China to lead India in 2008 energy race: analysts

China to lead India in 2008 energy race: analysts


New Delhi: The race for energy by rising powers China and India will intensify in 2008 as they scour the world for fuel to feed their booming economies, and Beijing has taken a big early lead, analysts say.

Everywhere, China -- with its deep pockets and energetic diplomacy -- has been beating lumbering, bureaucratic India to the punch in the quest to lock in long-term supplies in Asia, Africa and Latin America, analysts say.

“The Chinese have stolen a march on the Indians. Whether it’s in Myanmar or Sudan or Indonesia, the Chinese are way ahead," said Rahul Bedi, India analyst for Jane’s Defence Weekly. “But India is stepping up its pace."

In early December, China pipped India to be chosen as preferred bidder for natural gas from South Korea’s Daewoo International’s Myanmar project, after Beijing said it aimed to spend $1.1 billion (Rs4,353 crore) on a gas pipeline.

“The Chinese go after their targets more aggressively and faster," Victor Shum, analyst at Singapore-based oil consultancy Purvin and Gertz, said. China’s voracious assertiveness is dictated by its massive industrial base which guzzles fuel to make everything from fertilizers to mobile phones.

China produces “a lot of goods for the world and needs a lot of energy to do this," said He Jun, analyst at Beijing energy consultancy Anbound Consulting. “This is an unstoppable trend." China, which imports nearly half its oil needs, consumed 7.16 million barrels a day last year and its demand will exceed that of the United States soon after 2010, says the International Energy Agency.

India’s energy needs are also growing fast but remain far below China’s due to its more service-driven economy. India, which imports 70% of its oil, consumes 2.45 million barrels a day. China’s thirst is partly responsible for the oil price surge to nearly $100 a barrel.

“Since 2002, Chinese oil demand has risen by 5-10% a year and China is one-third to blame for the price rise... (while) India is a casualty, not a driving force," said Dave Ernsberger, Platts Asia oil director.

India’s democratic -- and hence more cumbersome -- political system makes it tougher for state-owned Oil and Natural Gas Corp (ONGC) to pursue investments than for Chinese firms.

“Indian decision-making is a little slower, China has a command economy so it’s more efficient, they’re not accountable to parliament... they just do it," said Bedi.

Protests by communist allies of India’s Congress-led coalition have stalled a landmark pact with the United States to bring New Delhi into the global civilian nuclear marketplace.

Meanwhile Washington, suspicious over alleged Iranian nuclear weapons aims, has discouraged plans by New Delhi to take part in an ambitious pipeline that would see Iranian gas sent to India via Pakistan. That project has also been delayed by technical and pricing wrangles.

China is also outspending India. State-owned CNPC, China’s main oil producer, invested 45 billion dollars in new energy sources while ONGC spent a paltry $3.5 billion in a five-year period to 2005.

India declared in 2005 that it hoped to turn its rivalry with China into an alliance to take on western energy majors but its efforts fizzled against a backdrop of mutual suspicion between the historically hostile giants.

China has shored up its presence in Central Asia and targeted resource-rich Russia, India’s old Cold War ally.

India, which has a 20% stake in Russia’s Sakhalin-1 oil field, has said new deals between India and Russian oil and gas majors could be “firmed up by February." But New Delhi’s warmer ties with Washington have cast a cloud over its previously cosy links with Moscow.

Lately too, India has taken a leaf from China’s book, scaling up ties with African states and handing out credit and boosting trade and defence links. In return, ONGC has won exploration rights in Sudan and Nigeria besides Libya, Algeria and Egypt since 2004. In October, Manmohan Singh made the first visit by an Indian premier in 45 years to Africa’s top oil exporter Nigeria.

But China already has a commanding presence in Africa, building roads, railways and petrochemical installations -- when President Hu Jintao visited Africa in early 2007, it was his third trip in less than three years.

“The Chinese have gone after the African market big-time, pumping in huge amounts," said Bedi. “India just doesn’t have that combination of flamboyance and aggression."