Rumors Grow Of China-India Cooperation On Energy Policy - Reuters

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BEIJING - "Chinese Premier Wen Jiabao visits India this week with the race between the world's two most populous nations to secure the energy they need to fuel their growing economies likely to be on the agenda. In volatile trouble spots from Sudan to Myanmar, both countries are competing to snap up resources where most Western companies cannot, or dare not, compete, as well as facing off in less difficult environments.

But politicians, including India's oil minister, have started talking of energy co-operation as political relations, marred by a 1962 border war, warm. With rapidly growing oil demand, and increasing dependence on imports -- last year over 40 percent of China's crude and some 70 percent of India's came from abroad -- the two countries have more than just their rivalry in common. And they are linked by similar business models, with cash-rich, state-controlled oil firms seen having more appetite for risk than companies beholden to earnings-conscious shareholders.

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A deal could include agreements for each country to refrain from trying to buy certain assets to prevent bidding wars, or working on joint projects in areas of interest, analysts say. "We are always pitted against each other to the advantage almost always of the third country," Indian Oil Minister Mani Shankar Aiyar said in February.

But the energetic politician is wary of his neighbour as well as welcoming, advocating restructuring Indian state firms to help them compete with Chinese rivals. And although Chinese and Indian companies are partners in Sudan's Greater Nile Project, widespread cooperation could be a long way off with both countries on a global prowl for assets. "The Chinese in particular, I think, would be reluctant to start excluding themselves from ... areas of certain countries just so they could avoid having Indians bidding on one or two assets," said Gavin Thompson, Beijing-based analyst with Wood Mackenzie."

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