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Tue, Jan 18, 2005 - Page 12 News List

India says China leads energy race

COMPETITION India's energy needs are growing quickly -- much like China's -- and the prime minister says it must move quickly to secure supplies


India's prime minister warned yesterday that China had moved ahead in securing worldwide oil and natural gas supplies, the bluntest expression yet of energy worries among Indian leaders.

In the last two weeks, they have pursued a series of energy deals that have surprised global markets.

"I find China ahead of us in planning for the future in the field of energy security," Prime Minister Manmohan Singh said in a speech in New Delhi at the convention of India's oil and gas industry. "We can no longer be complacent and must learn to think strategically, to think ahead, and to act swiftly and decisively."

Like China, India has a fast-growing economy but stagnant domestic oil production, which has led to a rapid rise in energy imports, at a cost that has soared with high oil prices.


Indeed, India has become even more dependent than China on volatile producing countries in the Middle East, buying nearly three-quarters of its oil from them now, compared with less than half a decade ago.

Government-owned Chinese oil companies have been busy in the last two years buying large stakes in gas fields in Indonesia and Australia and exploring possible investments in American and Canadian energy companies. After staying relatively quiet until recently, Indian companies, also government controlled, have completed their own agreements in recent days.

On Jan. 7, for example, three Indian companies concluded a US$40 billion deal to buy liquefied natural gas from Iran over the next 25 years and to invest in gas fields there. The biggest of these, the Oil and Natural Gas Corp, emerged yesterday as a rival to China in bidding for a stake in oil operations taken from Yukos by the Russian government in a dispute over back taxes and, some say, politics.

And on Thursday, Indian officials concluded an agreement to build a separate gas pipeline from Myanmar across Bangladesh to supply eastern India. Ecuador's oil minister, Eduardo Lopez, is in New Delhi this weekend to negotiate the possible sale of stakes in oil fields in his country to Indian companies.

Abdallah Jumah, the chief executive and president of Saudi Aramco, was also here this past weekend. He said that the company, which produces almost all of Saudi Arabia's oil, wanted to invest in refining and marketing operations in India, and would be prepared to discuss possible Indian investments in refining, marketing and petrochemicals businesses in Saudi Arabia.

Subir Raha, chairman and managing director of the Oil and Natural Gas Corp, said in an interview that "substantive discussions" were under way with the Saudis and the Russians. He said his company was also interested in Canadian oil companies with operations in South Asia -- including Niko Resources, which has been active in India -- and would consider buying companies outright or investing in their oil fields.

Mani Shankar Aiyar, India's minister of oil and natural gas, said in an interview that Asian nations could avoid discord over energy and would be able to cooperate.

Aiyar's ministry will begin a campaign today to promote the auction of 20 onshore and offshore blocks of land for oil exploration.

Until the mid-1990s, India banned 100 percent foreign ownership of its oil and gas fields and has been considered unenthusiastic about such investments since then.

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