• 3 minutes War for Taiwan?
  • 7 minutes How China Is Racing To Expand Its Global Energy Influence
  • 10 minutes Is it time to talk about Hydrogen?
  • 5 hours U.S. Presidential Elections Status - Electoral Votes
  • 2 days Mail IN Ballot Fraud
  • 13 hours Supreme Court rules against Cuomo's coronavirus limits
  • 9 hours “Cushing Oil Inventories Are Soaring Again” By Tsvetana Paraskova
  • 3 days Michael Moore Cranking Up Planet of the Humans Again
  • 4 hours Saudi Arabia Seeks to Become Top Hydrogen Exporter
  • 8 hours Biden's Green New Deal- Short Term - How Will He Start to Transition Out Of Crude?
  • 2 days Censorship in USA
  • 2 days “Consumers Will Pay For Carbon Pricing Costs” by Irina Slav
Brazil’s Oil Giant Slashes Its Five-Year Investment Plan

Brazil’s Oil Giant Slashes Its Five-Year Investment Plan

Brazil’s state oil giant Petrobras…

Peru’s Oil Industry Is Engulfed In Crisis

Peru’s Oil Industry Is Engulfed In Crisis

Peru’s oil industry is facing…

Why OPEC Is Worried About The UAE

Why OPEC Is Worried About The UAE

With its recent update in…

Simon Watkins

Simon Watkins

Simon Watkins is a former senior FX trader and salesman, financial journalist, and best-selling author. He was Head of Forex Institutional Sales and Trading for…

More Info

Premium Content

Two Major Power Blocs Are Vying For Power In The Middle East

The 15 June clash between military units of the two great Asia powers – China and India – in the disputed territory of the Galwan Valley in the Himalayas reflected a much greater change in the core relationship between the two countries than the relatively small number of casualties might imply. It marked  a new ‘push back’ strategy from India against China’s policy of seeking to increase its economic and military alliances from Asia through the Middle East and into Southern Europe, in line with its multi-layered multi-generational ‘One Belt, One Road’ (OBOR) project. Until China dramatically upped the tempo of this OBOR-related policy – at around the same time as the U.S. signalled its lack of interest in continuing its own large-scale activities in the Middle East through its withdrawal from the Joint Comprehensive Plan of Action (JCPOA) and its withdrawal from much of Syria – India had stuck to a policy of trying to contain China. With the announcement in August of the U.S.-brokered Israel-UAE ‘normalisation deal’ it appears that a new corridor of co-operation is being developed from the U.S. (and Israel), through the UAE (and Kuwait, Bahrain, and in part Saudi Arabia) through to India, as a regional counterbalance to China’s growing sphere of influence.

As much of China’s current turbo-drive expansion into the Middle East is predicated in the first instance on the energy sector – most notably the military additions to the originally energy-focused 25-year deal with Iran – the starting point for the build-out of the U.S.-Israel-UAE-India also appears to be the energy sector. This makes perfect sense as the oil industry, in particular, involves the movement of huge amounts of money, ships, equipment, technology, and personnel in often disguised ways – confidential bank accounts, intelligence and military personnel who can pass as high-level oil technicians or security people, ships hat can disappear through the flick of an AIS switch and so on – that other industries cannot match for activities that countries wish to conduct quietly. In this context, shortly after the announcement on the 13th of August of the U.S.-Israel-UAE-deal, it was also stated that the three countries now agree to co-operate in the fields of oil and gas and ‘related technologies’ (which, as China and Russia know in Iran, Iraq, and Syria, can mean absolutely anything at all). With Bahrain later following the UAE in making a similar ‘normalisation deal’ with Israel, Washington has considerable room for optimism that further such deals can be made with the other GCC states, comprising Kuwait (already firmly in the U.S. sphere of influence), Saudi Arabia (Crown Prince Mohammed bin Salman is believed to have been in favour of the UAE-Israel accord), Oman (toying with moving into the China fold), and Qatar (quietly co-operating with Iran over the South Pars/North Dome gas field). The remaining GCC states – Jordan and Egypt – already have similar pacts with Israel. Related: Saudi Arabia Cuts Oil Prices To Asian Market


In the Abu Dhabi National Oil Co (ADNOC) this new U.S.-aligned group has an ideal corporate proxy to advance such broader policy and power projection all the way up to China’s border through increased co-operation with India. At the moment, ADNOC – already the UAE’s biggest energy producer and OPE’'s third-largest oil producer - is pumping around 4 million barrels per day (bpd) of crude oil but, according to a statement last month, is aiming to increase this output by at least another 1 million bpd by 2030 at the latest, and to increase its gas output as well. In order to generate the funding for this volume expansion, ADNOC’s chief executive officer, Sultan al-Jaber announced recently that it will: “…Continue to pursue partnerships with investors that will allow us to generate new value streams for us to reinvest in higher value, higher return projects.” These new deals are likely to heavily involve U.S. and U.S.-allied firms, in line with the US$10 billion+ that ADNOC secured from a consortium of international investors by selling a 49 per cent stake in its gas pipelines a year after striking a similar transaction for its oil pipelines. ADNOC also secured a US$5 billion+ deal last year with a similarly-constituted of heavy-hitting U.S. financial companies, BlackRock, and KKR.

With all of this moving forward, and given the U.S. endgame in securing India as a direct counterbalance to China in Asia, the last piece of the puzzle appears to be moving into place right now. Al-Jaber last week made a high-profile speech at which he said that he looks forward to exploring partnerships with even more Indian companies across the energy giant’s hydrocarbon value chain. He added that he wants this to include expanding the commercial scale and scope of the strategic reserves partnership, in line with ADNOC currently being the only overseas company so far allowed to hold and store India’s vitally-important strategic petroleum reserves (SPR). In keeping with the developing scope of this relationship, only two weeks earlier, India’s government approved a proposal that will allow ADNOC to export oil from the SPR if there is no domestic demand for it, in the first instance from the Mangalore strategic storage facility (the other major SPR pool being at Padur). This decision marked a major shift in the policy of India in the handling of these vital energy reserves, with the country having previously completely banned all oil exports from the SPR storage facilities. Related: China’s Crude Oil Imports Sink In October

A further sign of this relationship between the U.S.-sponsored UAE and India moving up a gear is the likelihood of ADNOC being ‘top of the list’ of foreign companies that would be considered to buy a substantial stake in the high-profile privatisation of major Indian refiner, Bharat Petroleum, OilPrice.com understands from sources close to the deal. Russian state corporate proxy, Rosneft, had expressed an interest in buying the Indian government’s 53.29 per cent in the company as recently as the middle of this year – following a visit to New Delhi in February by Rosneft’s chief executive officer, Igor Sechin – but these overtures have now been sidelined by India. Certainly, given the current low oil price and low demand for a range of refined products, it may be thought that buying a refining-centric operation would not appeal to many companies but, as far as the UAE is concerned, it would fit well not just into the broader geopolitical manoeuvring that is going on but also – commercially – into the swathe of deals being planned with Indian companies in the UAE. This was underlined by al-Jabber at the end of last month when he said: “Today, Indian companies represent some of Abu Dhabi’s key concession and exploration partners…[and] As we continue to work together, I see significant new opportunities for enhanced partnerships, particularly across our downstream portfolio.” He added: “We have launched an ambitious plan to expand our chemicals, petrochemicals, derivatives and industrial base in Abu Dhabi and I look forward to exploring partnerships with even more Indian companies across our hydrocarbon value chain.” This longer-term view accords with the outlook given at the end of last month by India’s minister of petroleum and natural gas, Dharmendra Pradhan, as he stated that India’s demand for refined products is expected to rise dramatically, requiring a 40 per cent increase in the its refining capacity to 350 million tonnes a year or 7 million barrels per day (bpd) by 2030. Part of the policy to accommodate for this increase is the plan to build a 1.2 million bpd refinery and petrochemical plant on India’s west coast through a joint venture made up of Indian state refiners and ADNOC, plus, possibly Saudi Aramco.

The final push for this series of announcements indicating an even broader and deeper relationship developing between the UAE and India may have come from the unscheduled visit in September of India’s defence minister, Rajnath Singh, to Iran where he met his Iranian counterpart Brigadier General Amir Hatami. OilPrice.com understands that this visit in large part focused on India trying to establish exactly what the true scope of the 25-year deal between China and Iran actually is, and more immediately for Indian security and financing, how it will impact on the long-running development of Iran’s Chabahar port. At the beginning of 2018, Iran’s premier, Hassan Rouhani, and his Indian counterpart, Narendra Modi, witnessed the signing of an agreement that gave operational control for an initial period of 18 months to India of the Shahid Beheshti port, one of the two port segments of the key Chabahar Port development project, the other being Shahid Kalantri. This marked a major operational advance on the strategically crucial development that would allow Iran easier access to its top priority markets of Asia and India to finally make substantive progress on its ‘Neighbourhood First’ policy alternative to China’s ‘One Belt, One Road’ initiative. Additionally crucial for India is that Chabahar Port is the most obvious transit alternative to the China-built and operated Gwadar Port in Pakistan, just 75 kilometres away, which is the key departure point in the China-Pakistan Economic Corridor. OilPrice.com understands that no reassurances were made by Hatami to Singh that the Chabahar Port project would continue to be regarded as primarily an India-led development, and that China would be taking the lead role from now on.

By Simon Watkins for Oilprice.com

More Top Reads From Oilprice.com:


Download The Free Oilprice App Today

Back to homepage





Leave a comment
  • Mamdouh Salameh on November 06 2020 said:
    Whilst India is a great Asian power technically and militarily, it will never be a match to China now or ever. The reason is their different political systems and ideologies. India is a great democracy with a capitalist-based economy while China is a communist system with a command economy. This explains a lot why India has for years been lagging behind China in development and decision-making.

    Like all democracies around the world, India’s democracy takes a long time to make a decision and much longer to implement it. China being an authoritarian regime takes decisions by command from the top and implement them virtually immediately.

    Take for instance the monumental three Gorges dam in China. The building of the dam started in December 14, 1994, involved the displacement of 1.3 million people and was completed and fully operational by 2012. If an equivalent project was decided upon in December 1994 in India, you can bet your money that it would still be today at the planning stages.

    Another manifestation of the difference in their political system is that in 1980 China’s GDP and India’s were virtually equal at $191.1 bn and $186.3 bn respectively according to World Bank data. Today China’s GDP is $27.5 trillion based on purchasing power parity (PPP) compared with India’s $8.7 trillion (also based on PPP). In other words, China’s economy is more than 3 times bigger that India’s.

    A major power bloc comprising UAE, Israel, India and led by the United States is no match to the one comprising China, Russia and Iran. This is so because of two major realities: China’s Belt and Road Initiative and the China-Russia strategic alliance both of which will shape the world and accelerate the emergence of the world’s new order within the next two decades. So India couldn't be joining the winning bloc.

    Another factor why the US led bloc can’t win is that it is principally based on energy cooperation. How could they win against a bloc led by China which is the world’s largest energy market and wedded to Russia, the world’s only energy superpower. Furthermore, without China’s oil thirst, most of UAE’s and Gulf oil will remain virtually underground.

    One last thing. The author’s claim that the UAE is pumping 4 million barrels a day (mbd) is totally inaccurate. The UAE has no production capacity to produce 4 mbd. Furthermore, it has never on average exceeded 3 mbd according to BP Statistical Review of World Energy and the 2019 OPEC Annual Statistical Bulletin.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News