INDIA has joined a new five-nation club of oil buyers aiming to challenge the vice grip of producing countries over crude prices and supplies. It has also formalised a long-awaited arrangement with China to explore and produce oil and gas in third countries.
These deals have been struck at a time when the latest gas find by the ONGC at the Krishna-Godavari basin promises to put India in the select list of 10 gas-rich countries and give it a biggest bargaining position in the world oil markets.
The deal with China would help India access some oil-rich but politically difficult areas in Africa, where the Chinese have built up enviable influence.
"This is a very important deal. We will now start looking at joint participation in oil projects across the world," Indian petroleum minister Murli Deora said on Sunday after signing a memorandum of union with Ma Kai, chairman of the National Development and Reform Commission, which is China's main policy setting body.
The two nations have worked jointly in a few projects in Syria and Columbia but this is the first time that the process has been formalised as a permanent feature of Sino-Indian relations. Deora said there are several good locations like Venezuela and Ecuador where the two countries can go for joint bidding or joint venture projects. The recent joint deal in Columbia resulted in massive savings for both countries because they acted in a co-ordinated fashion, he said.
India's inclusion in the oil buyers' club smacks of some deft diplomacy because India consumes a mere three per cent of the world's oil resources. The other members of the club consume much more with the United States leading the way at 25 per cent, followed by Japan 11 per cent and China 8 per cent. The only other low consumer is South Korea at 3 per cent.
"This is the first time in history that the voice of the buyers is being heard. So far the oil producers have been determining supplies. But I would not call it a cartel. The purpose is to express the difficulties of the buyers," Deora said.
The MoU signed with China would not preclude competition among the two countries, MS Srinivasan, secretary for petroleum and natural gas, said.
"We cannot avoid competition. But we will try to cooperate and jointly bid for oil and gas assets, wherever possible," he said. RS Butola, MD of ONGC Videsh, which would be at the forefront of joint participation with China, said the agreement would give a "major boost" to his organisation.
The latest oil discovery by ONGC at the Krishna-Godavari basin has further buoyed the mood at the Indian petroleum ministry.
