Oil Global Quest: The Asian Race for Natural Resources

nigeria oilIt is talking for stake in Mozambique’s Rovuma-1 gas field, is gazing 1 million barrels of crude oil in Ghana, has sent its special envoy in Sudan, has planned to boost investment in oil sector in Venezuela. Who is it? A little help: it is an Asian country with more than 1 billion people. And no, it is not China.

Surprise?

India’s growth is probably less spectacular and iconic than China’s, yet the magnitude is similar. And so it is its thirst for natural resources. China is scary, instead India has the reassuring smile of a Santa Klaus Mohamon Singh, it’s the biggest democracy, no Bollywood villain can seriously be taken as a menace.

India's Prime Minister Mr. Manmohan Singh.Photo Reuters

India’s Prime Minister Mr. Manmohan Singh.
Photo Reuters

India has a friendly face. The worst it can happen with India is that they will start to dance and to sing in falsetto. Yet, New Delhi needs natural resources, desperately. In particular, oil. Loads of oil. India in 2011 consumed a third of the oil of China, but China produced also a third1. China imports almost half of its need, India almost all2. And the future could be even more unbalanced for New Delhi. It is fair to say that India is looking as ravenously as China for new oil sources.

As we mentioned in the introduction India was in talks over the stake in Mozambique’s Rovuma-1 gas field3, with Ghana about equity participation and industrial collaboration4 and also for a contract of more than 1 million barrels5, has sent a special envoy in Sudan6 with the clear mandate of lobbying for India in the competition with China over the Sudanese oil; finally, it is investing in Venezuela more than $ 2 billions7.

Union Petroleum Minister Mani Shankar Aiyar with the President of China National Petroleum Corporation, Chen Geng in Beijing on January 13.

Union Petroleum Minister Mani Shankar Aiyar with the President of China National Petroleum Corporation, Chen Geng in Beijing on January 13.

This competition with China is not new. In 2006 they signed an agreement to stop such a bidding war that was driving up prices worldwide8. In 2012 in a very unnoticed press release, they “agreed to “work together to maintain peace and stability of the Asia-Pacific region”. The “consensus” was reached during the recent visit of the Chinese defence minister General Liang Guanglie to India, the first such visit since 1976.”9 Few months earlier their race for the assets in the Western Hemisphere attracted some attention by the analyst10.

India and China will maintain internal stability only with massive growth, which in turns will be possible only through a constant, reliable access to natural resources. The human cost for this race will be enormous. In India the group Vedanta launched a para-military campaing with the support of the New Delhi (“operation Green Hunt”) to evict the Adivasi11 people from the mining site.

India is looking everywhere for new possibilities. So it was very welcomed news when they discovered fields at home in Gujarat12, the Andhra Pradesh13 and the Cauvery Basin14. Since 1981 presence of oil on the Indian side of the Basin were confirmed15.

Cairn India was awarded the contract for oil exploration in block No.2 of the Mannar Basin and has signed a petroleum resources agreement with the government of Sri Lanka.

Cairn India was awarded the contract for oil exploration in block No.2 of the Mannar Basin and has signed a petroleum resources agreement with the government of Sri Lanka.

So it was only a matter of time before they found oil on the Sri Lankan one. Indeed. In 2011 Cairn launched a press release where they announced the oil discovery16.

If you consider that the Sri Lankan government in 2006 assigned one block each to China and India for further exploration, then you’ll have a more complete framework of the Chinese and Indian interests in Sri Lanka17.

When it comes to natural resources and their appropriation in countries with conflict issues and violations of human rights, you may easily accuse the role of China, as it is the case in Sudan. Well, we suggest that India, with a much lower profile, has very similar interests and very similar doing. China didn’t export wars, as the US did. We would like to broad the debate about conflict and natural resources also to India.

Stay tuned.

Sri Lanka:Oil and LTTE presence

Map of Sri Lanka.
In Blue the areas interested by oil exploration.
In Black areas previously under the control of LTTE.

11The Adivasi are the Indian aborigenes, Estimated in 80 millions.

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