India’s Arctic Opportunities and Relevance of South Korea

In 2013, India obtained observer status in the Arctic Council. It became one among the non-circumpolar countries in the Arctic Council like China, Italy, Japan, Singapore and South Korea.

The Arctic Council is a high-level intergovernmental forum that addresses issues faced by the Arctic governments and the indigenous people of the Arctic. It was set up in 1996. It has eight member nations viz. Canada, Denmark, Finland, Iceland, Norway, Russia, Sweden and United States. There are 12 countries with Observer status in Arctic Council. They are China, France, Germany, India, Italy, Japan, South Korea, Netherlands, Poland, Singapore, Spain, United Kingdom.

Importance of Arctic region

In recent times, the global interest in the Arctic region increased manifolds due to the following:

• Availability of vast reserves of oil, gas, and minerals. It is estimated that as much as 10 to 20 percent of the world’s oil and 30 percent of natural gas is present in the Arctic region. Countries like Russia and Norway have already accelerated the exploration of hydrocarbons in the region.
• Availability commercial fishing opportunities
• Due to the effects of global warming shortened shipping routes are now accessible. The traffic in the Northern Sea Route (NSR) would be seen increasing as the number of vessels plying in this route is increasing day by day. The Arctic region is experiencing global warming at twice the rate of global average. The consequent melting of ice has led to two major geopolitical impacts: Firstly, opening up of new shipping routes between Atlantic Ocean and the Pacific Ocean. Secondly, the scramble for resources of the Arctic region
• Still further, it can also mean a shift in the center of gravity back to trans-Atlantic from the Asia Pacific, via the Arctic region.
• Currently, global supply of oil comes to Asia through the Suez Canal and is stored in Singapore. This makes Singapore as the World’s biggest oil storage hub. However, with increased traffic through NSR will shorten the route and will not have any piracy related issues that has been plaguing the Suez Canal. Sensing this opportunity, South Korea is developing itself into a next hub for oil storage. It has already developed a master plan for the Arctic region involving three policy goals, four strategies and 31 projects.

Importance of Arctic for India

India’s interests in the Arctic can be classified into scientific, environmental, commercial and strategic. Though as of now, India has increased its participation in the Arctic matters, there is no clear policy about the path ahead. For India, Arctic may be doubly important especially for satisfying energy security needs. Arctic’s crude oil deposits may be helpful to solve India’s perpetual energy security problems. India depends heavily upon fossil fuels as oil constitutes more than 30% of India’s total imports.

Further, China’s ability to navigate the Northern Sea Route (NSR) is another factor in India’s military strategy. It opens up the possibility of China accessing oil from the north. India’s military strategy, so far based on the assumption that it would be able to pressurize China by blocking off Malacca Strait, thus choking the Chinese energy supplies needs to be reframed in the context of energy availability from the Arctic region.

China’s stake in Arctic

China has succeeded in registering its presence in the Arctic by way of investment in research and mega-projects. It has signed a $400 billion gas deal in 2014 with Russia. Also, it has given a $12 billion loan for the Yamal LNG project (mainly held by Russia) after it went into trouble due to the US issued trade sanctions. Interestingly, ONGC showed initial interest in the project but later opted out from acquiring a stake in this project.

Way Forward

With India’s current US-leaning policy, India could not have strategic partnerships with Russia and China. So in this case, partnership with South Korea may help India to avail the benefits of the recent development.

India and South Korea have already signed a Comprehensive Economic Partnership Agreement (CEPA). CEPA has provisions to liberalise trade between both the nations under WTO regime. Also, in the last year seven agreements were signed with South Korea under CEPA. The agreements were related to double-tax avoidance, deployment of renewable energy, maritime transport and sharing of maritime technologies. At present, both the countries are holding discussions to review the Indo-Korean Free Trade Agreement (FTA). The FTA particularly will provide potential tariff concessions on storage or transport of Arctic oil which is likely to help India immensely in the coming years. With the falling oil production from ONGC and other domestic players, strategic partnership with South Korea provides immense opportunity in filling this gap.

To begin with India should include provisions for future crude oil trade and integrate Arctic resources in CEPA. As an observer state in the Arctic Council, India should get actively involved in the programmes of the Arctic region. This is especially important since in this year China, Japan and South Korea were holding discussions on Arctic issues in Seoul. India which is also an observer state so far has been from talks of this nature.