India is chasing China in rivalry for West African oil stakes

Oct 15, 2004 02:00 AM

Asian giants and economic rivals India and China are locked in battle to secure stakes in oil fields and blocks in the new energy haven of West Africa, officials and analysts say.
"There is big, big competition going on between India and China for oil blocks in the region," says Narendra Taneja, an energy expert associated with the international oil and gas newspaper, Upstream. Taneja points to a report in a recent Indian Express newspaper report bemoaning the fact that India had lost a lucrative deal in Angola in early October.

Angola's state-owned Sonangol reportedly blocked an Indian move to buy Anglo-Dutch energy giant Shell's 50 % share in Block 18 for about $ 620 mm. According to Taneja, India's state-run Oil and Natural Gas Corporation (ONGC) had almost closed with Shell, "but the Chinese evidently cut a deal with the Angolan government at the last minute," resulting in Sonangol exercising its pre-emption rights.
This stymied Shell's move to sell its stake to ONGC, a deal that would have yielded about 5 mm tons of crude oil daily for New Delhi from 2008-2009.

An Indian official says the sale is "still open", but for Taneja it illustrates the intense Sino-Indian competition.
"China managed to swing the deal by offering aid to the tune of 2 bn for a variety of projects to Angola, compared to India's offer of $ 200 mm for developing railways," Taneja explains. Aid-for-oil is part of a deliberate strategy adopted by the Chinese across West Africa, whose oil potential came into focus after the September 11 terror attacks, the analysts add.

The amount of oil in the region is yet to be mapped, but Indian officials point to US studies which say Washington can rely on Gulf of Guinea reserves to cut its dependence on crude from the volatile Middle East by 25 % in the next decade.
"Washington is negotiating with Sao Tome and Principe to develop a naval base there to guard its oil interests in the region," says a foreign ministry official.
With China overtaking Japan to become the world's second largest oil consumer after the United States, Beijing is aggressively building a network of energy-related ties throughout the world -- in the Middle East, Central Asia, Southeast Asia and Russia, the official says.

China used 5.46 mm bpd of oil last year, compared with Japan's 5.43 mm, according to the International Energy Agency. Beijing relies on overseas producers for one third of supplies and accounts for about 7 % of world oil demand.
In contrast, India -- Asia's fourth largest economy -- imports nearly 70 % of its oil needs and last year consumed a little more than 2 mm bpd. A government paper predicts that by 2025, India will consume 7.4 mm bpd.

Top Chinese leaders including President Hu Jintao have made a beeline for Africa, signing deals with Algeria, Gabon and other states, besides promising millions of dollars in aid free of good governance and human rights ties. Indian officials admit India does not have the resources to compete barrel for barrel with China in West Africa.
"India had its era of influence in Africa in the heyday of the Non-Aligned Movement in the 1960s and '70s. Today it is money that speaks and China has deeper pockets than India," Taneja notes.

The foreign ministry official admits Indian contact with West Africa has been "limited," due to the absence of the Indian diaspora in a largely Francophone region.
"But in the past 12 months or so, we have been making inroads into Senegal, Ivory Coast, Guinea, Benin, Togo and Mali," bagging crucial transport contracts, he adds.
India recently extended credit worth $ 500 mm to some of these countries and began training and development programmes there.
"We have just put our foot through the door. China is already in there," he says.

Source: AFP
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