China, India Oil Deals Can Undermine Global Diplomacy, U.S. Says

China, India Oil Deals Can Undermine Global Diplomacy, U.S. Says- U.S. Department Of State

State Department's Wayne says energy dialogue with both is best option

By Andrzej Zwaniecki
Washington File Staff Writer

Washington -- China’s and India’s willingness to make oil deals with certain countries can undermine international efforts to encourage policy changes intended to strengthen global stability and energy security, a State Department official says.

E. Anthony Wayne, assistant secretary for economic and business affairs, said July 26 that the United States has promoted the reduction of barriers to energy trade and investment around the world and welcomed additional sources of oil and gas on the world market.

But efforts by Indian and, particularly, Chinese national oil companies to purchase overseas assets in certain countries and participate in bilateral deals with those countries have a troubling aspect, he said.

“The economic support such investment provides regimes such as Iran and Sudan can undermine efforts to encourage policy changes that will reduce global instability and enhance security for all,” Wayne told the Senate Foreign Relations Committee.

He said the two countries’ quest for equity investment in overseas oil resources has met with considerable skepticism by market analysts. Those analysts believe that China would not likely satisfy its demand for oil or reduce its dependence on oil from major oil companies through acquisitions that often are not considered commercially viable, he said.

The Bush administration believes that China over time will see the benefits of private energy enterprises in particular as well as an open economy in general, Wayne said.

He said China and India are pursuing acquisition of oil assets in response to a projected dramatic increase in energy use as they continue to expand economically in the next two decades.

According to the International Energy Agency, demand for energy in China and India is projected to approximately double by 2030, while U.S. demand is expected to grow by 35-50 percent. The three countries are largest consumers of energy in the world.

Wayne said that continued U.S. engagement with both countries is the best way to help them use energy in the most efficient, affordable and environmentally sound manner.

He said U.S. policy aims to ensure that “energy interests are pursued in a manner that seeks to engender cooperation rather than conflict or confrontation.”

Wayne said that continued energy dialogue with China and a similar, newly launched energy dialogue with India will allow the United States to expand and deepen bilateral and multilateral energy cooperation with the two countries. He said those efforts will include cooperating on civil nuclear energy with India and on clean and renewable energy technologies with China.

For additional information, see also these related articles:

U.S.-China Cooperation Could Advance Mutual, Global Energy Goals;

U.S. Encourages China To Become Responsible Energy Consumer;

Congress Cites Security Concerns over Chinese Bid for Unocal;

Bush Administration Says Review of Chinese Unocal Bid Premature;

China Must Address Economic, Security Concerns, Commission Says;

India, United States Building Global Partnership in Eight Areas;

India, United States Sign Pacts on Energy, Science, Communications.

Assistant Secretary Wayne’s testimony is available from the Senate Foreign Relations Committee in pdf format (10 pages).