Usually when China competes with India for global energy resources, India is the loser. This time, ONGC Videsh Ltd (OVL) has done it. It announced a deal to acquire Imperial Energy Plc., a British firm with 450 million barrels of hydrocarbon reserves.
For a major fuel importer such as India, these figures look impressive. There are, however, questions that remain unanswered. How will India bring these hydrocarbons from Russia, a country in the grip of resource nationalism (BP Plc.’s continuing difficulties with Russia being an example)? While these resources can be monetized in energy markets, is that what India is looking for? In addition, the model of swapping hydrocarbons between any two nations can easily become hostage to uncontrollable political situations.
Perhaps that’s a pessimistic assessment. A lot will depend on how OVL plays its cards and what support, diplomatic and political, it gets from the Indian establishment to get these hydrocarbons home.