Notwithstanding the ballooning trade deficit between India and China which swelled by 34 percent to reach US$12 billion in the first five months of this year, India is also heavily loosing out to China in acquiring oil assets internationally.
Inchin Closer had earlier written about Chinese companies winning gas deals as both nations raced to acquire green energy assets. In light of recent reports, it is estimated that India has lost close to US$12.5 billion of oil deals to China in the past few years.
Highlighting its loss after India’s ONGC lost the giant Kashagan oilfield to the Chinese CNPC earlier this weel, the Times of India notes that India lost to China earlier too. CNPC beat India’s ONGC by agreeing to pay US$4.18 billion in August 2005 for PetroKazakhstan, then China’s biggest overseas oil deal. A month later, CNPC outbid ONGC in buying assets of Encana Corp in Ecuador for US$1.42 billion. In March 2010, ONGC lost out on acquisition of oil Block 1 and 3A in Uganda oilfields to China’s Cnooc who offered as much as US$2.5 billion for the 50 per cent stake. In May 2011, ONGC again lost a bid to buy Exxon Mobil Corp’s 25 percent stake in an Angolan oil field. ONGC had offered about US$2 billion for the stake in Block 31 off Angola’s coast.
As recurrent losses to acquire strategic oil assets raise petrol and production prices in India, it also underlays her foreign policy stance and stymies her long term growth potential. India’s relations with Iran and Afghanistan buffered by American presence mean secure energy assets for the South Asian nation. Yet, China feeling threatened by the US’s big brother attitude in the Middle East has prompted it to spawn friendly ties with Pakistan, enabling secure energy assest over land into her muslim dominated Xinjiang province. The two developing Asian giants are also wooing other neighbouring nations especially Myanmar. African nations are also solidly on their hit list of energy procuring states.
As oil and gas assets dictate foreign policy initiatives, the two nations are also keeping their financial cards close at hand. At a time when money markets are tight, oil prices which trace inflation are being closely monitored. Further with nuclear and coal being dated energy assets, oil and gas seem to be best bet going forward. Already amongst the highest energy consuming countries, both China and India will have to play the black gold game smartly to avoid any manjor long term development set backs.