China-India Energy Cooperation: A Perspective of Geo-politics and Geo-economics

Commentaries and Op-eds May, 2015, China-India Brief, No. 50

In the process of their rise as major powers, China and India have experienced rapid economic development, with an average annual growth rate at 10 percent and 8 percent respectively over the past ten years. To sustain such a growth, their demand for energy resources will undoubtedly continue to increase. However, the stark reality is that domestic oil and gas reserves and production in China and India are very limited. At present, China’s annual domestic oil production has already reached a saturation point, with peak production estimated between 2010 and 2020. Natural gas production has entered a period of swift development, and is estimated to achieve peak production by the year of 2020. However, given the rapid growth in consumption of oil and natural gas, their indigenous resources are woefully inadequate. China and India are therefore seeking overseas energy supplies as one of the most important strategies to ensure energy security. It is estimated that by 2020, China’s dependence on foreign oil and natural gas will reach 76% and 40% respectively. Given India’s widening gap in demand and indigenous supply of oil and gas resources, its dependence on foreign oil has reached 70%, and Indian authorities have forecasted that this will reach 90% by 2030.

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