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China and India power up: Geopolitical implications for ASEAN

Updated On: Mar 31, 2006

Rising economic giants portend an insatiable energy thirst, as recent months witnessed a flurry of globetrotting energy shopping sprees by China and India, reverberating ‘tectonic’ shifts in foreign diplomacies around the world in their path.

This past weekend at a post-Kyoto accord meeting in Canberra also saw a private admission by Tony Blair and John Howard: China and India’s energy needs pose a “key strategic challenge” and the issue pre-occupies “the agenda of every policymaker in Europe and around the world” (Agence France-Presse, 28 March 2006)

The energy deals sought by China and India are unprecedented in their character. Guided by the need to secure their own interests, they seem to cut across traditional geopolitical alliances, and look beyond any human rights concerns that might have arisen.

India’s Memorandum of Understanding with the Myanmar junta on March 9 – with a US$1 billion Myanmar-Bangladesh-India gas pipeline at stake – is hot on the tail of China’s ongoing engagements with the authoritarian regime (alongside others in Iran and Sudan), having been ousted from a late 2005 Chinese purchase agreement for 6.5 trillion cubic feet of gas.

Just this past Monday (March 27), state-run Gail India announced an international energy consortium bid to transport compressed natural gas (CNG) from Myanmarto India, and become the world's first CNG shipping time chartering service.

New ripples are created by what the current superpowers regard as an inevitable Eastward shift and ‘asianisation’ of the world energy epicentre, disrupting the flow of traditional geopolitical alliances, and replacing them with more flexible political-economic arrangements toward achieving regional energy efficiency and security.

Reeling from China’s oil venture into Latin America (America’s traditional sphere of influence) last week, the United States’ hegemonic dominance in East Asia takes a further cut as a result of China’s counter-hedging tactics on two fronts.

First, in what must be regarded as a tombstone on the Bush administration’s failed trilateral containment strategy against China during Rice’s visit to Australia two weeks ago, Chinese Premier Wen Jiabao’s visit to Canberra next week will witness the signing of Australia’s largest uranium trade deal with China, amid heightening pressure from India

Second, a brewing Beijing-Moscow nexus against American unipolar dominance is in the mix as Hu Jintao continues to negotiate with Vladimir Putin on an oil pipeline linking East Siberia to the Pacific, with a branch line to China

Elsewhere, geopolitical rivalries between China and India also gave way to active economic cooperation to further whet their energy appetites. Last December, Indiaand China won a joint bid to buy PetroCanada's 37 per cent stake in Syrian oilfields for US$573 million. Last week, Hindustan Petroleum Corp Ltd and China's Sinopec Corp signed a preliminary agreement for joint projects in the two countries. Business deals in the renewables sector also hold great potential as the two economic giants assert greater energy independency from fossil fuels.

What impact does the Sino-Indian quest for energy security have on ASEAN?

Current domestic woes pre-occupy Malaysia and Indonesia’s energy resource developments. The recent goodwill visit by Condoleezza Rice has cast an anti-imperialistic gloom over the Pertamina-Exxon Mobil deal in Java’s Cepu region, touted to boost Indonesia’s oil production by a fifth. Meanwhile, the PT Freeport conflicts continue to escalate.

Malaysia’s recent biofuel initiative and a new gas discovery at its PC4 gas field offshore Sarawak by state oil corporation Petroliam Nasional Berhad (Petronas) are also marred by public resistance against the fuel price hike, as the government risks implementing the pre-emptive policies to soften the impacts of oil reserve depletion and becoming a net importer of petroleum by the end of the decade.

The chips fall on Myanmar as it carries the geopolitical energy potential with the recent January 11 discovery of “massive” gas reserves (between 2.9 trillion and 3.5 trillion cubic feet) off the northwestern coast, and new deals forged with India and China.

Greater energy cooperation between Myanmar and the rest of ASEAN is clouded by the former’s lack of progress in democratic and human rights reforms, as evidenced by the poor outcome of ASEAN special envoy Foreign Minister Datuk Seri Syed Hamid Albar’s visit to Myanmar earlier this week. The annual retreat in Bali for ASEAN foreign ministers scheduled next month will probably cast further doubts on Myanmar in ASEAN, and ASEAN’s continued claim to be the driving force for the East Asian region.

Sources:

Burma and India sign natural gas deal (The Nation 10 March 2006)

Is Myanmar the next Iran? (The Daily Star, 11 March 2006)

In Myanmar visit, Indian president jockeys with China for energy (Myanmar News.Net, 12 March 2006)

Frustrated China seen getting no promises off Putin (Reuters, 20 March 2006)

Falling Pertamina (The Straits Times, 20 March 2006)

The global battle for oil (The Straits Times, 21 January 2006)

Malaysia's Petronas discover gas Sarawak (Antara, 21 March 2006)

India on shopping spree for oil and gas assets (Asia Pulse, 24 March 2006)

India's quest for renewable energy goes beyond its borders (The Business Times, 24 March 2006)

US keeping tabs on Russia-China courtship (The Straits Times, 27 March 2006)

Indian, Chinese energy needs 'pose key challenge' (Agence France-Presse, 28 March 2006)

Australia PM says close to uranium deal with China (Reuters, 28 March 2006)

Beijing to ink two energy deals with Canberra (The Straits times, 28 March 2006)

Gail India gets 8 EOIs from shipping firms to bring Myanmar gas (Asia Pulse, 28 March 2006)

Asean ministers upset with lack of progress on Myanmar (The Star, 30 March 2006)