Oil firms can invest $25 bn in acquisitions

India, China should not compete in energy, says Aiyar.

Petroleum Minister Mani Shankar Aiyar today declared that domestic oil companies can invest up to $25 billion (Rs 1,09,175 crore) in acquisition of overseas oil and gas fields. He also called for India and China forging an alliance to secure their energy requirements.

Speaking at the inauguration of a two-day conference of the Confederation of Indian Industry, Aiyar said Indian companies have acquired stakes in oil and gas fields in 12 countries including Russia, Ivory Coast, Australia, Vietnam, Sudan, Iran, Iraq, Libya, Egypt, Qatar and Myanmar.

But between India and China, the most neglected sector in cooperation was energy, the minister said. The two countries can complement each other rather than competing.

"When the world's most energy-thirsty countries pit against each other, the bid price for the limited properties available goes up," he said.

Aiyar cited the example of Sudan's Greater Nile project, where ONGC Videsh Limited (OVL) and China's National Petroleum Company are working together. While China was building the refinery, the Indian company was constructing the pipeline.

Aiyar said India and China would continue to be dictated by market forces but there are possibilities of working together. "My ambition is not to compete with China, but to explore ways and means of partnering with it," he said.

"There are enormous prospects for India and China to work together. Our interests are complementary," the minister said adding there could be some sectors where the two countries can compete and some where they could cooperate.

Aiyar said China got its initial inflows from non-resident Chinese and foreign direct investment, while India earned its foreign exchange after opening up in 1991 through foreign institutional investors.

India can emulate the Chinese "miraculous" growth, he said. "China had $4-5 billion FDI during 1983 to 1991, the same as what we got in the last ten years.

If the Chinese got the same amount of FDI in the first 10 years of reforms and has reached where it is today, we can also get there."