For a country that is heavily dependent on external sourcing for its energy needs, India has been remarkably lax in sewing up the required resources. Very often, the resources it manages to acquire (such as Imperial Energy Corp. Plc), don’t live up to the original promise. In other cases, it ends up acquiring assets in politically difficult countries (Sudan) or in geographically challenging locales (Sakhalin and the Sea of Okhotsk come to mind). To top everything, it often manages to get into ruinous competition with an equally hungry rival with much deeper pockets: China.
That may change, for the better. As reported in Mint on Wednesday, Oil and Natural Gas Corp. (ONGC) and China National Petroleum Corp. (CNPC) have renewed an agreement for jointly bidding for resources globally. The managing director of ONGC Videsh Ltd (OVL), D.K. Sarraf said: “We should collaborate and bid together.” He added: “There is no point in raising prices. A memorandum of understanding was signed to this effect. However, there is no property in mind immediately.”
This development is one facet of a complex relationship the two countries share. While not being purely conflictual, the cooperative possibilities are greatly limited by rivalry and mistrust. It will be interesting to see how the two countries cooperate in an arena in which they have bid against each other for long.
The key to success lies in India doing its homework before it agrees to joint projects with China. For one, careful project appraisal—not exactly a strength of our oil and gas establishment —is a must. Then come negotiating skills in wading through complex deals of the kind that are usual in this sector. Finally, and perhaps most importantly, a careful assessment of geopolitical risks, especially in Africa and Latin America, is a primary requirement in this venture. This requires expertise of a kind that OVL does not possess. Either background consultation or, better still, active participation of our diplomats in contract negotiations will be necessary. The ministry of petroleum and natural gas needs to actively engage the ministry of external affairs in this matter: mere consultation won’t do, active cooperation is necessary. Otherwise, there will be a repeat of the problems seen in Myanmar and elsewhere. And one can be sure the Chinese will do their appraisals in a thoroughgoing manner. This is an opportunity that India can’t afford to miss.
Cooperation with China: a dream? Tell us at firstname.lastname@example.org