India Loses to China in Africa-to-Kazakhstan-to-Venezuela Oil

by Dave

Indian Oil Minister Murli Deora traveled to Nigeria, Angola, Uganda, Sudan, Saudi Arabia and Venezuela this year, leading a record number of delegations to gain oil for the world’s third-fastest-growing major economy.

The flurry of visits is part of a new drive to find oil for India’s 1.2 billion people after losing out to China in at least $12.5 billion of contracts in the past year. India proposed a sovereign wealth fund to bid for reserves, told state-controlled Oil & Natural Gas Corp. and Oil India Ltd. to make a major acquisition each this year, and raised the amount they can spend without government approval to 50 billion rupees ($1.1 billion).

“There is a new push,” said N.M. Borah, chairman of state-owned exploration company Oil India. “Going abroad is part of the government’s policy — diplomatic support is very, very crucial as we search for assets overseas.”

India’s energy use may more than double by 2030 to the equivalent of 833 million metric tons of oil from 2007, while China’s demand may rise 87 percent to 2.4 billion tons, the Paris-based International Energy Agency said.

India faces an uneven contest to close the gap with China, which is dipping into $2.4 trillion of foreign currency reserves to buy stakes in oil and natural gas fields from Iraq to Uganda, compared with India’s $250 billion in foreign exchange reserves. State-run Chinese companies spent a record $32 billion last year acquiring energy and resources assets overseas versus India’s single $2.1 billion investment by ONGC. China’s June 19 decision to allow the yuan to appreciate will further strengthen the hand of Chinese companies buying overseas.

India’s oil import bill climbed six-fold in the past decade to $85.47 billion for the year ended March, equivalent to about 7 percent of gross domestic product.

China’s political economy, freed from democratic and constraints, allows for long-term strategic bets in the national interest. All the talk of India-Africa historic ties is meaningless because ultimately money talks – there are more and larger kickbacks to be had for politicians and officials in oil-producing at the receiving end of Chinese largesse.

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