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India seeks to edge out China in Sudan

India seeks to edge out China in Sudan

New Delhi: India and China look set to renew their battle for hydrocarbon reserves around the world, some of them in unsettled countries that have been turned into pariahs by the global community. India is now seeking to edge ahead of China in Sudan, after having been forced out of the reckoning.

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As part of its attempt to help energy firms secure assets in oil-rich Sudan, state-owned Ircon International Ltd will develop a 180km rail link from Khartoum to Al-Masala-Mian through a soft loan extended by the Union government.

“The loan of $150 million (Rs700 crore) will go towards the rail project, for which the technical and financial agreement is expected to be signed in Sudan this month," said a senior Indian government official aware of the development, but who did not want to be identified.

Sudan had earlier repudiated the terms of the same offer that Ircon had made some three years back, after which the African nation started negotiating with the Chinese government. Developing economies such as India and China are engaged in a race to acquire equity stakes in scarce hydrocarbon blocks overseas to feed the energy need generated by galloping growth.

The Chinese have a significant presence in Africa’s hydrocarbons sector and some experts partially attribute this to a failure on the part of the Indian government to actively engage the African countries, both politically and economically.

A senior Ircon executive, who declined to be identified, said that there was a need to visit the terms of the old offer before a pact is inked.

Sudan is scheduled to hold a referendum in January 2011 in which the southern part of the country may vote for separation. This presents an interesting opportunity for both India and China as 85% of the hydrocarbon resources are in south Sudan, while the north has all of the infrastructure.

Even as ONGC Videsh Ltd (OVL), the global arm of state-owned exploration firm Oil and Natural Gas Corp. Ltd (ONGC), has been facing international wrath for investing in the civil war-hit Sudan, India wants a greater share in the hydrocarbon resources of the country and plans to leverage its infrastructure commitments to secure assets.

The Sudan conflict, which started in 2003, is believed to have killed nearly 300,000 people and displaced at least two million Sudanese.

“The possibility of the situation getting out of hand is negligible. Nobody is ready for war," Angilina Jang Teny, Sudan’s state minister for energy and mining, told Mint. “The Indian oil sector should not overtly worry."

Some of the other Indian firms eyeing hydrocarbon opportunities in Sudan, produces around 520,000 barrels per day, include Reliance Industries Ltd (RIL), Essar Group and Indian Oil Corp. Ltd (IOC). Sudan is underexplored—out of 22 blocks, three still await exploration.

A senior IOC executive, who did not want to be identified, confirmed his firm’s interest in Sudan. An Essar Group spokesperson said in an email, “As a group, we keep on looking for opportunities in the sectors that we are in. However, we do not comment on any specific proposal." Questions emailed to the spokesperson of RIL remained unanswered at the time of filing the story.

Despite the competition, Indian and Chinese companies have also collaborated.

OVL has already invested $2.5 billion in Sudan and acquired a 25% stake in Greater Nile Petroleum Operating Co. from Canada’s Talisman Inc. for $720 million. The other partners in the consortium are China National Petroleum Corp. (40%), Petronas Carigali Overseas Sdn Bhd (30%) and Sudan National Oil Co. (5%).

Expanding ONGC’s Sudan operations in May 2004, OVL had acquired a 24.13% stake in Block 5A and a 23.5% stake in Block 5B operated by the White Nile Petroleum Operating Co. Ltd from Austria’s OMV Aktiengesellschaft for $134 million.

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