India, China may tie up for oil hunt

IOC, OIL likely to sign pact with Sinopec soon.

Indian petroleum companies are set to join hands with their Chinese counterparts in their hunt for oil and gas globally.

As part of the broad contours being worked out following an official Indian delegation's visit to China last week, Indian Oil Corporation and Oil India Ltd are expected to sign a memorandum of understanding with China Petroleum & Chemical Corporation (Sinopec) for cooperation in the downstream sector, particularly petrochemicals.

Oil and Natural Gas Corporation is likely to collaborate with China National Petroleum Corporation (CNPC) along with either Hindustan Petroleum or Bharat Petroleum, while ONGC Videsh Ltd and China National Offshore Oil Corporation Ltd (CNOOC) will work out the areas for cooperation. GAIL (India) has already announced its intention to collaborate with Sinopec for petrochemicals.

Officials said the collaboration would extend to joint bids for assets in third countries. China and India, the two biggest consumers of oil and gas in Asia and among the top five in the world, are scouting for energy in various parts of the world.

Companies from the two countries have also often competed for the same assets. The Indian delegation held discussions with Sinopec, CNPC and CNOOC on issues covering all hydrocarbon activities.

"It was felt during the discussions that each of us has specific areas of strengths and we could collaborate in West Asia, Central Asia, Africa and Latin America. The Chinese side felt that collaboration could be extended to even bigger projects in North America and Europe," said an official.

A road map for the visit of Petroleum Minister Mani Shankar Aiyar to China later this year will be laid out. There will be exchange of a draft MoU between the two countries for a framework for government level cooperation in the hydrocarbon sector.

"Following this, a joint working group for monitoring progress in specific areas will be set up," said the official.

Among areas which have been identified for collaboration are strategic storage, research and development, training, improved oil recovery, better oil recovery techniques and compressed natural gas.

While India offered expertise in CNG, China's experience in planning for strategic storage was of interest to the Indian delegation.

Indo-China oil battles

• PetroKazakhstan acquisition
• EnCana's stake in Project Diamond, Ecuador
• Yukos assets
• Oil blocks in Sudan
• Oil blocks in Angola