Jun. 20 – China’s largest energy firm, China National Petroleum Corp. (CNPC), and India’s flagship oil and gas explorer, Oil and Natural Gas Corp. (ONGC), have signed an agreement to jointly explore potential energy assets overseas. China and India hope to combine their financial resources and expertise to better secure energy supplies for their rapidly-expanding economies.
This is not the first time there has been cooperation between China and India’s chief oil producers. In 2006, CNPC and ONGC agreed to a series of pacts covering all segments of the oil industry. These pacts, however, never manifested into an efficient working relationship. India’s Junior Oil Minister R.P.N. Singh conceded that cooperation has been slow as “there has been no sharing of information on crude purchases by the oil companies of the two sides.”
While China and India already work together on various international oil projects, they do share a history of bad relations in the oil sector. China and India often find themselves as rivals, most recently highlighted when China criticized ONGC for violating Chinese sovereignty when exploring an energy block off the coast of Vietnam. Similarly, China and India have often clashed in Myanmar, where China has increasingly been able to out-bid and out-maneuver India.
This recent pact, however, hopes to put an end to any competition or rivalry that would unnecessarily raise the cost of energy.
“Efforts are on to work out a joint strategy to counter the ongoing surge in global oil prices,” a senior ministry official said. “Although we both are rivals, energy security is a key concern for both the countries.”
Including the expansion of their cooperation in the exploration of foreign energy assets, CNPC and ONGC have also agreed to expand their cooperation in the refining and processing of crude and natural gas and in the construction and operation of oil and gas pipelines.
While the unstable history of their past relations may provide a dangerous precedent for cooperation, ONGC Chairman Sudhir Vasudeva remains committed to the partnership.
“ONGC drew upon the positive and productive experience of working with CNPC… It is important that henceforth we collaborate with more management engagement on important global assignments beyond the current projects so that the interests of both the companies are mutually served,” he said.