Originally Published 2003-10-23 06:51:18 Published on Oct 23, 2003
India is all set to further its energy cooperation with Sudan. Reports suggest that ONGC Videsh Limited (OVL) has decided to invest $1 billion in Sudan to acquire 25% stakes of the 5A/5B oil projects in Sudan. The project is currently owned by Austrians.
India-Sudan Energy Ties: Implications
India is all set to further its energy cooperation with Sudan. Reports suggest that ONGC Videsh Limited (OVL) has decided to invest $1 billion in Sudan to acquire 25% stakes of the 5A/5B oil projects in Sudan. The project is currently owned by Austrians. India would also soon get two projects from Sudan one of which is to build a pipeline and the other is to refurbish an oil refinery.

In March this year, OVL acquired 25% equity in Sudan's Greater Nile Project for US $669 million. This was the largest foreign investment ever made by a domestic corporate. With the finalization of the present deals India is getting ready to go ahead with plans to invest US $2 billion in Sudan's energy sector.

This heightened level of proactive search for energy abroad is part of a strategy adopted by the government of India. The ONGC has made plans to invest $2.85 billion for overseas joint ventures during the 10th plan period. The amount will be spent on oil field blocks in Iraq, Iran, Algeria and Venezuela. While $250 million will be spent in Algeria over the next five years, $ 74 million, $ 97 million, $62 million and $210 million will be spent in Vietnam, Iraq, Iran and Venezuela respectively. Another $ 500 million will be spent in other countries.

The latest Sudan deals assume immense importance due to their being part of the larger agenda of 'energy source diversification' in order to avoid being overly dependent on the West Asian region for hydrocarbon resources. Critics, however, say that while India's overseas deals show aggressive negotiating strategies and considerable amount of realism, they can also prove to be a cause for concern at the same time. For example, it was when the Canadian company Talisman Energy had to leave Sudan due to accusations of being party to the widespread Human Rights violations in Sudan that OVL acquired the stakes from the Talisman. There are also reports of rampant Human Rights violations in Myanmar where India has considerable amount of stakes in the energy sector. How prudent is it to invest large amounts of money in countries where there are civil wars (Sudan) or unpopular regimes (Myanmar)?

Sudan's 17-year-old civil war, between the Muslim government of the north and the mostly Christian Sudanese People's Liberation Army (SPLA) of the south, is Africa's bloodiest and longest-running war. The revenue from the oilfields is reportedly fuelling the war as this money is being spent to buy weapons. Talisman Energy was accused of asking Khartoum in 1999 to remove villages from the vicinity of its oil properties which the government did using mindless violence. Such Human Rights violations were repudiated worldwide and the firm had to bow before pressures from within Canada and world over.

India currently gets 60,000 b/d of oil from Sudan and it is expected to rise to 200,000 b/d by 2009. This expectation could be shattered by another potential problem, namely, the Chinese presence in Sudan. China has reportedly invested US $20 billion in Sudan apart from soft loans, grant and other forms of aid. Besides its huge investment in Sudan, the London Telegraph reported in 2000, China also has a large 'military' presence in Sudan. Officially considered as cheap laborers, the 700,000 Chinese troops have had experience in active military service. They are being used by the Chinese to protect their oil properties in Sudan. The Telegraph report further claimed that the troops are under the control of China's Special Services and agents who claim to be managers and executives. China has a history of coercing countries to get what it wants and its history in the energy sector is no different. Some years ago China had reportedly bullied Kazakhstan into signing energy deals with it.

Given the fact that China has a very aggressive overseas energy policy and that India is its strategic competitor in the region both militarily and economically specially in acquiring overseas energy stakes, India needs to be concerned about is interests in Sudan.

How does India do it? While there are no easy answers to the problems of international politics, India has to look for innovative business and negotiating strategies to protect its interests. India needs to redefine its understanding of energy diplomacy. While India is already doing some welfare programmes in Sudan, they need to be enhanced as part of a well thought out plan, and the benefits from its overseas business ventures should be given to all parties involved in the target country. Even if not out of charity, at least as part of a business strategy India needs to take care of the non-profit aspects of business.

Secondly, it may not be a great idea for India in the longer run to distance itself from China while acquiring and maintaining stakes in overseas ventures especially in the area of hydrocarbons. It is always better to be part of an international consortium where China is also involved. Distancing itself from China can only increase suspicions and subsequently enmity.
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