India and China are both characterized by a tremendous increase in energy consumption, of which an increasing share derives from imports. Very rapid economic growth always makes it difficult to arrive at a sound balance between demand and supply, and this tends to generate waste, bottlenecks and insecurity.
Although both countries are trying hard to provide appropriate energy, increase their energy efficiency, and diversify their sources of supply, they are becoming increasingly dependent on imported oil, and the Persian Gulf is set to remain their predominant source of oil in the coming decades. Instability in the Middle East thus poses a serious challenge to the security of China and India, just as it does for Japan, the US and many European countries. The question of maintaining a stable supply of fossil fuels poses several security challenges. One is to boost one’s own production, another to diversify one’s sources of import, and a third to secure the transportation of oil and gas on vulnerable sea routes; or over land through pipelines that depend on long-term strategic relationships with the producing countries.
In China and India a heightened awareness of the geopolitical implications of energy supply and demand has given energy issues an increasing prominence both in their domestic and foreign policies. However, it is difficult to say if this leads to more tension in their foreign relations or if instead it pushes them towards increased international cooperation. Plans are certainly being made for future possible ‘resource wars’, but emphasis is presently being put on economic competition, and on seeking to maximise each country’s position on the international energy market. Then again, such increasing resource competition may contribute to raising the stakes of conflict in areas where national jurisdiction has not been resolved (East China Sea, South China Sea), and also in some of the energy exporting countries. Burma is one such country, in which the energy security dynamics of India and China are played out, and this is detailed in an appendix to the report.
The report is based on available literature, online energy data, and communication with Indian and Chinese researchers. We have used country reports and statistics provided by the International Energy Agency (IEA), statistics, forecasts and analyses by the US Energy Information Administration (EIA), unpublished academic papers, books and articles by Indian and Chinese researchers, and reports by several European and American analysts.