The latest development in the high-stakes rivalry between energy hungry India and China saw India once again trumped by its Himalayan neighbour. The acquistion of PetroKazakhstan Inc, by a unit of China National Petroleum Corp (CNPC) is being feted in the mainland as a major victory at a time the country is still smarting from the failed attempt by the China National Offshore Oil Corp Ltd (CNOOC) to bid for Unocal Corp. On Tuesday, the official China Daily newspaper said of the PetroKazakhstan deal: ‘‘It marks a victory for China in its rivalry with India.for overseas oil and gas reserves.’’ The deal, which still requires the approval of PetroKazakhstan shareholders, would be China’s largest overseas acquistion yet. China’s flexing of its well-oiled muscles demonstrates the depth of the competition between the Asian titans at a time when world energy supplies are already tight and the economies of India and China galloping upwards. Both countries’ domestic resources are inadequate to meet supplies. However, India is more vulnerable, given that it imports more than 70 per cent of its crude oil needs as opposed to China’s 40 per cent. Although Indian oil companies have of late been attempting to aggressively manoeuvre and expand internationally (with the aim of tripling the annual flow of oil from overseas assets to 20m barrels by 2010), more often than not they find themselves running up against Chinese heavyweights. These are not only comparatively cash-rich but also receive solid financial backing from the central government. Just how rich was made evident over the last few months with CNOOC, the smallest of China’s oil producers offering $18.5 billion to buy Unocal. The political backing that Chinese oil companies receive was also on display last October when ONGC’s bid to purchase a block auctioned by Shell in Angola was topped by the Chinese, who used a $2 billion aid package to convince the Angolan government, at the last moment, to go with China instead. In Kazakhastan, the ONGC-Mittal combine had reportedly attached two conditions along with their $3.98 billion bid on August 15. The Chinese, however, were allowed to raise their bid price (originally less than ONGC-Mittal’s price) to $4.18 billion because they were ready to go ahead without any conditions attached. Beijing has in the last several months been cultivating its relationship with Kazakhastan, expected to become one of the world’s leading oil producers. In July this year, Chinese President Hu Jintao visited Kazakhstan and signed agreements aimed at developing a ‘‘strategic partnership with the Central Asian republic.’’ The two governments already have close ties as participants in the Shanghai Cooperation Organization — a six-nation security group led by Beijing and Moscow. The bid for PetroKazakh is thus being painted as a ‘‘win-win’’ situation with the benefits to Kazakhstan highlighted. In the China Daily newspaper, an analyst with CNPC was quoted as saying, ‘‘Kazakhstan will benefit from its partnership with CNPC, through improvements in oil and gas exploitation technology and supply to the local market.’’ ONGC had made unsuccesful attempts in the past to acquire stakes in Kazakhstan’s Kurmangazy fields. Its latest bid along with steel tycoon, Lakshmi Mittal was relying on Mittal’s ostensibly considerable sway over the Kazakh government and business circles. So far this sway would appear to be less weighty than that of Beijing’s. Moreover, China and Kazakhstan are developing a $3 billion, 3,000 km pipeline to carry Kazakh oil to Western China. According to analysts, buying Petrokazakhstan is a move aimed at guaranteeing supplies to fill the pipeline and meet demand in China’s poor and isolated west, which Beijing has launched a major offensive to develop economically. India for joint bids for oil assets with China NEW DELHI: A day after China drubbed India in the race for Petrokazakhstan, Petroleum Minister Mani Shankar Aiyar on Tuesday called for joint bidding by Indian and Chinese firms for scarce energy resources. “It underlines the need for China and India to adopt a collaborative approach in bidding for oil and gas assets,” he told reporters after flagging of a biking expedition to the Himalayas here. CNPC secured Petrokazakhstan, Kazakhstan’s third-largest oil producer, with a revised bid of $4.18 billion. ONGC had made a higher bid at the closing of price bids on August 15 but still lost to CNPC, which was given another opportunity to revise its bid. “I am going to Beijing in November to consolidate relations between the two countries and see wherever possible and when in mutual interest, we mount joint bids,” he said. — PTI
