India plans to increase it imports of crude oil and liquefied natural gas from Nigeria to meet increasing demand for energy, the country's oil minister said last week.
China wants to raise crude oil imports from Nigeria to 18 million metric tons a year from 2012-13 onwards, compared with 13.2 million tons.
Reports monitored in Washington D.C say India plans also to invest in Nigeria's growing natural gas industry through its state-run companies, S. Jaipal Reddy said after a meeting with Nigeria's foreign affairs minister, Henry Odien Ajumogobia, in New Delhi to discuss trade issues.
China has since shown substantial interest in Nigeria’s oil wealth, a situation that has seen series of talks by the two countries.
In early 2009, China's Foreign Minister Yang Jiechi held talks with Nigerian officials on oil exports to energy-hungry Beijing.
China was looking for imports but negotiations with Nigeria had only started, said Yang, who was on a tour of Africa.
"Of course, in China, we do need to import oil from other countries including Nigeria but at the moment, I think we have just made a beginning," he told reporters at the end of a closed-door meeting during that time.
Yang said the two countries enjoyed "good cooperation" in energy matters and "it is a mutually beneficial relationship and progress has been made".
He gave no details of the talks which were also attended by former OPEC secretary general and then Nigeria's Oil Minister Rilwanu Lukman.
Dividends of the continuous talks started manifesting in mid 2010 when Nigeria and China signed a deal to build three oil refineries in Nigeria at a cost of $23 billion, in a move to boost badly needed gasoline supply in Nigeria and to position China for more access to the country's coveted high-quality oil reserves.
"This is a deal we need for Nigeria to cut our reliance on imports," said a senior Nigerian oil official.
He said the Chinese commitment to build refineries in Nigeria—a country that has long spent billions of dollars annually importing gasoline due to rickety refineries at home—would also help put China "in the running" for getting additional access to oil acreage in Nigeria, one of Africa's biggest crude producers and exporters. "This is business, but it builds goodwill in addition," the official said.
For the Nigeria government, the deal represents a victory of sorts over U.S. and European oil companies, which have long turned a deaf ear to Nigerian government calls to operate refineries in the country because of the poor financial returns.
Nigerian gasoline and diesel prices are highly subsidized. Nigeria's mostly low-sulphur crude, exported largely to the U.S. and Europe, is relatively easy and cheap to refine into gasoline.
The fuel subsidies mean refineries operate at little or no profit, a primary factor that has hurt new investment and upkeep at existing facilities. The subsidies have also encouraged a thriving black market for Nigerian gasoline and other fuel products in neighboring states like Benin.
But Nigeria's tough refining economics are an opportunity for the Chinese government, which is bent on procuring its state oil companies access to new oil reserves to fuel the country's speedy economic growth. Nigeria is looking to offer offshore oil fields to foreign companies but hasn't yet announced a date for any new licensing rounds.
Funding for the three refineries, each expected to pump out 250,000 a day of refined products, will come from the China Export & Credit Insurance Corp. and a group of Chinese banks.
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