Focus in Central Asia

All of this is just a beginning, and there is room for China and India to cooperate further. They can work together in any place if the conditions are right. But the ideal and also the key area of their energy cooperation is Central Asia, one of the world's resource centers.

First, Central Asian countries are close to both China and India, and thus transportation costs will be low.

Second, there is a good political foundation for India and China to cooperate with these countries. Russia has paid attention to developing tripartite cooperative relations, and looks on China and India as important partners in energy cooperation. From a long-term perspective, there is the possibility for China, India and Russia to build a tripartite energy alliance.

At the same time, both China and India maintain close and amicable relationships with Central Asian countries. China and Central Asian countries are members of the Shanghai Cooperation Organization (SCO). India, which has observer status in the organization, is likely to become a formal member, which will enable the three sides to carry out and strengthen energy cooperation within the framework of the SCO.

Apart from this, China and India may also align with some other Asian countries to restrain international oil prices. Actually, the two countries have reached a consensus with relevant Asian countries on jointly coping with high international oil prices. In the future, they are likely to strengthen their cooperation to maintain the rights and interests of Asian oil-consuming countries.

The possibility of joint work by China and India on Iran's energy development is increasing. Oil imports from the Middle East account for over half of China's total oil imports, and Iran is China's second largest oil supplier in the region. In October 2004, China and Iran signed a memorandum of understanding on the development of an oilfield in Iran, which will make China the largest investor in that oilfield if the agreement is implemented.

India also maintains close cooperative ties with Iran. In September 2004, India and Iran signed a series of energy cooperation agreements, including one in which Iran will export liquefied natural gas to India. India also has the right to explore and develop three Iranian oilfields, while the two countries will jointly develop natural gas resources and India's state-run ONGC will participate in expanding Iran's oil refining facilities. Iran has become an important oil and gas producer in the Middle East.

Currently, the United States is exerting pressure on Iran in the political, economic, military and other fields. It is not impossible for President George W. Bush to launch an attack on Iran. That would be a big threat to China and India's oil supply security, which is likely to push forward energy cooperation among China, India and Iran, and such cooperation would serve the major interests of China and India.