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Sat, Oct 16, 2004 - Page 12 News List

China, India fight for African oil

DEEPER POCKETS China is using a deliberate strategy of aid for oil across West Africa to outbid India in a rush to gain access to the region's largely untapped reserves


Asian giants and economic rivals India and China are locked in battle to secure stakes in oil fields and blocks in the new energy haven of West Africa, officials and analysts here say.

"There is big, big competition going on between India and China for oil blocks in the region," says Narendra Taneja, an energy expert associated with the international oil and gas newspaper Upstream.

Taneja points to a report in a recent Indian Express newspaper report bemoaning the fact that India had lost a lucrative deal in Angola early this month.

Angola's state-owned Sonangol reportedly blocked an Indian move to buy Anglo-Dutch energy giant Shell's 50-percent share in Block 18 for about US$620 million.

According to Taneja, India's state-run Oil and Natural Gas Corporation (ONGC) had almost closed with Shell, "but the Chinese evidently cut a deal with the Angolan government at the last minute," resulting in Sonangol exercising its pre-emption rights.

This stymied Shell's move to sell its stake to ONGC, a deal that would have yielded about 5 million tonnes of crude oil daily for New Delhi from 2008 to 2009.

An Indian official says the sale is "still open," but for Taneja it illustrates the intense Chinese-Indian competition.

"China managed to swing the deal by offering aid to the tune of US$2 billion for a variety of projects to Angola, compared to India's offer of US$200 million for developing railways," Taneja explains.

Aid-for-oil is part of a deliberate strategy adopted by the Chinese leadership across West Africa, whose oil potential came into focus after the Sept. 11 terror attacks, the analysts add.

The amount of oil in the region is yet to be mapped, but Indian officials point to US studies which say Washington can rely on Gulf of Guinea reserves to cut its dependence on crude from the volatile Middle East by 25 percent in the next decade.

"Washington is negotiating with Sao Tome and Principe to develop a naval base there to guard its oil interests in the region," says a foreign ministry official, asking to remain unnamed.

With China overtaking Japan to become the world's second largest oil consumer after the US, Beijing is aggressively building a network of energy-related ties throughout the world -- in the Middle East, Central Asia, Southeast Asia and Russia, the official says.

China used 5.46 million barrels of oil a day last year, compared with Japan's 5.43 million, according to the International Energy Agency. Beijing relies on overseas producers for one-third of supplies and accounts for about seven percent of world oil demand.

In contrast, India -- Asia's fourth-largest economy -- imports nearly 70 percent of its oil needs and last year consumed a little more than 2 million barrels a day.

A government paper predicts that by 2025, India will consume 7.4 million barrels a day.

Top Chinese leaders including President Hu Jintao (胡錦濤) have made a beeline for Africa, signing deals with Algeria, Gabon and other states, besides promising millions of dollars in aid free of good governance and human rights ties.

Indian officials admit India does not have the resources to compete barrel for barrel with China in West Africa.

"India had its era of influence in Africa in the heyday of the Non-Aligned Movement in the 1960s and '70s. Today it is money that speaks and China has deeper pockets than India," Taneja said.

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