The Hindu Business Line : Oil diplomacy

It is on Nigerian oil that attention will have to be focused because of India’s growing energy needs and the imperative to diversify its oil sources.

The Prime Minister, Dr Manmohan Singh’s recent visit to Nigeria is significant considering that the last time an Indian Prime Minister visited that country was in 1962. Among other things, it indicates that New Delhi has begun to give Africa the importance it has always deserved, which is a welcome change in view of the shifting mosaic of international relations based on the relative economic strengths of the players involved.

It is in this perspective that Dr Singh’s visit to Abuja should be seen, the declaration he signed with the Nigerian President, Umaru Musa Yar’Adua, appropriately calling for a “strategic partnership” between the two countries which could cover “bilateral political, economic, trade, security, cultural, education, S&T and international dimensions”. Indeed, nothing short of this would have sufficed to make the visit a success in view of the “strategic bilateral plan” announced by the visiting Chinese President, Mr Hu Jintao, last year. It is becoming increasingly clear that Beijing is focusing on Africa as a future economic and diplomatic partner, which will affect India’s national interest if it does not launch its own initiative now. Perhaps Dr Singh’s visit is a part of that larger exercise, and it is as well that the process has begun.Nigeria is not just the largest country in Africa but is also the continent’s biggest trading partner for India. Of critical importance is the fact that more than 95 per cent of Nigerian exports comprise oil and petroleum products; the country supplies as much as 12 per cent of India’s total crude needs. (Nigerian crude is low on sulphur, which is well suited for Indian refineries.) Clearly, the effort should be to increase Nigerian imports, the official target being to push up the proportion to 16-17 per cent of domestic requirements. One of the objectives of the visit was to operationalise the $6-billion oil-for-infrastructure deal with Nigeria, which would, among other things, deepen the foundations of the emerging bilateral economic cooperation. Public sector and private oil and gas companies are already working in Nigeria and it is to be hoped that Dr Singh’s visit will lead to their stronger involvement in Nigerian projects.

As the Abuja Declaration says, there are other sectors where cooperation can be increased such as infrastructure (building of railways), agriculture, food processing, power generation, pharmaceuticals, automobiles and auto components. In fact, an MoU has been signed on Defence cooperation and agreements on trade, double taxation, and extradition have been planned for the future. All this is to be welcomed, but the fact remains that it is on oil that attention will have to be focused because of India’s growing energy needs and the imperative to diversify its oil sources. The Nigerian President has said that Dr Singh’s visit is a landmark in bilateral relations. The litmus test will be provided by the results, as far as India is concerned, in the oil sector.

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