Chinese fuel in race for oil - Publication asks ONGC to dump exploration deal

Chinese fuel in race for oil - Publication asks ONGC to dump exploration deal

ARCHIS MOHAN AND REUTERS

Oct. 16: A Chinese trade publication linked to the communist party has warned India that it was playing with fire by agreeing to explore for oil with Vietnam in the disputed South China Sea, injecting an element of "coercive diplomacy" to the race for resources by the neighbours. The China Energy News, published by the People's Daily, also advised ONGC Videsh to pull out of the Vietnam deal. Some sources in India cautioned that while the paper's position might be mirroring various views in China, it need not strictly be construed as the official position of the government in Beijing. Official sources in India confined themselves to pointing to last week's agreement with Vietnam for "long term co-operation in oil and gas", implying that there was no rethink and Delhi would pursue the pact. Coinciding with Vietnam President Truong Tan Sang's visit to India, ONGC had said on Wednesday that its overseas investment arm had signed a three-year deal with PetroVietnam for developing long-term co-operation in oil. Both China and India have a voracious appetite for energy sources, which had led them to compete in some parts of the world and co-operate in others. Last week, when widespread power outages pitch-forked energy shortage from policy tables to Indian homes, Delhi had played host to the leader of not only Vietnam but also of Myanmar, both resource-rich countries. The news came as China and Vietnam signed an agreement seeking to contain a dispute over the South China Sea that has stoked tension between the two communist-ruled neighbours divided by a history of mistrust. Vietnam and China — as well as the Philippines, Brunei, Malaysia and Taiwan — stake conflicting claims over parts of the South China Sea, a potentially oil and gas-rich body of water spanned by key shipping lanes. The China Energy News said co-operation between India and Vietnam in these seas was a bad idea. "India's energy strategy is slipping into an extremely dangerous whirlpool," it said in a front-page commentary. "But oil companies must have a bottom line, which is to follow international law and respect the structure of international relations," the China Energy News added. "On the question of co-operation with Vietnam, the bottom line for Indian companies is that they must not enter into the disputed waters of the South China Sea," it said. "Challenging the core interests of a large, rising country for unknown oil at the bottom of the sea will not only lead to a crushing defeat for the Indian oil company, but will most likely seriously harm India's whole energy security and interrupt its economic development. "Indian oil company policy makers should consider the interests of their own country, and turn around at the soonest opportunity and leave the South China Sea," it said. The pact between ONGC Videsh and Vietnam's oil and gas agency covers new investments and strengthening presence from drilling-to-dispensing in Vietnam, India, and other countries, ONGC said. ONGC Videsh, along with TNK-BP and PetroVietnam, has a stake in a gas field in the Nam Con Son basin, off Vietnam's south coast. In 2006, Vietnam had awarded two exploration blocks — 127 and 128 — in Phu Kanh basin to ONGC Videsh. Businessmen and diplomats say China has pressured foreign firms in deals with Vietnam not to develop oil blocks in the sea. In New Delhi, officials said the oil exploration in the South China Sea was part of "ongoing co-operation for more than a decade". They said Prime Minister Manmohan Singh and the Vietnam President had last week iterated that this co-operation would continue. "India is not taking any sides in the territorial dispute between different countries of the region over the South China Sea. Our position on this is clear: the countries of the region should resolve their differences in a bilateral or multilateral forum," said an official. Some sources in India said the publication's comment should be taken with a pinch of salt, adding that not all published opinion reflected the official position of the Chinese government. "Media might be state-owned in China but it still reflects various opinions within the party. There are elements in China, like in India, who advocate aggressive diplomacy," said one source. "New Delhi and Beijing, too, have a good understanding. We had a very good strategic economic dialogue which was ignored by media in India which is interested only in reports that demonise China. But that dialogue was primetime news on Chinese television," the source added. He cautioned about western "propaganda" to highlight China-India differences while ignoring the areas of convergence. Srikanth Kondapalli, professor of Chinese studies at Delhi's Jawaharlal Nehru University, said both China Energy News and its fellow publication the Global Times had carried such articles twice before in the past one year. He said the People's Daily was more credible as it was under the Chinese communist party central committee's propaganda department. "The party has several factions which often work at cross purposes and the People's Daily is busy experimenting with relative freedom. The article does not reflect the government's position but still carries certain credibility, some factional legitimacy," he said. Kondapalli termed it an example of Chinese coercive diplomatic moves. Such an effort worked with British Petroleum, which wrapped up its investments in the South China Sea last year under Chinese pressure. "The absence of any naval back-up to sustain their operations played a part," Kondapalli added. He feels that India would continue to stick to its guns as the Indian Navy has an understanding with the Vietnamese navy and enjoys berthing rights for its naval ships at two ports in Vietnam. Since 2007, India's maritime policy considers the South China Sea as its "secondary area of operation", Indian Ocean being its "primary area of operation". The fact that Indian naval bases in the Andaman and Nicobar Islands are in the neighbourhood (2,000 nautical miles) gives India a sense of confidence. "However, an armed conflict is not a scenario as China has huge investments in the area and relies on the shipping corridor for its substantial trade. A conflict will be problematic for its own rise as a global power," Kondapalli added. http://www.telegraphindia.com/1111017/jsp/frontpage/story_14632880.jsp