Russia is Increasing its Influence in the Asia-Pacific Region

30.10.2016 Author: Dmitry Bokarev

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While media attention is focused on the struggle for influence in the Asia-Pacific region between China and the United States, Russia has been improving its standing with regional players slowly but surely. This strategy has been largely ignored by journalists and analysts alike since Moscow does it without loud statements and attempts to impress the region with countless war games that both the US and China hold. Instead, Russia increases its credibility on a much more solid and durable foundation than a military presence – focusing on cooperation in the field of economics, energy and technology.

This autumn has brought some important news regarding the prospect of Russia’s cooperation in the field of nuclear energy with a number of leading players in the Asia-Pacific region.

On October 15, during the BRICS summit, Moscow announced the completion of the second block of the Russian-Indian Kudankulam Nuclear Power Plant. Moreover, there was a ceremony held to honor the beginning of construction of the third and fourth blocks.

Just a few days later, local journalists reported that Rosatom opened a regional office in Mumbai (India). This announcement was followed by an India Nuclear Energy Forum. This event is being held annually, and representatives of Rosatom have always been treated as guests of honor by its organizers. As for the ever increasing number of Rosatom’s regional offices, like the one in Mumbai, such offices can be found all over the world – in China, the US, South America, Europe and Africa. It’s been reported that in 2015, the total value of all the deals Rosatom has signed reached the staggering 110 billion dollars.

Now Rosatom will be able to support its joint nuclear projects with its South Asian partners more effectively through its new office in the region. But Rosatom’s ambitions in the region are not limited to India alone, since there’s an ever increasing number of countries that are interested in Russia’s nuclear technology. For example, Bangladesh has already ordered a Russian nuclear power plant to be built on its territory. The first block of the Ruppur NPP will be made fully operational by 2022. The fact that it was built by Russia bears a lot of symbolic importance: since from the first days of the Bangladesh state, the USSR provided a great amount of support to Dhaka. It is gratifying that these warm bilateral relations are  preserved to this day.

However, Rosatom is not the only Russian company that has been actively operating in Bangladesh, since Russia’s gas giant, Gazprom, has been assisting Dhaka in developing its gas infrastructure for years. In the last decade, Bangladesh’s gas production saw an abrupt decline, since the infrastructure this country had was insufficient to even meet domestic natural gas demand, let alone export gas. For many years, there was no exploration of new gas fields. But when Dhaka decided that it was time to revive its gas sector, it turned to Russia for help.

The cooperation between Gazprom and Dhaka began in the spring of 2012, when it signed contracts with local companies including BAPEX and BGFCL/SGFL, the sub-companies of the gas and oil corporation Petrobangla. Bilateral cooperation was brought to its highest level when  the leader of Bangladesh, Sheikh Hasina, visited Russia in January 2013 to meet with Russia’s President Vladimir Putin. In the spring of that year, Russian experts started drilling new wells in such fields as Shrikail and Titas. In the spring of 2014 the level of gas extraction reached 350,000 cubic meters per day. Russia has fully fulfilled its obligations to Dhaka, increasing gas production in Bangladesh by almost 8%.

Therefore, Dhaka was satisfied with the results of bilateral cooperation, and rushed to sign new contracts. In September 2015 the media reported that Gazprom is going to start drilling new wells in Rashidpur, Shrikail and Bahrabad.

Despite this success, Bangladesh will not be able to put an end to shortages of its own gas in the foreseeable future. New wells are unable to fully meet the demand in Bangladesh. In the spring of 2016, Petrobangla signed an agreement with American company Excelerate Energy to build a floating liquefied natural gas terminal that would work with LNG carriers from Qatar. The cost of this project is estimated at approximately 200,000 dollars a day, not including the costs of the Qatari gas. Considering the fact that LNG  is more expensive than the gas brought by pipelines, it can be assumed that this project will hurt Bangladesh economically, which is already one of the poorest countries in the world. According to preliminary estimates, LNG imports along with the development of its own gas capabilities will cost Bangladesh 1.6 billion dollars a year. Nevertheless, the country is ready to go for it, because its growing industry is in dire need of fuel. Bangladesh’s only hope is – that in time it will be able to increase its own gas production to such a degree that it will make it less dependent on foreign suppliers.

In July 2016, Dhaka approved a plan for the drilling of more than a hundred new wells over the next five years. Since Gazprom has shown itself as a reliable partner it’s highly likely that it will be entrusted with this deal. If this ambitious project is successful, Bangladesh may soon revise its plans for LNG imports, saving a lot of money in the process.

In conclusion, we note that India and Bangladesh – are but a fraction of the Asia-Pacific region, in which Russia is strengthening its economic and political influence. Countries all across the region have been turning to Rosatom, Gazprom and other Russian companies. However, these two are particularly popular since they are well-known for their reliability. However, India and Bangladesh control a large part of the Indian Ocean, including – the Bay of Bengal, which has huge oil and gas fields. Thus, the successful development of positive relations with these two countries – is of paramount importance for Russia.

Dmitry Bokarev, political observer, exclusively for the online magazine “New Eastern Outlook