary sources such as the IEA (2018, World Energy Outlook) and BP (Statistical Reports). For the quantitative indicators of energy security, British Petroleum (2018, Statistical Review [XLS]) will be used for data on energy production, consumption, as well as reserves of coal, oil and gas. Also vital are data sources on trade, such as the IMF (2018, Diretion of Trade Statistics (DOTS) – Exports and Imports by Areas and Countries) and the India Export Import Data Bank (2018, Import: Commodity-wise all countries) and analyses and forecasts of the oil and gas markets (IEA, 2018, Oil 2018: Analysis and

Forecasts to 2023). This data is complemented by collecting data through; Interviews with

experts on the two countries and energy security, such as academia, policy makers and people from the private sector and Political statements by policy makers and high officials of state and non-state high officials.

1.6 Organization of the thesis

This paper will outline the domestic, bilateral and geopolitical economic forces that influence the Indo-Iranian energy relationship and the consequences for India’s sustainable energy security based on the following sections: [Chapter 2; India’s energy situation and Iran’s energy sector], which will be divided in two parts; the energy situation and the processes of energy policy formation of India and the energy situation and Iran’s political economy of energy. [Chapter 3; Indo-Iran energy diplomacy], which also consists of two parts; India’s energy diplomacy in Iran and India’s involvement in Iran’s energy sector. [Chapter 4; Geopolitics of energy and contender states], which will analyze how domestic, regional and geopolitical economic actors and forces relate to (threaten and influence) the Indo-Iranian energy relationship. It will also examine how the maximum sanctions campaign threatens the relationship and how this influences India’s energy security. [Chapter 5; Conclusion], which will conclude by discussing the findings and will outline whether the Indo-Iranian energy

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relationship and the developments in this relationship contribute to India’s sustainable energy security.

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2. India’s energy situation and Iran’s energy sector

2.1 Introduction

In order to analyze the Indo-Iranian energy relationship, this chapter will provide an analysis of India’s energy situation and Iran’s energy sector. More thoroughly, following the operationalization, the first part of this chapter aims to explain the domestic capitalist forces that push India to expand their energy policy overseas and how this affects its energy policy formation. This will help to understand the forces that drive India and its State-Owned Enterprises (SOEs) to engage in overseas energy sectors in general. As this thesis analyzes India’s overseas energy strategy to Iran specifically, the second part will seek to provide a thorough explanation of the political economy of Iran’s energy sector, by examining Iran’s state-society complex and the way it affects (the potential of) its energy sector. As such, this chapter aims to answer the following research questions:

1) What is India’s energy situation and why does it need to acquire resources from overseas?

2) What is the current state of Iran’s energy sector and what is the political economy of its energy governance?

2.2 India’s energy situation and energy supply policy

This section will present the development of India’s import dependence. Following the theory of GPE, this should be done by understanding its increasing reliance on imports as a result of the capitalist (geo-economic) logic of power, which is the tendency of capitalism to expand geographically. Not only do industrializing countries have to expand geographically to penetrate overseas markets to prevent underconsumption, but also do they have to gain access to resources to sustain capital accumulation and wealth creation. Accordingly, based on the concepts of demand induced scarcity and lateral pressure, this section will analyze the India’s domestic factors that lead to an increased reliance on fossil fuels and the imports thereof, to sustain its power wealth structure.

2.2.1 India’s energy situation

According to GPE, lateral pressure on governments increases primarily due to; technological change, population growth, rising per capita income, domestic resource-scarcity and the social pressure of unfulfilled demands (Amineh & Yang, 2018, p. 27). As such, these variables are used to analyze India’s energy situation vis-à-vis its effect on energy policy.

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India’s technological change

Due to India’s rapid industrialization and growing economy (at a compound annual growth rate of 7.8% between 2017-25; IEA, 2018, p. 599), India’s thirst for energy has grown significantly and is expected to continue to grow (EIA, 2016, p. 2). As discussed in the Theoretical Framework in Chapter 1.3, industrialization increases the demand for fossil energy to produce wealth and power (Amineh & Houweling, 2007, p. 363). Because of the transition from a rural to an industrialized economy, the foundation of India’s economy and its economic sectors have been subjected to technological change, which increased the dependency on energy resources. Primarily the power and transportation sector are expected to continue to have significant impact on the total energy demand. The IEA estimates that 19% of India’s population, 240 million people, lacked access to electricity in 2013 (IEA, 2018), which the Government of India is now trying to reduce. In accordance with the theory, the IEA (Ibid) predicts that this will increase India’s domestic energy demand significantly. Additionally, India is aiming to improve road and railway transits and the number of transport vehicles is expected to increase with 260 million additional passenger cars, 185 million two- and three-wheeler vehicles and 30 million new trucks and vans (IEA, 2014, p. 234). This means that the transportation sector will expand and increase the demand for petroleum products. Finally, it is expected that the ‘Make In India’ campaign will also put significant pressure on India’s energy demand (Ibid).

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India’s industrialization and growing economy have also led to a positive annual GDP per capita growth, with an average growth rate of 5.5% between 2000 and 2017 (World Bank,

2018). The IEA found that there is a strong correlation between GDP/capita growth and increased energy consumption for developing countries. Figure 2.1 shows that for India, the energy consumption has grown and is expected to grow relative to GDP per capita growth. The effect of GDP per capita growth on energy demand is further intensified as the total population of India is expected to continue to grow. The IEA estimates that India’s rapidly growing population will rise from 1.339 million people in 2017 to 1.605 million people in 2040, at a compound average annual growth rate of 0.8%.

India’s domestic resource scarcity

Figure 2.2 shows India’s energy mix in million tonnes of oil equivalent (Mtoe) and in percentages of the total energy consumption in 2017. It shows clearly that 92% of India’s total energy consumption is based on the three major fossil fuels; coal (424 Mtoe, 56%), oil (222.1 Mtoe, 30%) and natural gas (46.6 Mtoe, 6%). This has two main energy policy complications: First, the large share of fossil fuels leads to increasing CO2 emissions, which forces governments to take measures towards energy transition. Secondly, it leads to resource

Source. EIA, 2018, p. 3

Note. Minor editing by the author to improve readability

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scarcity, which forces governments secure energy supplies. To secure energy supplies, India can use a combination of its domestic production of energy and imports from other countries. As such, it is important to analyse whether India has the capacity to satisfy its energy demands by domestic production. The gap between consumption and production is

domestic-resource scarcity, which needs to be imported from overseas sources. Figure 2.3 shows

India’s domestic production and consumption of the three main energy sources; coal, oil and gas.

Figure 2.2: India's Energy Mix in 2017 (in Mtoe and %)

[CELLRANGE] [PERCENTAGE ] [CELLRANGE] [PERCENTAGE ] [CELLRANGE] [PERCENTAGE ] [CELLRANGE] [PERCENTAGE ] [CELLRANGE] [PERCENTAGE ] [CELLRANGE] [PERCENTAGE ] Oil Natural Gas Coal Nuclear energy Hydro electric Renewables

Source: Chart Compiled by the Author, based on data of British Petroleum (2018) - Statistical Review All Data [XLS]

The contribution of the Indo-Iranian energy relationship to India’s energy security : a geopolitical economic analysis