Although much has been written about the two neighbors being at loggerheads and constantly competing for resources in a rat race to secure their energy future, little is known about joint efforts made by China and India to collectively, productively work together. While strides are being made in the auto sector, research by Inchin Closer, revealed areas where the two neighbors have collaborated for energy security in the past and reasons of why this trend has the potential to grow.
Rising reserves, favourable valuations, flourishing domestic economies and a penchant to expand into new markets has recently brought China and India to collaborate on international projects rather than compete against each other for the same resources. Laying aside territorial, diplomatic and nationalistic disputes, recently state and private sector players from both energy hungry nations have jointly bid for the same projects in the oil and gas sectors to grow their economies. While oil and gas companies have not bid for projects within their neighbors territory owning to security reasons, both nations work well internationally.
With energy a contentious issue between the two nations, Inchin Closer lists below joint deals that are successfully managed by both nations.
India and China first collaborated in 2006, through a joint acquisition. China National Petroleum Corp (CNPC) and India’s Oil and Natural Gas Corp (ONGC) bought Petro-Canada’s 37 percent stake in a Syrian oil and gas venture for US$580 million.
Earlier this year, India invested 12.5 percent stake in Myanmar’s gas pipelines to China. The two nations also work together to exploit energy reserves in East Africa and Afghanistan.
Other deals include:
China’s Sinopec holds a 51 percent stake in Iran’s Yadvaran Oil field while India’s ONGC holds a 29 percent stake.
Sinopec and ONGC jointly acquired the assets of Columbian Oil company Omimex De Columbia. Both own 50 percent.
CNPC owns 40 percent and ONGC owns 25 percent of Sudan’s Greater Nile Oil Project.
GAIL has signed an agreement with China Gas Holdings Limited for a 10 percent equity stake in the Chinese company. The two companies plan to cooperate in the areas of operation and management of city gas pipeline networks, as well as the sale and distribution of natural gas.
According to experts, collaborating to acquire assets not only helps both nations hedge risks, but joint efforts to pool in technology and resources is seen to yield higher results. Looking forward, analysts expect India and China to increasingly collaborate on energy projects as both of them turn to acquiring clean, green fuels and competition by outbidding each other only seeks to raise acquisition costs unnecessarily.