Thursday, November 15, 2018

For all the Indo – Pacific talk, India faces deep challenges of grand strategy.





Indo Pacific, the words conjures a world where Indian aircraft carriers assert Mahan’s vision of sea control far from the littoral, even as running silent running deep – an Indian nuclear submarine suddenly pops up to neutralizing a Chinese armada far from their home bases and Indian fighter aircraft undertake sorties from bases in the Indian ocean rim islands - refueled aerially far from the motherland.
As if an Indian role across the world - from the western command in Mumbai down south to Diego Garcia and all the way to the Pacific command in Honolulu is suddenly a reality.
Ever since the United States renamed its command in Hawaii as the Indo - Pacific and President Donald Trump unveiled a new National Security Strategy describing India as a "leading global power" India’s role on the high seas is assumed as manifest destiny.
Not so fast.
While India’s increasing role in global affairs and its attempts at military outreach is a fact – but several factors will likely hold India back.
The biggest block is money; there just isn’t enough of the stuff dedicated to match the ambition of a global role. Sending a few thousand soldiers on UN missions is very different from asserting oneself in the vast Indo - pacific.  What India needs is an expeditionary military force not the continental - largely land based capability that it currently possesses. Transformation will need billions of dollars.  Yet, by spending only 1.65 % of her GDP on defense in 2018, India is bringing a knife to a gunfight.
Pakistan at 3 % and China 3.5 % far outpace her- and the Chinese GDP is nearly five times India’s. The kind of navy with the number of nuclear submarines, mine sweepers and destroyers that India needs for power projection - along with the number of fighter aircraft and mobility for the army that are required - simply cannot be sustained at the current budget levels. A recent report from the ministry of defense said that even acquisitions for which money has been allocated are delayed on an average by three years and in some crucial ones by a decade. This makes some acquisitions obsolete even as they enter service.

One statistic in particular can cut short any indo pacific ambitions, at Rupees 2.5 lakh crore the pension and salary liabilities of India’s defense budget are more than double of the annual 1 lakh crore spending on defense modernization.
The second big concern is grand strategy. Does India really want to be an Indo pacific power? With power will come greater responsibility. So are India’s shoulders broad enough for that? Just as with money so with blood – grand strategy is a hard grind and influence in international relations is a messy business. It calls for taking responsibility – to put it simply it often calls for shedding blood and taking lives – calmly and consistently. Russia did that in Syria, China does it in Tibet and around the world, Mao’s own son died fighting in the Korean war. All great powers do this, this is the very nature of the beast. India is ill suited culturally for asserting hard power.
Take India’s approach with Pakistan an example – one reason why Indian efforts at isolating the Islamic republic fall flat is that no one is convinced that India would not jump at half and opportunity to break bread with Pakistan. We just do not come across as serious players much less as seriously nasty. You cannot lobby the world to isolate Pakistan when you continue to offer the most favored nation to it. Put another way, the world is waiting to see if India is really serious about isolating the Islamic republic for only after that will the Indian scope beyond her neighborhood and in the Indo pacific emerge with some coherence.
India has to demonstrate it can make hard choices in international relations. While it is important not to reduce diplomacy to a zero sum game and retain strategic autonomy - it is equally important to assert when core interests are in question. 

This is especially so in a multi polar world. India’s old relationship with Russia has been reduced from strategic to the transactional. In Afghanistan India has spent $5 billion beefing up a regime that is opening a dialogue with the Taliban.
In short, the world is increasingly shorting India.


It will need - as it always does - a dramatic and sustained change of course through blood, money and application of hard power to bankrupt the short sellers
.
India with its 2.5 trillion dollar economy has choices a plenty but needs to get her hands dirty. The world is waiting with the QUAD option of US Japan and Australia - and beyond, it will not wait for long. 

India must be loved for her soft power and feared for her strength. For otherwise it looks a little silly speaking in a loud voice but carrying a small stick.

Tuesday, July 10, 2018

Oil refining is on fire in India with $100 billion investments


India’s oil refining sector is red hot ongoing investments total $100 billion
By Ninad D. Sheth

Oil refining is the next big economic thing out of India.
The sector has seen $80 billion investments in the last five years.

$50 billion investments are planned for the next five years.
Although India does not have much oil, it is the world’s fourth largest refiner of the black gold!!

Refining turns crude oil into usable and profitable commodities like petroleum!

Most of the stuff refined is for domestic consumption but amazingly oil deficit India exports a lot of petroleum, petro chemicals and diesel.
In 2016 INDIA exported 61 million metric tons  of petroleum!!


These massive investments point to the fact that despite the solar push and alternative energy focus oil will be the mainstay till at least 2070.
Battery solar wind and others could yet prove these investments costly legacy ones!

That in fact helps India, as oil giants hedge with alternative energy they continue pumping money into oil thus the boom in refining.

India is the world's 5th biggest Oil refinery player and Saudi Aramco just but $20 billion in Reliance a huge vote of confidence !

 The top 10 oil refining countries account for more than 58% of the world's total refinery capacity. The United States is the biggest refiner in the world followed by China, Russia, Japan and India.

Oil is everywhere 


It’s in your       
Dress
Golf
Faucets
Anticeptics
 TV
Eyeglasses
Aspirin
Shampoo
Heart valves
Cold creams
even toothpaste

From Russia with OILOVE


Rosneft, a Russian oil giant payed $13 billion along with Trafigura a Russian fund for ESSAR an Indian oil company.

The ESSAR group once India’s third largest conglomerate was sorta forced to sell this profitable crown jewel by the Modi government which wanted it to pay back the $20 billion debt.

ESSAR has repaid about half of that through this deal alone, though $10 odd billion still remain which at 24 % interest is a hefty outstanding!!
In a bad year for FDI 2017 the Rosneft deal constituted 40 % of all FDI in India.

The deal makes Russians owners of the 400,000 barrels per day (bpd) Vadinar refinery in western Gujarat, a port and 5000 petrol pumps.





Reliance refining plans have taken off !!




Reliance which has a capacity to refine 60 million tons per year is finishing a $10 billion push to up its refining capacity by 40% come 2030.
$10 billion is 66000 crores, lots of money, that.


Reliance has one of the fattest refinery margins in the world at $11 to a barrel of crude.



ARAMCO comes to town !!




Saudi Aramco is the world’s largest oil company.
It has teamed up with Abu Dhabi Oil Company to invest $44billion for 50% in a 60 million-ton/year integrated refining and petrochemical complex in Maharashtra.

This will be the largest ever foreign investment in India.
Gasoline and diesel will be made here meeting India’s equivalent to Euro 6 fuel-efficiency standards

This redefines BIG - the mega refinery will provide feed stock for an integrated petrochemical complex equipped to produce about 18 million ton per year of chemical products.



Kuwait can’t wait!



Kuwait Petroleum International (KPI) is in talks to buy 24 percent of the Bina joint venture refinery in central India.

The 120,000-bpd Bina plant is operated by Bharat Oman Refineries Ltd (BORL), a 50-50 JV between Oman Oil Co and state-run Bharat Petroleum Corp.

The investment would be about $7 billion in this venture.




This is why India’s downstream hydrocarbon sector is a big draw
India is the world’s third largest oil consumer after China and the USA
India is the fourth largest refiner of oil in the world
The Reliance refinery is the largest Greenfield refinery in the world
Oil majors want to go beyond selling crude oil to India 

They want value addition and want to sell petroleum, diesel aviation fuels and petro chemicals
Dharmendra pradhan, India’s oil minister was quoted in the media recently saying, "Oil refining capacity in the country stands at over 247 million ton at present and demand for petro products, which is rising rapidly, will touch 600 million ton by the year 2040,"


Why Oil Refining matters to india

It increases India’s energy security when crude majors also invest downstream they have a greater stake in continued supply to the Indian energy sector.

The $100 billion investment over the next decade and now under way will create 9.5 lakh jobs directly in this sector.

India has some fine petroleum universities that are great for a degree.


Finally, they bring in research and innovation in the business for better products helping the ecosystem.