China and India to Build Energy Alliance

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China and India have agreed to establish an annual dialogue on energy in a move to strengthen bi-lateral cooperation, according to Shanghai Securities News.The partnership comes at a time when the two countries are increasingly at odds in their efforts to acquire energy supplies to fuel their fast growing economies.

Mani Shankar Aiyar, India's petroleum minister, made the announcement on January 12 during talks with Chinese officials and business leaders in Beijing. Energy companies from both countries also nailed down five memorandums of understanding to share information and strengthen cooperation in exploration, development, and production of oil and natural gas. Both sides agreed to seek partnership in investments and in the construction of liquid natural gas pipelines and terminals.

China's Foreign Ministry hailed the agreement, saying that cooperation with India will not only benefit peoples in both countries, but also be conducive to peace and stability in South Asia and to the strengthening of South-South cooperation.

The new alliance, aimed at preventing the two nations' competition for oil assets from pushing up energy prices, symbolizes their increasingly assertive role in global energy politics, said the Financial Times. China is currently the world's second largest energy consumer, while India is the sixth. Companies from both countries are seeking oil resources from as far away as Sudan and Venezuela—and both have just started to build what are slated to be two of the world's largest automobile industries, according to the Worldwatch Institute's State of the World 2006 report.

In the past six months, China and India have competed three times over oil and gas acquisitions—in Kazakhstan, Ecuador, and Nigeria—with Indian companies losing the first two bids. Earlier this month, in the race for offshore fields in Nigeria, the Indian side withdrew its bid at the last minute, handing the deal to rival company China National Offshore Oil Corporation.

In November 2005, China and India teamed up on a joint offer to buy PetroCanada's 37 percent stake in Syria's largest oil company. The successful deal was the first time oil magnates in the two nations have joined forces in overseas expansion, according to Asian Times Online.