India, China to sign agreement on cooperation
(AP)
Updated: 2006-01-10 20:08

India and China, competing worldwide in their search for oil and gas reserves, will jointly bid for, explore and produce energy under an agreement to be signed this week, India's oil minister said Tuesday.

Petroleum Minister Mani Shankar Aiyar said at least five agreements are to be signed between Indian and Chinese companies, with seven others likely to be finalized during his January 12-13 visit to China.

"In all spheres of energy development, there is a great deal we could learn from China and perhaps something we could give them," Aiyar said.

The agreements provide for cooperation in exploration, production, storage and stockpiling, research and development and conservation, the petroleum ministry said in a statement.

On Monday, Chinese oil company CNOOC Ltd. said it bought a 45 percent stake in a Nigerian oil field after India's biggest oil company, state-owned Oil & Natural Gas Corp., backed out despite a winning bid. CNOOC paid US$2.3 billion (euro1.9 billion) for the stake.

Aiyar refused to state the reasons for India's decision to withdraw, although media reports say the Indian Cabinet opposed the deal, saying it wasn't commercially viable.

The announcement about the agreements came a day after Indian Foreign Secretary Shyam Saran met with Chinese Vice Foreign Minister Wu Dawei in Beijing in the second round of talks to settle border disputes and strengthen their emerging strategic partnership.

India and China have a four-decade boundary dispute that arose after their 1962 war. They are also economic and military competitors and have found themselves competing for oil and gas reserves around the world.

"This visit is the opening of a new chapter in our relationship ... it will lead to new levels of understanding," Aiyar told reporters.

Aiyar said the engagement would also help structure an oil and oil products market and possibly help bring down prices in Asia, the world's largest producer of oil and gas and the fastest growing consumer.

Aiyar said he was also open to discussing a pipeline project connecting India and China, a suggestion he has made in the past.

"This relationship is not only desirable but also feasible. On several occasions we find ourselves competing with Chinese firms," he said. He added that India and China still might compete, but without "destructive competition."