The breakout of ethnic violence in South Sudan over the past month has seen hundreds of civilians killed. Yesterday, two Indian soldiers serving in in the country as part of the United Nation’s peacekeeping force died after their base was ambushed by rebels. New Delhi has close relations with Juba, and much before its independence, had impeccable and historic relations with Khartoum. Sudan was India’s first oil and gas homerun abroad.
In the mid-1990s, India seriously started mooting investing in the energy sector abroad as its newly liberalised economy and its new designers realised that for successful and uninterrupted economic growth for a country of this size, it was vital to organise uninterrupted supply of fuel.
Prior to this India, which has always been a net importer of crude, had invested in Russia which provided more than favourable conditions. Now, things were changing and decision making on the issue at the Prime Minister’s Office was changing. One of the earliest signs of India’s intensions for overseas investments in oil and gas came with the then much publicised idea of the Central Asia Gas Pipeline Project (CAGPP), an idea first put forward by the company Bridas from Argentina. Indian diplomats at the time in Baku, the capital of Azerbaijan, had started pressurising the Indian government to seriously look into the prospects of bringing natural gas from central Asia into India, but avoiding Afghanistan and Pakistan. Alternates included building pipelines through parts of China.
As politics over the central Asian pipeline continues even today, in 2013, India’s plans to invest in energy assets abroad took it elsewhere. Africa is a continent rich in natural resources and while not much of Western interest prevailed there in the 1990s, due to various reasons, the developing world started to look at the continent as a viable and comparatively economical region to invest in.
However, there was considerable dissent within the multi-layered political circles on Delhi whether India should invest in assets such as these abroad or not, specifically in Africa. Such an investment was unprecedented in a post-90s India and possibility of this happening, while challenging, was eventually unavoidable.
When BJP’s Atal Bihari Vajpayee became Prime Minister in 1998, Indian oil and gas sector started to work towards applying (previously failed) pressure on the Prime Minister’s Office to start investing in energy assets abroad. During lobbying for this, many involved from the industry realised that some of Prime Minister Vajpayee’s Cabinet ministers were dead against investing in a project in Sudan. ONGC Videsh (OVL) had already managed to win the country’s first big foreign energy project in Russia’s Sakhalin-1 field in 2001. However, Sudan was a different, challenging, risky and unconventional bid.
One of the main reasons why powerful people such as Arun Shourie and the late Pramod Mahajan were advising Vajpayee against this “adventure” was the fact the stake India was looking to buy also involved China. This was looked upon as against India’s national interest within the cabinet and the trust factor with Beijing was not the strongest, making it a risky venture.
Ram Naik, who was the Oil Minister at the time, was spearheading these acquisitions knowing that Vajpayee was interested in this direction. Bureaucrats, oilmen and others including ministers had managed to correctly guide Naik in accepting that these bids are necessities and not luxuries. The dissent, nonetheless, continued within the cabinet. It is known that Mahajan had said: “hum gareeb desh hain. Sudan mein itna paisa lagane ki kya zaroorat hai? (we are a poor country, why do we need to put so much money in Sudan?). Arun Shourie reportedly added weight to Mahajan’s views.
However, Vajpayee and now L K Advani, who had gotten involved, were not convinced by Mahajan’s apprehensions. A meeting was organised where bureaucrats and oil industry leaders were called in to offer further convince the cabinet. By this time, the people gunning for the Sudan deal had managed to get some newspapers to back the bid, with articles favouring the deal. However, not many made it into print since time was limited. Multiple copies were printed of these few articles which were then taken into the meeting and presented as though many articles backing the bid had been published across the spectrum of the print media.
The oil industry also highlighted the fact that India had invested over $1 billion in the Sakhalin-1 project in Russia successfully. This was presented as another feather in the cap of Oil Minister Ram Naik’s accomplishments. After listening to all the details including both Mahajan and Shourie making their concerns known assertively, Vajpayee decided to overrule all opposing viewpoints after L K Advani convinced him that the deal should go ahead along with risk insurance, which was organised by a British bank. He (Vajpayee) gave ONGC Videsh a historic unconditional nod for the deal.
India went ahead and bought 25% stake in the Greater Nile Petroleum Operating Company (GNPOC) from Canadian major Talisman Energy for a staggering sum of $750 million in 2003. The China National Petroleum Company (CNPC) owns 40 per cent in GNPOC, Petronas of Malaysia has 30 per cent and the Sudanese national oil company 5 per cent.
This successful deal, passed thanks to political foresight and smart and intense lobbying by both diplomats and oil industry leaders, opened in a way many doors for other Indian businesses to grow in Africa. Even after the carving out of South Sudan from Sudan, New Delhi has managed to keep close relations with both Juba and Khartoum, even though the near war conditions between the two states do keep India’s Foreign Ministry on its toes. Last year, India had invited high level delegations from both countries to try and ease the tensions.
A lot of the troubles between Sudan and South Sudan have occurred due to the new international border separating them. Most of the rich oil and gas regions are around the border and the basins in the region are now shared by both countries. For many months Sudan had blocked routes for South Sudan, a land-locked country, to export its oil as the pipeline required for this runs via Sudan. Juba, as a response, asked India to come and build a new pipeline via Kenya, hence bypassing its problem in dealing with Khartoum and restoring its crucial funds received from oil and gas. However, India till now has not accepted due to concerns on both political (angering Khartoum which could have then got closer to China) and economic (cost of the project and the transit fees due to Kenya would have been too high).
Both Sudan and South Sudan are great examples of governance with vision, which managed to get both in the bigger business of owning energy assets abroad and getting a good foot hold in Africa, a continent on the cusp of an economic boom.