21 February 2005
India joins China in great oil gulp
- By Keith Bradsher
New York Times Service
Mumbai, Feb. 19: India has joined China in a ravenous thirst for oil that now has the world's two most populous nations bidding up energy prices and racing against each other and against global energy companies in an increasingly urgent grab for oil and natural gas fields around the world.
Energy economists in the West admire the industrial success of both China and India. But they worry about the effect on energy supplies as the two countries, with 37 per cent of the world's population, rush to catch up with Europe, the United States and Japan. And environmentalists fret about the global-warming effect of burning more fossil fuels.
With engineering expertise and equipment more available around the world, oil executives and drillers in remote spots increasingly are speaking Mandarin or Hindi, not English. Their newfound commercial confidantes live in pariah states like Sudan and Burma, one sign that the political dynamics of the world oil market pose a difficult challenge for the Bush administration.
The prospect of China's consuming ever-growing lakes of oil has been noted over the years, although it is gaining new urgency as Chinese consumption continues to soar. China's oil imports climbed by a third last year, as the country's oil demand exceeded Japan's for the first time.
Now India is joining China in a stepped-up contest for energy, with both economies booming while their domestic oil production sags. China is now the world's second-largest energy consumer, trailing only the United States. India has moved into fourth place, behind Russia.
China and India are also expanding their Navies as they become increasingly dependent on lines of oil tankers from West Asia, posing the beginnings of an eventual challenge to US influence in the Indian Ocean and the South China Sea.
As millions of Indians and Chinese buy cars, television sets and air conditioners, the fossil fuels burned to power their purchases have become one of the fastest-growing contributors to global warming. Chinese emissions alone soared nearly 15 per cent last year.
Under the Kyoto agreement, neither India nor China faces any specific limits on greenhouse gas emissions. And even environmentalists hesitate to demand stringent restrictions on China or India, since their energy consumption per person remains less than one-sixth the level in the United States.
Voracious energy demand is coming from people like Ms Kalpana Anil Gaikar, a 35-year-old unemployed widow with three children in Mumbai who keeps running up electricity bills.
Ms Gaikar pays $9.30 a month in rent for her tiny apartment in a public housing project and as much as another $4.50 a month for electricity to power the lights, ceiling fan and other amenities. That is a hefty electrical bill for someone who earned less than $30 a month at a bedsheet factory until she lost her job in late December because of a broken leg.
Her children need the lights to study for school, however, and she has no intention of cutting the power.
To meet that demand, the Indian government, like that of China, is looking to tap countries that the Bush administration and the European Union have tried to isolate, like Iran, Burma and Sudan.
During a recent conference in New Delhi, a succession of top Indian officials saluted Mr Omer Mohammed Kheir, the secretary-general of Sudan's ministry of energy and mining, who sat beaming in the middle of the front row. The Oil and Natural Gas Corporation (ONGC) recently began producing oil in Sudan in cooperation with Chinese state-owned companies. It is building a pipeline in Sudan and negotiating to erect a refinery.
"The Asians came to Sudan in a very difficult time, and we created a very good strategic relationship with them," Mr Kheir said in an interview.
Three government-controlled Indian companies concluded a $40-billion contract with Iran on January 7 for the purchase of liquefied natural gas over 25 years and for stakes in an oil field there. The Indian government followed up on January 13 by concluding a deal with the military government of Burma for the construction of a gas pipeline.
Mr Subir Raha, the chairman and managing director of ONGC, said that Western countries had been arbitrary in their imposition and removal of sanctions on countries like Libya, so his company could not be expected to follow their practices for countries like Sudan and Burma.
"If you talk about pariah states, Libya is an excellent example," he said. "One fine morning, you see there are no sanctions."
China has also been in the spotlight lately because of allegations that it sold nuclear technology to Iran, one of the biggest sellers of oil to China and other Asian markets.
China's deputy foreign minister, Mr Zhou Wenzhong, took positions similar to India's in an interview last summer, referring specifically to Western criticism of Sudan stemming from violence in its Darfur region. "Business is business," he said. "We try to separate politics from business. Secondly, I think the internal situation in the Sudan is an internal affair, and we are not in a position to impose upon them."
A vigorous debate has emerged in India over whether the country's need for oil will inevitably put it at odds with China. Petroleum minister Mani Shankar Aiyar said that India and other Asian nations needed to pursue their own interests in oil markets.
"None of us in Asia should fall victim to the strategies of outsiders," he said. "The only way to counter the geopolitics of others is to have our own geopolitics."
Beijing, and now New Delhi, are following a long tradition of rising economic powers that seek to secure energy supplies. Britain, Japan and the United States wheeled and dealed in the years leading up to World War II for control of oil fields around the world, with diplomats often working with oil company executives.
Through the 1980s and early 1990s, government-controlled oil companies from Malaysia and Brazil also invested in distant oil fields, notably in China and the South China Sea.
As Chinese and Indian companies venture into countries like Sudan, where risk-averse multinationals have hesitated to go, questions are being raised in the industry about whether state-owned companies are accurately judging the risks to their own investments, or whether they are just more willing to gamble with taxpayers' money than multinationals are willing to gamble with shareholders' investments.
"Sudan is the beneficiary," said Mr Philip Andrews-Speed, a former BP geologist in China who now runs an oil policy study centre at the University of Dundee in Scotland. "If these state-owned companies were not in the game, there would not be much interest in Sudan."