With more than 1 billion people each, China and India have experienced rapid economic growth in recent decades – on an unprecedented scale in economic history – credited to their policies of reform and economic openness. Moving gradually from state-planned agricultural economies into global manufacturing and services powerhouses has helped China and India reduce poverty. The strong expansion of the Chinese and Indian economies over the last decade leaves no doubt about their impact globally.
After economic reforms, when India entered the global energy market, it encountered an important competitor, the People’s Republic of China (PRC), one of the fastest-growing economies in the world, and a rising military power with a vast appetite for oil and other raw materials—and the financial resources to satisfy that appetite. China is already well ahead of India in the search for new energy sources. Since 2000, China National Petroleum Corporation (CNPC) has invested United States Dollars (USD) $45 billion in this search, while India’s Oil and Natural Gas Corporation Limited (ONGC) has invested just USD $3.5 billion. The vast foreign-exchange reserves available to China’s state-owned oil firms have enabled them to undercut India’s efforts to obtain oil beds. Furthermore, as recent events underscore, the Sino-Indian competition for new energy sources in Central Asia is well underway.
China and India are the world’s leading energy consumers, having very similar patterns of energy mix, with a high reliance on coal. Both economies are also heavily dependent on foreign oil. However, China’s biomass consumption is about 50% of that of India. In India, there are focused programs for promoting renewable energy. At present, renewable energy comprises about 5% of the energy mix. These include programs for the rural sector, solar energy, power generation, and so on. The Ministry of Non-Conventional Energy Sources (MNES) has set a goal of installing 10% of additional power generation capacity in the country through grid-connected renewable power by 2012.
With a population of over 2.5 billion and booming economic growth, China and India are going to play an increasingly important role in global economic matters and energy markets. Both of these countries are heavily dependent on oil, mostly due to the advance of the transportation sector in the developing countries of the region. Though China and India are rich in coal reserves, the quality of coal is not good and there are restrictions on coal use due to environmental considerations. In terms of oil production developments, these two neighbors suffer from natural depletion and lack of investment in the exploration and production sectors. China has the largest oil reserves in the region, but Chinese production capacity has seen very limited growth. The heavy dependence on oil from the Middle East has led to these countries paying premium for a long time. Growing energy demand in the region could also heighten competition for imports in the regional market. Regional geopolitical and external production challenges can also exert pressures on future energy supplies in these Asian giants.
View Table of ContentsPages: 117
Publication Date: October 2007
Publisher: Energy Business Reports
)
