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India Steps Up in the Competition for Russian Oil

India, with a population of one billion, has jumped into the development of Russian oil, the world’s largest potential oil reserve, making Japan and China worried. The two nations are the second and third largest oil consumers respectively in the world.

China and Japan, having conflicted over a Siberia oil pipeline, and are now together struggling to come up with clever plans to keep this new but strong competitor away and sustain their vested interests in Russian oil.

India, as it steps into a period of high-speed economic growth, has increased its oil demands dramatically, and is expected to serve as a new variable in the international oil market. Last year, China swept the crude oil market and caused serious troubles.

Aggressive Movements from India

India’s Oil and Natural Gas Corporation (ONGC) has recently announced that it formed a consortium with the Russian state-run oil company Rosneft to launch the Sakhalin-Three oil field development. The company has already financed 20 percent of the development of Sakhalin-One, and is slated to produce natural gas starting as early as this fall. The ONGC is currently negotiating to buy up the assets of the Russian oil giant Yukos that went bankrupt.

The Indian government announced it would participate in Caspian Sea oil development projects late last year, and in the middle of last month, it also decided to jump into the Siberian oil development project. This aggressive movement began right after the Indian government invited Russian President Vladimir Putin to India and confirmed his promise to cooperate in the energy sector.

With the economic growth on right track, the Indian government realizes its desperate need for securing stable oil providers, which will surely aggravate the competition to obtain more resources, said the Japanese newspaper, Nihon Keizai Shimbun.

It is an Emergency for China and Japan

Japanese conglomerates have paid a great deal of efforts in the Sakhalin oil fields since the early 1990s in order to lower its oil dependency on Middle East regions. China’s Sinopec and Petro-China—both are government-run companies—also have invested large amounts of money into Caspian oil.

Japan, after having succeeded in changing the last stop of the Siberian pipeline from Daqing in China to Nakhodka in the Maritime Province of Siberia, is planning to invite the Russian president to visit Japan within the first half of this year and settle pending issues regarding oil.

When pointed out that they are spending too much money on the oil pipeline, the Japanese government explained that the money was not all losses, given the one million barrel of oil a day that Japan would be provided.

During his recent visit to Russia, Japanese Foreign Minister Nobutaka Machimura focused on stressing the cooperative resource relationship, while holding back the northern territory issues that had brought disputes in recent years.

China is not excluded in this “betting” competition for Russian oil. Chinese banks are known to have provided six billion dollars to Rosneft on Tuesday to support the acquisition of Yugansk, a key subsidiary of Yukos, under the condition that Rosneft will offer China 48,400,000 tons of crude oil up to 2010.

The Chinese press also reported that Russian industry and energy minister Victor Khristenko secretly visited China and promised to build a branch line in China.

The accelerating energy competition among China, Japan, and India is not irrelevant to the outlook that Asia will perhaps be the largest energy consumer in the world before the mid-21st century, experts predict.

The International Energy Agency estimates that oil imports by China are likely to double by 2010, reaching four million barrels a day. Japan’s energy consumption is also expected to continue to increase by 2022.

Won-Jae Park (

Editorial Notes: FEBRUARY 02, 2005 22:51. are a S.Korean based multilanguage Asian news journal. -LJ

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