NEW YORK, Dec 13: The recent discovery of huge natural gas deposits in the southeast coast of India could impact the world energy markets and consequently affect the military and political balance of power in South Asia, said the New York Times.

In an analysis on the impact of gas discovery, the Times says that if the new deepwater gas can be brought to market at an affordable price, it could reduce India’s need to proceed with current negotiations to buy gas from fields that Exxon Mobil is helping to develop in Qatar, and that the UNOCAL is developing in Bangladesh.

Besides being bad news for Qatar and Bangladesh, the latest discoveries could affect India’s strategic posture. The paper says that the Indian Navy is starting to see the offshore energy discoveries, and the need to defend them, as a way to press for more money and new vessels.

The impact of the discovery could be a vehicle for modernization of the Indian navy and the Air Force

The paper says that India’s military budgets have long favoured the army and, to a lesser extent, the air force, which defend against China to the North and Pakistan to the West. But China has begun building an ocean-going navy, which would approach India from the east, and it has been setting up listening posts in southern Burma to monitor military activity along India’s eastern seaboard.

The paper says that according to Brahma Chellaney, a professor of strategic studies at the Center for Policy Research in New Delhi, the Indian governments “have sort of neglected the navy in the last decade, and they need to get on with modernization.”

Reliance Industries, which is based in Mumbai and is one of India’s largest companies, said that each of its first five exploration wells had struck natural gas in the Krishna Godavari basin, off Andhra Pradesh. It said it had found recoverable reserves equal to more than five trillion cubic feet of natural gas, one of the world’s biggest discoveries this year.

Cairn Energy, based in Edinburgh, said that it had found an additional 800 billion cubic feet of gas while drilling in an adjacent block of the sea floor.

Both companies plan more drilling and predicted that more gas would be found.

Pierre Audinet, an expert on South Asia at the International Energy Agency in Paris, told the NYT that Reliance’s discovery alone was significant.

By disclosing the success of its initial exploration wells, Reliance may discourage bankers from lending money for the construction of pipelines and liquefied natural gas terminals to receive gas from other countries, Audinet told the paper.

A few reserves found in recent years in the Mideast and the Canadian Arctic have been 10 times that size or more, but they have been far from major markets. And much of the delay and cost in developing gas reserves lies in the pipelines or liquefying plants needed so the gas can be transported, the paper said.

The companies discovered the gas while drilling in water up to 3,300 feet deep, a depth that will pose technical obstacles to production and require greater investment.

American companies have produced gas from even deeper waters in the Gulf of Mexico, but southeastern India lacks a comparable support network of drilling and production companies and pipelines.

On the plus side, though, the Indian deepwater reserves are just 30 miles offshore, making them more accessible than the gulf gas, the paper said.

In India, gas accounts for just 4.3 per cent of total energy consumption. Beyond that, the country relies heavily on cheap domestically mined coal, which contributes to severe air pollution in big cities.

Michael Watts, the exploration director at Cairn Energy, told the paper that Andhra Pradesh itself could use only the natural gas from one trillion cubic feet of reserves. The state is heavily agricultural beyond the computer-programming industry here in the state capital, Hyderabad.

He estimated that it would cost $300 million to $500 million to develop Reliance’s deepwater gas fields and build a pipeline to shore, plus $500 million or more to build a pipeline to Mumbai or perhaps New Delhi, where power plants would have to be converted to run on gas, the paper said.

However, the Times noted India needs help from foreign investors to develop, drill and distribute the new found energy deposits.

It points out that after Enron built the first phase and part of the second phase of a $2.9 billion gas-fired power plant near Mumbai, only to find that the state-owned electricity distribution authority was unwilling to pay the price for electricity that Enron thought had been agreed on.

Nevertheless the paper says that with the connections of the Reliance industry within the Indian government could help it overcome those obstacles.