Energy could 'trump' defence as the dominant force guiding India-US relations

• US President Donald Trump and Indian Prime Minister Narendra Modi signed a Memorandum of Understanding (MoU) to increase accessibility to clean fuel.
  
• US-based gas transportation company Chart Industries will use virtual pipelines to deliver liquefied natural gas (LNG) to households located off the grid.
  
• Modi also announced that the Strategic Energy Partnership is holding strong.
  

Defence cooperation has always been at the centre of the India-US bilateral relations. However, that may be set to change that both countries look to deepen ties in the energy sector.

Today, US President Donald Trump and Prime Minister Narendra Modi inked a Memorandum of Understanding (MoU) between India-based Exxon Mobil, the government-owned Indian Oil and US-based gas transportation company Chart Industries.

The trade pact will help deliver liquefied natural gas (LNG) to Indian cities that are currently outside the pipeline network. Using ‘virtual pipelines’ the companies hope to fuel factories, houses and vehicles that are connected to the gas grid.

In addition to the new agreement, Modi announced that the existing Strategic Energy Partnership between the two countries is holding strong as their interests are mutual.

“For oil and gas, the US is an important partner for India. Over the past four years, our clean energy trade has been around $20 billion. Whether it’s renewable or nuclear energy, our cooperation has found new renewed vigour,” he said.

Reducing dependence on oil — and the Middle East
The new agreement is expected to help India increase gas’ share in the energy basket from 6.2% to 15% in 10 years. It is however well below the global average of 24%.

In addition to making clean fuel accessible, it will also help reduce India’s dependence on the Middle East for crude oil to meet its energy requirements. India currently imports 80% of the oil that it consumes — most of it from the Middle East — with domestic production falling by the day.

Energy to trump defence in Indo-US bilateral ties
India is the sixth-largest buyer of liquefied natural gas (LNG) from the US. In 2017, India was buying $155 million worth of LNG from the US. In 2020, incoming shipments are projected to hit at least $576 million.

“Energy will soon take over from defence as the strongest link in the Indo-US relationship,” said President and CEO of the U.S. India Strategic Partnership Forum (USISPF) Mukesh Aghi.

India is emerging as a major buyer of LNG. Along with being the second largest population in the word and its growing energy demand, India is also trying to shift to cleaner fuels. The demand slump in China also boosts India’s prospects.

Deals are still pending
There was also speculation that the investment of $2.5 billion by India’s Petronet in the US-based Tellurian may be sealed during Trump’s visit. However, officials told The Hindu that it is not ready to be signed, and will likely be finalised by the end of March.

There are four working groups set up for oil and gas, energy efficiency, renewable energy and sustainable development between the US and India. Sources told ET that the two countries will also discuss accelerating the deal between Westinghouse and the Nuclear Power Corporation of India (NPCI) to build six 1,100 MW reactors in Andhra Pradesh during the trip.

See also:
Narendra Modi and President Donald Trump announce 'comprehensive global strategic partnership' in a joint conference

From army helicopters to trade deal — Donald Trump's holding out carrots for India

India's defence deal with the US — all we know so far