China, India seek cooperation in global oil quest
(Shenzhen Daily/Agencies)
Updated: 2005-04-05 14:07

Chinese Premier Wen Jiabao will visit India this week with the race between the world's two most populous nations to secure the energy they need to fuel their growing economies likely to be on the agenda.

With rapidly growing oil demand and increasing dependence on imports — last year over 40 percent of China's crude and some 70 percent of India's came from abroad — the two countries have more than just their rivalry in common.

They are linked by similar business models, with cash-rich, State-controlled oil firms seen having more appetite for risk than companies beholden to earnings-conscious shareholders.

"Although there is competition, both sides share a common aim," said Zhou Fengqi, a high-level adviser in the Energy Research Institute of China's National Development and Reform Commission.

"There is a basis for cooperation between the two sides, because they are both developing countries with oil demand ... but the specifics of any cooperation still needs to be researched."

A deal could include agreements for each country to refrain from trying to buy certain assets to prevent bidding wars, or working on joint projects in areas of interest, analysts said.

"We are pitted against each other almost always to the advantage of the third country," Indian Oil Minister Mani Shankar Aiyar said.

Although Chinese and Indian companies are partners in Sudan's Greater Nile Project, widespread cooperation could be a long way off with both countries on a global prowl for assets.

"The Chinese in particular, I think, would be reluctant to start excluding themselves from ... areas of certain countries just so they could avoid having Indians bidding on one or two assets," said Gavin Thompson, a Beijing-based analyst with Wood Mackenzie.

"It’s just a little bit too competitive for that to happen."

If China and India can’t cooperate over oil and gas deposits, there may still be a future for lower-level cooperation.

"Both countries have large populations without access to modern forms of energy and we need to work together developing technologies appropriate for rural areas," said R. K. Pachauri, director general of the Energy and Resources Institute in New Dehli.

Cleaner coal-burning techniques would offer another opportunity for cooperation, but neither side had promoted this kind of deal amid the jostling about overseas oil resources, he said.

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