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Shoot down the rhetoric
It is possible to diplomatically manage the Chinese reaction
Issue Date - 10/11/2011
A week back, ONGC Videsh Limited (OVL) and PeroVietnam in the presence of Indian Prime Minister Manmohan Singh and Vietnamese President Truong Tan Sang, entered into a three year long treaty on cooperation in the field of oil and gas.

A seething China feels that this alliance has the potential to disrupt peace in the Asia-Pacific region. China is striving for sovereignty in the area and they won’t feel comfortable with a strong Indian presence over there. As a matter of fact, China diplomatically pressurised British Petroleum to abandon their operation in the region. Interestingly, China had not raised any formal objection over the Indo –Vietnamese co-operation in oil and gas until last year when they privately conveyed to their US counterparts that they see South China Sea as their ‘core interest’. For the uninitiated, the cooperation in the field of oil and gas in the region between India and Vietnam dates back to May 1988 with the signing of a Production Sharing Contract between Hydrocarbon India Ltd (now ONGC Videsh Ltd.) and PetroVietnam.

The situation is like a toss up for Vietnam. Scrapping the oil extraction deal with India would put contracts with oil companies from several other countries at risk & also negatively impact its relations with India, which has projected $7 billion in bilateral trade. It would also be tough to resist China, their major trading partner, particularly considering the economic sweetener it has promised in addition to strengthening military co-operation. As far as India is concerned, tapping on China’s troubled neighbourhood is seen as a valuable vantage point to counter the ‘String of pearls’ strategy or a firm attempt to emerge as a logical counterweight to China in Asia. But it’s best for India to tow the official line on energy security and avoid getting into a war of words with Chinese government mouthpieces. And also keep a watch for the next Chinese move!



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