THE WALL STREET JOURNAL: China, India Team Up In Bid for Syrian Oil: "China and India are putting aside their differences to secure energy resources and are going after an oil field together.": "Al Furat Petroleum is a joint venture between Petro-Canada, Royal Dutch Shell's Syrian subsidiary and the state-owned Syrian Petroleum Co.": Monday 12 December 2005
Joint Effort to Secure
Energy Assets Marks
A New Tack by Rivals
By SHAI OSTER in Beijing and JOHN LARKIN in Mumbai
Staff Reporters of THE WALL STREET JOURNAL
December 12, 2005; Page A17
China and India are putting aside their differences to secure energy resources and are going after an oil field together. A spokesman for China National Petroleum Corp., China's biggest oil producer, said Friday it had teamed up with India's flagship Oil & Natural Gas Corp. to try to buy a 38% stake in Syria's Al Furat Petroleum Co.
The move marks a departure from the past, when the rivalry between the two countries drove up the price of oil and gas fields as they competed to secure energy supplies. It also could spell trouble for Western oil companies, which may not be able to afford the lower rates of return that the two state-owned oil giants are willing to accept.
A senior official at India's Ministry of Petroleum and Natural Gas confirmed that an offer had been submitted for the Syrian assets. He said the company's board had signed off three weeks ago on the offer, but he refused to elaborate on the size of the bid. An ONGC spokesman declined to comment on the deal.
It is unclear whether the joint China-India bid for a stake in the Syrian oil company will succeed.
Al Furat Petroleum is a joint venture between Petro-Canada, Royal Dutch Shell's Syrian subsidiary and the state-owned Syrian Petroleum Co. It produces about 200,000 barrels of a oil a day, half of Syria's output. Petro-Canada, which owns about one-third of the venture, is interested in selling its stake.
India and China have been competing on the world stage for oil and gas assets, driving up prices as they try to outbid each other. But the two countries decided in August to jointly pursue selected energy assets abroad.
The cooperation will be formalized in January, when Mani Shankar Aiyar, India's oil minister, travels to China to preside over an exchange of memoranda of understanding between both governments and the two national oil companies, the official said.
China's energy demand soared some 15% last year. The country imports about one-third of its oil, but that will increase as domestic production stagnates.
Chinese oil companies have been aggressively seeking overseas oil and gas assets to supplement their stagnating output at home. China's biggest offshore oil producer, China National Offshore Oil Corp., made headlines with its bid for Unocal Corp. That bid was withdrawn in August after U.S. political pressure.
In October, China National Petroleum Corp. successfully sealed a deal for PetroKazakhstan Inc., overcoming political hurdles to buy the oil fields in Kazakhstan. India has lost in a string of competitive bids for foreign assets against China's oil giants, most recently for PetroKazakhstan.
Securing foreign energy acreage is increasingly important to India, which is Asia's fourth-largest oil consumer. Because of stagnating domestic reserves, it must import more than 70% of its crude-oil requirements, a proportion that is rising. Indian officials also fret that most of the country's oil is sourced from the politically unstable Gulf area.
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