The Hindu Business Line : India-China combine faces tough competition in Syrian oil stake bid

THE combined negotiating skills of the State-owned energy firms of China and India - China National Petroleum Corp (CNPC) and ONGC - are being put to test for acquiring assets in Syria due to aggressive bidding by other players.

Sources told Business Line that the two entities, which have come together to bid for Petro-Canada's interest in a major Syrian oil and gas joint venture with Royal Dutch Shell, are positioned low in the bidding race.

"It is tough and both CNPC and ONGC would need to use their negotiation powers, as the bid is definitely not in first five. Besides, the credentials of the top bidders would also be a major deciding factor," the sources said. They, however, did not disclose the bid amount.

In September, Petro-Canada said that it might sell its stake of close to 38 per cent in the Shell-operated Al Furat venture in Syria, which translates into nearly 70,000 barrels of oil equivalent of the company's daily output.

The venture produces as much as 50 per cent of Syria's production. It produces oil and gas from 36 fields with 220 wells in three concession areas.

CNPC and ONGC have come together in their efforts to secure reserves to feed their economies, which require more imported oil.

India and China, with daily consumption of almost 2.2 million barrels and 6.4 million barrels respectively, are said to be among the five largest consumers of crude oil in the world.

India's foreign exchange expenditure on import of crude oil and petroleum products in 2004-05 stood at $29,266 million, up from $20,383 million in 2003-04 and $17,581 million in 2002-03.

In view of the unfavourable demand-supply balance of hydrocarbons in the country, acquiring equity oil and gas assets overseas was one of the important components of enhancing energy security, the sources said.

The Government has been encouraging national oil companies to aggressively pursue equity oil and gas opportunities abroad.

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