A Hint of Sino-Indian Energy Cooperation?
Editor’s Note: The following is a guest post on recent efforts at Sino-Indian energy cooperation written by finance writer Diana Morton. It argues that despite the contentious relations of the two Asian giants and diplomatic disputes over oil exploration in Vietnamese-claimed areas of the South China Sea last year, the vital role of energy in powering their economic success may create opportunities for cooperation as well. If you wish to contribute to The Asianist, please email submissions to pprashanth711@gmail.com.
Last month, India and China demonstrated that they may have begun to come to agreement over a number of issues relating to defense and energy. As the two often go hand-in-hand it will be interesting to see how the two most populous countries in the world, and the two major emerging economic powers around the globe, develop their mutual ambitions.
The two countries share a long border along the Himalayas peppered by independent nations such as Nepal and Bhutan. Both countries share borders with Myanmar (Burma). They do not share a maritime border, which has saved the pair from a large number of sea-related border disputes such as those between China and the Philippines or Japan and South Korea. One problem they do share, apart from a hard to define border, is a need for energy.
Neither country is yet able to draw enough resources from within its own land and sea borders to fuel its development. A well worn notion from the previous decade is that China has twenty percent of the world’s population, but America has twenty percent of the world’s energy usage. If China and India want to equal America’s per person energy usage they need to use more energy each per day than the energy world currently produces as a whole.
China National Petroleum Corp (CNPC) and the Oil & Natural Gas Corp of India (ONGC), signed an initial pact last month to undertake joint energy policies. Both companies and countries aim to combine their financial resources to better compete in the energy market and to develop new energy avenues. There are other benefits for both companies. Joint ventures make it easier to cover losses and to mitigate against bad investments. It is also easier to afford insurance and financial advisor cover for other investments and projects they may venture into together.
The deal came as no surprise to many as the companies hold joint stakes in 36 oil fields in Syria as well as others in Sudan. It also builds upon a pact signed in 2006, which was focused on the oil industry. Both sides now hope to share more information concerning their purchases and developments in all forms of energy. Previously, neither nation shared information as the two countries saw themselves as energy rivals.
International instability will form the central challenge to any joint energy development project. There is a state of almost civil war in Syria as the Arab Spring movement gains traction in the face of mounting government brutality. In Sudan there are disputes between the government and the newly independent South Sudan nation over who owns which oilfields. Other nations are in political flux or in a period of transition. Myanmar is hopefully moving towards democracy, while Zimbabwe continues to be in a state of decline.
As energy grows more scarce or needs develop, both nations will have to face the range of political issues that surround their energy needs. This is perhaps where a joint defence agreement comes in. On the sidelines of the Rio+20 Environmental Summit in Brazil, China’s Wen Jiabo and Manmohan Singh of India continued their dialogue towards an enhanced defence and security arrangement designed to facilitate a $100 billion trade target set for 2015.
At the moment talks center around infrastructure development within India and the issue of trans-border rivers. These rivers begin in one country and flow into the next. As the denizens of the Mekong know, if a river is dammed by one country, it directly affects the country into which the river flows.
Dialogue between the two leaders and their successors will have to move beyond issues that directly affect the two nations and move onto international diplomacy. At the moment, oilfields are still producing, but nations may face regime changes such as those seen in Libya and Egypt or those attempted in Bahrain and Syria. International conflicts such as those between North and South Sudan disrupt energy production and major energy consuming nations cannot afford to be held at ransom. As China is a permanent member of the United Nations Security Council and India is a well-respected neutral nation, both countries will need to develop a joint approach to such diplomatic problems. Do they back the regimes or regime change? How do they best secure energy? China has been accused of putting economics before ethics. If this is true, will India be able to go along a similar path? Only the future will tell.
Diana Morton is a 29 year old finance writer from England who specializes in personal finance articles for a range of magazines. She enjoys traveling and finding ways to save money on hotels, cruises and exchanging money. Her research was put to good use when she helped to arrange her brother’s marriage in Bali.
