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Politics: Spurned By China, India Woos Taiwan As Oil Partner

Posted on: Monday, 3 October 2005, 21:00 CDT

By Antoaneta Bezlova

BEIJING, Oct. 3, 2005 (IPS/GIN) -- Frustrated in their futile attempt to team up with China in the search for new energy sources, Indian companies are mulling oil alliances with Taiwanese partners and drawing plans for joint exploration in areas aggressively targeted by Chinese oil firms.

Recent Indian overtures to lure Beijing into energy partnerships have produced no results and left New Delhi with little option but to seek cooperation with China's arch rival, Taiwan, claimed an Indian academic in Beijing this week.

"India's oil minister has been desperately looking for partnerships with Chinese companies, but there is little interest on their side in forging such alliances," Madhav Nalapat, professor of geopolitics at Manipal Academy of Higher Education, said in Beijing.

In an attempt to ease bidding battles between New Delhi and Beijing over energy sources, India's Petroleum and Natural Gas Minister Mani Shankar Aiyar has held a series of talks with Chinese energy officials and business representatives. More negotiations are scheduled for November, but the vision of energy synergy between the two Asian giants Aiyar had advanced has received tepid response from Beijing.

Both the Asian giants are desperate to slake the thirst of their huge and growing economies. They are competing to ensure future supplies by either buying into new foreign oil and gas fields or signing supply contracts when new reserves come on stream.

China's aggressive bidding and political networking to secure oil properties have proved a stumbling block for more cautious Indian companies.

"Nearly all of our bids for oil assets overseas have been lost to China," said Nalapat. "We have not got one square inch of oil- bearing territory anywhere in the world."

Recent notable failures include India's withdrawal from the bidding war for acquiring Canadian oil firm Encana Corp's assets in Ecuador, which allowed a Chinese consortium to win the bid and India's defeat in the race for snapping up the oil properties of Canadian company Petro Kazakhstan in the central Asian republic of Kazakhstan.

This streak of bidding losses might soon be a thing of the past if New Delhi succeeds in engineering a partnership with Taiwanese oil companies, claimed Nalapat, who has been active in informal diplomatic negotiations.

"I see it as an unbeatable alliance. A combination of Taiwanese capital and management with Indian geopolitical skills and diplomatic clout could go a long way to secure vital energy resources," he said.

The emerging alliance is likely to provide Taiwanese companies with a springboard for oil blocks in places like Latin America and Africa where China exerts an increasing economical and political clout. Indian oil firms, for their part, expect to benefit from Taiwanese expertise and know-how.

Talks between companies of both countries have been under way for some time, Nalapat said, and a deal is expected before the end of the year.

If inked, the deal is likely to rankle Beijing, which has been expanding economic partnerships with Africa and Latin America, not the least for political reasons -- the two regions combined have 19 of the 25 countries that still maintain diplomatic relations with Taiwan.

Democratic Taiwan has been ruled separately from China since 1949, but the communist government in Beijing regards the island as a renegade province and has vowed to reunify it with the mainland.

Taiwan, which for decades has been providing economic assistance to Latin American and African countries, is now hard pressed to compete against China's expanding clout in these regions. Where cash has not been enough to secure foreign oil reserves, Beijing has used political persuasion, generous packages of development aid and the lure of increased trade and investment.

China has been vying for every share of ever-scarcer reserves of global oil to satisfy spiraling demands of its economy. Last year China imported 2.46 million barrels per day (bpd), accounting for about 40 percent of current demand.

By 2025, according to projections by the U.S. Energy Information Administration (USEIA), China's oil imports will reach 9.4 million bpd of a total of 12.8 million bpd consumed. In India, meanwhile, the USEIA predicts demand will jump to 5.3 million bpd by 2025, 80 percent of which will come from imports.

Both China and India already consume far more oil than they can produce domestically and with worldwide supplies already stretched, the competition for access to international sources of oil is now driving up prices for investments in oilfields globally.

China's insistence on going it alone in the quest for oil might be somewhat wavering in the wake of Beijing's upset bid to take over a U.S. oil company. China National Offshore Oil Corporation, China's largest offshore oil producer, was forced to drop its bid for U.S.- owned oil giant UNOCAL this summer after an outburst of criticism and anti-China sentiment from U.S. politicians.

Beijing planners might have realized that while both China and India are latecomers to the energy game, in established oil- producing areas and Western markets, India's democratic credentials cut a more alluring image than China's.

At the World Petroleum Congress last week in Johannesburg, Chinese officials reportedly invited India to forge strategic partnership in the oil sector. The head of the Chinese delegation, Wang Tao, was quoted saying that China and India should join forces in energy exploration since both countries' increasing demand has pushed oil prices to a new high.

Source: Global Information Network

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