India to counter China through oil diplomacy

Govt approved a framework of understanding on cooperation in hydrocarbons with Bangladesh recently

India is planning to use its strength in oil refining to promote oil diplomacy with its neighbours, Nepal and Bangladesh, to counter Chinese influence. 

While state-run Indian Oil Corporation (IOC) is set to start 100 retail outlets in Nepal soon, India is now looking to expand its tie-up in Bangladesh beyond retail. India and Bangladesh have decided to explore and jointly bid for hydrocarbon assets in other countries, especially in areas like Myanmar.

India has submitted its bids to foray into petroleum retail in Myanmar, while IOC is looking at Vietnam to invest in refinery infrastructure. Currently, IOC has marketing subsidiaries in Sri Lanka, Mauritius and West Asia.

The Cabinet has approved a framework of understanding on cooperation in hydrocarbons with Bangladesh recently. “We want to promote investment in each other’s country as well as in third countries, technology transfer, research and development and conducting joint studies,” said Petroleum Secretary K D Tripathi.

This comes soon after China and Myanmar announced setting up a 771-km crude oil pipeline at $1.5 billion. Through the pipeline China will import 22 million tonnes (mt) of crude oil every year.

“India and Bangladesh will jointly look to acquire hydrocarbon assets abroad as well,” said Sunjay Sudhir, joint secretary, international cooperation, petroleum ministry. 

In a recent meeting with a Nepal delegation, India had decided to enter the retail market by starting 100 outlets in the neighbouring country. Along with this, in order to carry diesel and natural gas, India and Bangladesh will build a 131-km pipeline at about $46 million. India’s Petronet LNG  will set up an LNG terminal in Kutubdia Island and the country will also build an LPG terminal in partnership between IOC and PetroBangla. On the other hand, in Nepal, India will be extending the planned 41-km Raxaul-Amlekhgunj pipeline to Chitwan on the Nepal side and Motihari on the Indian side. 

“India currently transports 1 mt of petroleum products to Nepal. With the setting up of pipeline, a major portion of this will be transferred to pipeline infrastructure. Two parallel LPG and natural gas pipelines will also be built in this route,” said another official close to the development. 

Late last year, IOC had shown interest in an offer by Myanmar Petroleum Products Enterprise to cooperate for import, storage, distribution and sale of all petroleum products except LPG and LNG. 

The tie-up will be for a 30-year period and will be in the form of a joint venture. “The Myanmar bidding process is yet to be over, because of a change of guard in the local government in between. We are waiting for that,” said an industry source.