India Joins China to Compete for Myanmar Energy

In the Great Game between China and India for Myanmar’s energy sector, Indian companies have been making successful inroads, with state-owned companies such as OVL and GAIL having invested almost US$1.33 billion in the China-Myanmar gas pipeline project, which runs 2,400 km. across Myanmar to Yunnan, the west China border state.

Myanmar’s government has cautiously turned away from China toward a neutral stance, caught as it is between Asia’s two biggest countries. The years when the junta ruled a pariah state condemned across the world were mostly spent as a China client. But with the opening to the west, the government in the capital of Naypyidaw has pulled back from the dragon’s embrace.

India has maintained an on-off relationship with Myanmar since the 1962 coup d’état in what was then Rangoon, maintaining lukewarm relations with the military junta since the late 1980s when soldiers of the Tatmadaw, Myanmar’s military, shot down hundreds of student protesters in the streets and later cracked down brutally on Buddhist monks. India has finally arrived with political realism in Myanmar following its "democratic transition" which began with a new constitution allowing for limited popular voting in 2010. Subsequent elections in 2012 opened the country more.

Despite the decades of cool relations, India has a cultural advantage over China with the shared history of Buddhism, colonial rule and the struggle for independence. In addition the two countries share a long land border and maritime boundary in the Bay of Bengal. Today, however, both countries have their own economic and national interests at heart rather than glorifying its rich past.

For the past quarter-century, India has followed a textbook "Look East" policy approach, making numerous efforts to reach out to Myanmar, given its strategic and economic value. Through Look East, New Delhi was also trying hard to give impetus to trade and economic ties in the land-locked and poverty-stricken northeast India, which is almost cut off from the majority of the country by the geographic intrusion of Bangladesh, by seeking cooperation of neighboring countries.

As Myanmar has increasingly opened up, that has opened up concomitant new business opportunities for more Indian companies. After the rise to power of the National Democratic Alliance government in 2014, the new leader, Prime Minister Narendra Modi, visited Myanmar a few months later. Modi has amended the government's "Look East" policy to ''Act East."

Cooperation has so far proven to be mutually beneficial for India and Myanmar with respect to the power and energy sector. Modi has set a conciliatory tone, mentioning that his foreign policy toward the neighboring state is based on liberal issues.

On a recent visit to Myanmar by India’s External Affairs Minister Sushma Swaraj, both sides reiterated the need for closer energy cooperation. The Myanmar government has reacted eagerly, encouraging more investment. Discussions were held for promoting joint ventures in Myanmar, specifically in hydroelectric power. Myanmar has recently proposed the establishment of a coal power plant at Kalewa in northwestern Myanmar, further strengthening energy ties.

The country’s rich resources in oil and gas reserves provide energy-hungry India with alternative opportunities. As Myanmar has opened its doors to the world for economic liberalization, Indian energy companies sought to take advantage, with state-owned oil companies like ONGC Videsh owning 20% and GAIL having 10% stake in Shwe gas fields.

As a result, today, figures from the Myanmar Investment Commission show Chinese foreign direct investment totaling US$2.3 billion – about what India expects to invest over the next several years – although it could be higher than reported in the first three months of the fiscal year 2015-2016.

Private companies like OIL, Mercator, Oilmax and Reliance have also entered Myanmar’s energy market. India’s investment in the country’s energy sector between 2009 and 2014 was US$273.5 million. That is expected to soar to US$2.6 billion over next few years on foreign direct investment and joint ventures.

These companies have won exploration and production rights in four oil blocks off the Gulf of Mottama, where the Thanlwin River empties into the Andaman Sea in the southern peninsula. Reliance Industries, controlled by billionaire Mukesh Ambani, has signed production sharing contracts with state-owned Myanmar Oil and Gas Enterprise for the two blocks it won in the Tanintharyi basin offshore. This has been a big breakthrough for the Indian government considering the integrated economic prospects.

Further, New Delhi will seek the marketing rights for its secured blocs. This way it could directly ship the oil and gas to advanced south Indian ports of Chennai and Vishakhapatnam, across the Andaman Sea in Andhra Pradesh.

Sanchita R. Sairang Kshatriya is a journalism master’s degree candidate at the Hong Kong University Journalism and Media Studies Centre. She is an Asia Sentinel intern.