The race for African resources

The race for African resources
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First Published: Tue, Feb 05 2008. 11 48 PM IST
Updated: Tue, Feb 05 2008. 11 48 PM IST
Russia is the latest entrant in the race for the final natural resources frontier: Africa. All the big players—China, Western multinational corporations and now, Russia—have interesting strategies for the task. India seems to be floundering.
With an estimated 117 thousand million barrels (tmb) of oil, Africa is second only to West Asia in importance. The share of the continent in oil production is finally expected to touch the 30% of the world’s total mark. At the moment it counts for roughly 12% of the world total.
To wean them away from the Western orbit, the Chinese and the Russians are offering an interesting mix of incentives to various African nations. The Chinese mix aid and expertise, while the Russians are offering to develop infrastructure in a big way. Russian efforts are strategic in nature. Russia has some 79.5tmb of oil reserves and some 48 trillion cu. m of natural gas. Its efforts in Africa are part of its strategy to attain diplomatic and political objectives elsewhere.
The Russians have deep pockets as well: They have $476 billion (Rs18.75 trillion) in foreign exchange reserves. It’s promising to develop energy infrastructure in Nigeria.
Such efforts will bid up the price of African oil. For Russia and China, these are sweet deals. The two countries are only leveraging their other resources to gain ground in Africa. Other countries may not have such resources to spare.
It’s not clear what India can offer to stay in reckoning. With dwindling energy resources, the fight for exploration and rights promises to be a bruising battle. What should be the Indian strategy?
For long, African nations have smarted under Western domination. Their dream of becoming exporters of manufactures instead of being mere exporters of raw materials remains unrealized. Here is where India’s chance lies.
If India can open its markets to African goods at zero or extremely low tariffs, it may get a chance to share Africa’s natural wealth. This option needs a careful, but bold, trial. For starters, let it apply only to countries that allow India to get hydrocarbon exploration, sharing and production rights. The negotiations and deals should be done smartly.(What should be the Indian strategy to get natural resources from Africa? Write to us at views@livemint.com)
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First Published: Tue, Feb 05 2008. 11 48 PM IST
More Topics: Africa | Oil | Russia | China | West Asia |