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NEW DELHI: Energy-hungry India and China, often fierce rivals in the race for global oil and gas supplies, have agreed to form a joint venture company for acquisition of hydrocarbon assets in Africa and Latin America.
While the November 20-23 visit to India by Chinese President Hu Jintao produced plenty of economic commitments, the concept of increased collaboration on securing energy assets was clearly missing from the official agenda.
But this did not deter Petroleum Minister Murli Deora from using his old friend Chinese Commerce Minister Bo Xilai to get a midnight audience with Ma Kai, the all powerful chairman of National Development and Reform Commission, China's top planning agency.
Sources said Deora's unscheduled meeting with Ma Kai, who looks after seven key economic portfolios, including energy, brought about the critical meeting of minds on the need for the two countries to bid together for oil assets so as to avoid a price war.
"Both countries have in-principle agreed to work out a mechanism to bid jointly for oil and gas properties in Africa and Latin America. Indian and Chinese flagship companies will pool resources together to form a special purpose vehicle or a joint venture company to scout for assets in third countries," a source said.
An agreement for the purpose is likely to be signed in Beijing next month when Deora will visit to attend a ministerial meeting of oil importing countries.
China is hosting a meeting of energy ministers of US, Japan, Korea and India on December 15.
India and China have been aggressively competing to secure foreign oil and gas assets to reduce their import dependence. India imports nearly 70 per cent of its oil needs, while China relies on foreign producers for more than a third of its oil. Given their growing needs, Deora is keen to avoid cut-throat competition with Chinese oil firms.
Sources said Deora impressed upon Ma Kai the need for both the nations to collaborate in pursuing foreign energy sources as fierce rivalry has benefited sellers.
China has been regularly outbidding India, most recently last August when ONGC lost out on Kazakhstan's third-largest oil producer, Petrokazakhstan, a Canadian firm, to CNPC. A month later, the Chinese company outbid ONGC in buying assets of Ecuador's EnCana Corp. for 1.42 billion dollars.
India and China have till date have jointly acquired properties in Syria, Columbia and Ivory Coast. India's Oil and Natural Gas Corp and China National Petroleum Corp are both stakeholders in an oilfield in Sudan, although they did not bid for it jointly.
Teaming up would give Indian and Chinese more negotiating muscle as they buy up far-flung oil and gas fields, analysts say. Both countries have been scouting for oil around the world to meet their soaring energy demands.
China and India, which consume 11 per cent of global oil production, need energy supplies to sustain growth in the world's two fastest growing economies. Energy takeovers announced by the two countries more than doubled last year to 16.9 billion dollars.
"Unbridled rivalry between Indian and Chinese companies for acquisition of overseas hydrocarbon assets is to the advantage only of the seller of the assets," a source said
Source: http://timesofindia.indiatimes.com/Energy-needs_bring_India_China_closer/articleshow/578149.cms
While the November 20-23 visit to India by Chinese President Hu Jintao produced plenty of economic commitments, the concept of increased collaboration on securing energy assets was clearly missing from the official agenda.
But this did not deter Petroleum Minister Murli Deora from using his old friend Chinese Commerce Minister Bo Xilai to get a midnight audience with Ma Kai, the all powerful chairman of National Development and Reform Commission, China's top planning agency.
Sources said Deora's unscheduled meeting with Ma Kai, who looks after seven key economic portfolios, including energy, brought about the critical meeting of minds on the need for the two countries to bid together for oil assets so as to avoid a price war.
"Both countries have in-principle agreed to work out a mechanism to bid jointly for oil and gas properties in Africa and Latin America. Indian and Chinese flagship companies will pool resources together to form a special purpose vehicle or a joint venture company to scout for assets in third countries," a source said.
An agreement for the purpose is likely to be signed in Beijing next month when Deora will visit to attend a ministerial meeting of oil importing countries.
China is hosting a meeting of energy ministers of US, Japan, Korea and India on December 15.
India and China have been aggressively competing to secure foreign oil and gas assets to reduce their import dependence. India imports nearly 70 per cent of its oil needs, while China relies on foreign producers for more than a third of its oil. Given their growing needs, Deora is keen to avoid cut-throat competition with Chinese oil firms.
Sources said Deora impressed upon Ma Kai the need for both the nations to collaborate in pursuing foreign energy sources as fierce rivalry has benefited sellers.
China has been regularly outbidding India, most recently last August when ONGC lost out on Kazakhstan's third-largest oil producer, Petrokazakhstan, a Canadian firm, to CNPC. A month later, the Chinese company outbid ONGC in buying assets of Ecuador's EnCana Corp. for 1.42 billion dollars.
India and China have till date have jointly acquired properties in Syria, Columbia and Ivory Coast. India's Oil and Natural Gas Corp and China National Petroleum Corp are both stakeholders in an oilfield in Sudan, although they did not bid for it jointly.
Teaming up would give Indian and Chinese more negotiating muscle as they buy up far-flung oil and gas fields, analysts say. Both countries have been scouting for oil around the world to meet their soaring energy demands.
China and India, which consume 11 per cent of global oil production, need energy supplies to sustain growth in the world's two fastest growing economies. Energy takeovers announced by the two countries more than doubled last year to 16.9 billion dollars.
"Unbridled rivalry between Indian and Chinese companies for acquisition of overseas hydrocarbon assets is to the advantage only of the seller of the assets," a source said
Source: http://timesofindia.indiatimes.com/Energy-needs_bring_India_China_closer/articleshow/578149.cms
