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2018 2nd International Workshop on Renewable Energy and Development (IWRED 2018) IOP Publishing
IOP Conf. Series: Earth and Environmental Science 153 (2018)
1234567890 ‘’“” 032046 doi:10.1088/1755-1315/153/3/032046

Overseas Oil Cooperation between China and India Based on

Crude Oil Trade Flow Analysis

Zhijie Zhang1 and Wanli Xing2

1
China Center for Industrial Security Research, Beijing Jiaotong University,
Haidian District, Beijing, 100044, China;
2
Institute of mineral resources, Chinese Academy of Geological Sciences,
No.26 Baiwanzhuang Street, Xicheng District, Beijing 100037, China;
Corresponding author’s e-mail address: rock198699@163.com.

Abstract: Globally, China and India are the second and third largest oil consumption and import
countries, respectively. As the two countries’ economies develop, their oil imports will gradually
increase. The influence of India's future oil demand on China's access to overseas resources has
been the focus of scholars both in China and overseas. Based on the analysis of oil consumption
in China and India and the current status of the global crude oil trade, this paper analyzes the
change in the overlap and concentration degrees of China’s and India’s crude oil importing
sources from 2006 to 2015. The study shows that the competition over oil importing sources
between China and India is mainly concentrated in eight countries (Saudi Arabia, Iraq, Iran,
Venezuela, Kuwait, Brazil, the United Arab Emirates, and Angola) and that Africa and Central
and South America will become important competitive regions for energy resources in the future.
China and India import crude oil mainly from politically unstable countries and regions. In the
future, the two countries should strengthen cooperation in seeking oil supplies from overseas to
collaboratively safeguard stable oil supplies.

1. Introduction
Globally, China and India are major oil consuming countries. In 2015, China and India consumed 559.7
million and 195.5 million metric tons of oil, respectively, accounting for 12.7% and 4.5% of the total oil
consumed worldwide. China and India are the world's second and third largest oil consumers. Since the
beginning of the 21st century, with the development of China’s and India’s economies, their oil
consumption has rapidly increased. Scholars both in China and overseas have focused on studies of the
impact of China’s and India’s oil demand on the global oil market. Hamilton once assumed that
increasing oil imports from China and India would push up oil prices [1]. Hong Li and Sharon Xiaowen
Lin verify Hamilton’s hypothesis in their research [2]. Since 2003, because of the surge in oil imports
from emerging developing countries represented by China and India, oil prices have been pushed up,
resulting in the “oil crisis” of 2007-2008 [3]. Some scholars believe that the economic growth of
emerging developing countries such as Brazil, Russia, India, and China (the BRIC countries) has
resulted in the increase in oil demand, pushing up the price of oil [4,5]. On the other hand, some scholars
have held the opposite opinion, believing that the economic growth in China has not affected global oil
prices [6]. In their study, Wu Kang conclude that China’s oil imports did not clearly affect the Brent oil
prices [7]. High oil prices would somewhat inhibit China’s oil imports [8].
Scholars in China and overseas have conducted many studies on the competition over the oil supply
between China and India. For example, Mike Van Moerkerk et al. compare the oil supply crisis that

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2018 2nd International Workshop on Renewable Energy and Development (IWRED 2018) IOP Publishing
IOP Conf. Series: Earth and Environmental Science 153 (2018)
1234567890 ‘’“” 032046 doi:10.1088/1755-1315/153/3/032046

China and India could face under different climate scenarios in 2035[9]. The conclusion is that China
will face a smaller crisis compared to India whereas India’s situation is the opposite of that of China.
Based on the analysis of China’s and India’s oil consumption and the current status of the global oil
trade, this paper analyzes the changes in the overlapping and degree of concentration of the two countries’
oil import sources from 2006 to 2015. Based on the future global oil supply and demand trend, this paper
discussed cooperation between the two countries in seeking an oil supply from overseas.

2. The Current Status of Oil Consumption in China and India

China and India have a similar non-renewable energy consumption structure. Coal is the primary energy
source, followed by oil. Since 1965, the proportion of oil in the total non-renewable energy consumed
in India has been higher than that of China. In 2015, oil accounted for 18.6% of the total non-renewable
energy consumed in China. This ratio was 27.9% in India).
China’s oil consumption rose from 112.9 million metric tons in 1990 to 559.7 million metric tons in
2015, with an average annual growth rate of 15.8%. During the same period, India’s oil consumption
rose from 57.9 million metric tons to 195.5 million tons, with an average annual growth rate of 9.5%
(Figure 1). In 2015, oil consumption grew by 6.3% and 8.1% in China and India, respectively. Both
countries maintained a relatively rapid growth rate of oil consumption.
600 18% 250 14%
China
India
15% 12%
500
200
Oil consumption（megaton）
Oil consumption（megaton）

12% 10%
400
150
9% 8%

Growth
Growth

300
6% 6%
100
200
3% 4%
50
100 0% 2%

0 -3% 0 0%
1990 1995 2000 2005 2010 2015 1990 1995 2000 2005 2010 2015

Oil consuption oil consumption growth Oil consumption oil consumption growth

Figure 1. History of oil consumption in China and India (Data source: BP)
Both China and India lack domestic oil resources. Their domestic production cannot meet the
domestic demand, and both countries must import large amounts of oil to meet their domestic demand.
Since 2000, China’s dependence on foreign oil has gradually increased. India’s dependence on foreign
oil has remained at or above 70%. In 2015, China’s oil dependence was 62%; for India, it was up to 79%
(Figure 2).
600 80% 250 100%
Chin India
500
External dependence

200 80%
60%
External dependence

400
150 60%
Mt

Mt

300 40%
100 40%
200
20%
100 50 20%

0 0% 0 0%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015

2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015

production consumption External dependence production consumption External dependence

Figure 2. The current status of the oil supply in China and India ((Data source: BP)

3. Comparison of Crude Oil Importing Source Areas between China and India
Global oil is traded in two forms as crude oil and refined oil. Because India imports only a low amount
of refined oil, this study focuses on the crude oil trade. In 2015, the global crude oil trade volume was
1977.2 million metric tons. The Middle East was the largest oil export region, accounting for 44% of

2
2018 2nd International Workshop on Renewable Energy and Development (IWRED 2018) IOP Publishing
IOP Conf. Series: Earth and Environmental Science 153 (2018)
1234567890 ‘’“” 032046 doi:10.1088/1755-1315/153/3/032046

total global oil exports. The United States, Europe, China, India, and Japan were the world’s major crude
oil importing countries and regions.
The share of China and India’s crude oil imports in the world rose from 9% in 2000 to 27% in 2015.
During the same period, crude oil imports in Europe, the United States, and Japan gradually decreased.
Their proportion in global oil imports also declined.
Diversifying importing sources is one important measure of safeguarding the supply security in oil-
importing countries [10]. As India’s imports of crude oil gradually increase, the importing sources have
gradually been diversified. UN Trade data show that from 2006 to 2015, the sources of India’s oil
imports grew from 26 to 44 countries and regions, which gradually coincided with China’s import
sources. Moreover, this overlap is gradually increasing. In 2015, 94.5% of India’s oil and 98.5% of
China’s oil were imported from the same countries and regions (Figures 3 and 4).
China’s and India’s crude oil imports mainly depend on the Middle East, West Africa, and Central
and South America; in 2006, these three regions accounted for 45.2%, 24.4%, and 5.1% of China’s oil
imports, respectively, compared to 72.1%, 12.7%, and 1.5%, respectively, of India’s oil imports; in 2015,
China’s percentages were 50.7%, 14.9%, and 12.4%, respectively, whereas for India, the percentages
were 58.3%, 16.4%, and 15.0%, respectively.
Graphic Symbol

Share of India’s crude oil import: Middle East 72.1%; West Africa 12.7%; Central and South America 2.4% China's main crude oil trade flows
Share of China’s crude oil import: Middle East 45.2%; West Africa 24.5%; Central and South America 5.1%; India's main crude oil trade flows
Number on behalf of trade volume (Megaton)
23.4

Russia
5.4 4.8
35.4
15.9

2.7
Kazakhstan

65.6 7.5
China

Egypt
Middle East India

Fmr 76.9
Nigeria 2.1 4.2 Venezuela
Sudan
3.4 Malaysia

West Africa Republic of 13.5

the Congo Indonesia
1.7 S. & Cent.
Angola America

Share of China's crude oil import in 2006 Share of India's crude oil import in 2006
S. & Cent. Other North Africa
America 5% 3%
Asia Pacific
1.4 North Africa 5%
4% Other
7% 8%
West Africa
12 CIS
145 Mt
Middle East
13%
107 Mt
13% 45%

Middle East
West Africa 72%
25%

Figure 3. Main Oil Import Source Flow Diagrams for China and India in 2006
(Data source: UN Trade)

3
2018 2nd International Workshop on Renewable Energy and Development (IWRED 2018) IOP Publishing
IOP Conf. Series: Earth and Environmental Science 153 (2018)
1234567890 ‘’“” 032046 doi:10.1088/1755-1315/153/3/032046

Graphic Symbol
China's main crude oil trade flows
Share of India’s crude oil import: Middle East 59.3%; West Africa 16.3%; S. & Cent. America 15.0%
Share of China’s crude oil import: Middle East 50.7%; West Africa 15.5%; S. & Cent. America 12.1% India's main crude oil trade flows
Number on behalf of trade volume（Megaton）

50.1

38.7
Russia

42.4

170.2

China
16.0
Middle East 6.3 Mexico
India

114.4 Venezuela
Nigeria
22.3

32.2 41.7
West Africa Brazil 13.9
Angola
4.1 S. & Cent.
America
29.4
Share of China's crude oil import in 2015 Share of India's crude oil import in 2015
North Africa Other North America
S. & Cent.
7.6 America
4% 3%
S. & Cent.
3%
Other
12% America
7%
21.1 Middle East
15%
CIS 335 Mt 195 Mt
14% 51%
Middle East
West Africa
59%
16%
West Africa
16%

Figure 4. Major oil import flow diagrams for China and India in 2015
(Data source: UN Trade)
China imports crude oil mainly from Saudi Arabia, Russia, Angola, Iraq, Oman, Iran, Venezuela,
Kuwait, Brazil, and the United Arab Emirates. From 2006 to 2015, the imports from these 10 countries
accounted for 78% of total imports for China. In contrast, the crude oil imports from these countries
accounted for 73% of the total imports in India (Figure 5).
400 100% 250 100%
China India
350
80% 200 80%
300
Crude oil import (Mt)

Crude oil import (Mt)

250 150 60%

60%
Proportion

Proportion
200

40% 100 40%

150

100
20% 50 20%
50

0 0% 0 0%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Saudi Arabia Russia Angola Saudi Arabia Russia Angola
Iraq Oman Iran Iraq Oman Iran
Venezuela Kuwait Brazil Venezuela Kuwait Brazil
United Arab Emirates Other Proportion United Arab Emirates Other Proportion

Share of China total crude import, 2006-2015 Share of India tatal crude import, 2006-2015

Other Saudi Arabia Other Saudi Arabia Russia

22% 18% 26% 20% 0%
United Arab Emirates Russia Angola
3% Brazil 9% 4%
2380.68 Mt 1571.27 Mt
2% United Arab Emirates Iraq
8% 12%
Kuwait Angola
4% 14%
Iran Kuwait
Iraq Iran
10% Oman 10% Venezuela
6% 10%
Venezuela 8% 7%
4% Brazil
2% Oman
1%

Figure 5. China’s and India’s percentages of crude oil imports from major export countries from
2006 to 2015 (Data source: UN Trade, BP)
In 2006, the high overlapping oil export countries (i.e., those from which both China and India

4
2018 2nd International Workshop on Renewable Energy and Development (IWRED 2018) IOP Publishing
IOP Conf. Series: Earth and Environmental Science 153 (2018)
1234567890 ‘’“” 032046 doi:10.1088/1755-1315/153/3/032046

imported large amounts of crude oil) were Saudi Arabia, Iran, Yemen, and Venezuela. In 2015, the list
of overlapping countries grew to eight countries: Saudi Arabia, Iraq, Iran, Venezuela, Kuwait, Brazil,
the United Arab Emirates, and Angola. The percentages of China’s and India’s oil imports from these
eight countries in their total oil imports gradually increased (Table 1).

Table 1. The percentage of China’s and India’s crude oil imports to the total production of major oil
exporting countries
United Arab
Saudi Arabia Angela Iraq Iran Venezuela Kuwait Brazil Emirates
Percentage of import in the total oil
production of export countries China India China India China India China India China India China India China India China India
2006 5% 4% 34% 1% 1% 10% 8% 6% 2% 1% 2% 6% 2% 0% 2% 4%
2007 5% 5% 30% 2% 1% 11% 10% 9% 2% 1% 3% 8% 2% 0% 3% 7%
2008 7% 5% 32% 2% 2% 12% 10% 10% 4% 4% 4% 10% 3% 0% 3% 10%
2009 9% 6% 37% 8% 6% 11% 11% 12% 3% 3% 6% 13% 4% 2% 3% 9%
2010 9% 6% 44% 9% 9% 11% 10% 8% 5% 7% 8% 11% 7% 2% 4% 9%
2011 10% 6% 37% 9% 10% 17% 13% 6% 8% 6% 7% 12% 6% 3% 4% 9%
2012 10% 6% 46% 11% 10% 16% 12% 8% 11% 13% 7% 13% 5% 4% 6% 10%
2013 10% 7% 46% 10% 15% 17% 13% 6% 11% 16% 6% 14% 5% 2% 6% 9%
2014 9% 7% 49% 9% 18% 14% 16% 8% 10% 16% 7% 12% 6% 4% 7% 9%
2015 9% 7% 44% 9% 16% 16% 15% 6% 12% 17% 10% 8% 11% 3% 7% 9%
Data source: BP, UN Trade.
India adopted the strategy of stabilizing the oil supply from the Middle East, vertically developing
supplies from Russia, and horizontally developing supplies from Africa and Southeast Asia [11]. India
has cooperated with 25 countries around the world in oil and gas exploration and production, with a
total investment of more than 20 billion and 465 million US dollars, respectively [12]. Africa and Central
and South America have become the focus of India’s overseas oil and gas resources development regions.
To meet the increasing dependence on oil suppliers from overseas, both China and India are actively
laying out plans to develop overseas oil supplying sources. The plans of the two countries highly overlap
with one another. The overlapping is increasingly pronounced (Figure 6).

Russia
Canada
United Kingdom

Kazakhstan

⑥ ④ United States
Turkmenistan
②
① Iran
Libya Pakistan
Algeria Egypt Oman Cuba
Myanmar Vietnam
Mauritania Saudi Arabia Thailand Mexico
Chad
Niger ⑦
Nigeria Fmr Sudan Yemen Venezuela
⑧
Columbia
Cote d'Ivoire
⑤
Gabon ⑨ Kenya
Indonesia Ecuador
Papua New Guinea Brazil
Angola ③

Madagascar
Mozambique

Australia

Argentina
① Iraq
② Syria
③ East Timor
④Kyrgyzstan
⑤ Equatorial Guinea
⑥Uzbekistan
⑦Cambodia
⑧Trinidad and Tobago
overseas layout of China oil (Including block exploration, oil field equity mergers and asset acquisition )
⑨Uganda
⑩Central African overseas layout of India oil (Including block exploration, oil field equity mergers and asset acquisition)
Republic

Figure 6. Layout of China’s and India’s overseas oil suppliers

(Data source: Chen et al., 2015; Indian Oil Company Annual Report; China Petroleum Company
Annual Report)

5
2018 2nd International Workshop on Renewable Energy and Development (IWRED 2018) IOP Publishing
IOP Conf. Series: Earth and Environmental Science 153 (2018)
1234567890 ‘’“” 032046 doi:10.1088/1755-1315/153/3/032046

4 Discussion
It is predicted that China’s crude oil demand will be approximately 700 million metric tons by 2030[13].
Because of the lack of domestic natural resources, China’s maximum crude oil production will be
approximately 250 million metric tons in the future, which means that China will need import 500
million metric tons of crude oil to meet domestic demand. The Indian Planning Commission predicts
that India’s crude oil demand will reach approximately 486 million metric tons by 2030[14]. Because
India’s domestic conventional and unconventional oil production growth potential is limited [15], its
dependence on foreign oil will gradually rise. In its “India Energy Security Scenario 2047”, the Indian
Department of Energy predicts that India's dependence on imported oil will rise to approximately 90%
in 2030, at which time India will import approximately 400 million metric tons of crude oil annually.
China’s and India’s increasing oil demand is reshaping the existing oil trade pattern. Global crude
oil exports are gradually tilting toward China and India. Because of the high degree of overlap between
these two major crude oil importers, India’s effort to access overseas oil resources will inevitably affect
the interests of China. China’s and India’s bidding experience for oil resources in Angola and Ecuador
demonstrates that the competition over overseas oil resources between the two countries is inevitable
[16]. This competition will somewhat drive up the cost of obtaining overseas oil resources for China
and India [17].
BP’s “World Energy Outlook 2035” data show that before the year 2030, China’s and India’s
increasing demand for oil will result in an expanding oil supply gap in the Asia-Pacific region. The
Middle East is still the main oil supplier globally. Africa’s oil production will grow slowly. South
America’s own oil consumption is growing, which will somewhat negatively affect the crude oil exports
from this region. China’s and India’s crude oil imports from Africa and South America are gradually
increasing. In India’s “2025 oil and gas development strategy”, India proposes to strengthen cooperation
with Africa and Latin America. In the future, China’s and India’s most severe competition over oil
sources may mainly be in these two regions.

5 Conclusions
China and India are both major oil importers. Both are heavily dependent on oil imports from countries
with complicated geopolitical situations, such as Saudi Arabia, Iraq, Iran, Venezuela, Kuwait, Brazil,
the United Arab Emirates, and Angola. China and India share a common interest in ensuring that the oil
supply is stable and that the oil price is reasonable. Therefore, the two countries should strengthen their
cooperation in obtaining oil sources from overseas. China has built a refinery in Khartoum, Sudan,
whereas India has built a pipeline to deliver refined products to a nearby port for export. This example
is a nice model of cooperation between the two countries on developing oil sources. There exists a
security risk in oil transportation. For China, the “Malacca Strait Crisis” is a potential risk to its oil
supply security [19, 20]. To solve this dilemma, China is building crude oil pipelines in Pakistan and
Myanmar, but India is still a key factor affecting this plan. China should negotiate with India by
“equivalent exchange”, i.e., allowing an India-Russia crude oil pipeline to pass through China. China
can also co-share these pipelines.
The Sino-Indian relationship is one of the most complicated bilateral relations in Asia. On one hand,
the two countries share many common interests because of their similar characteristics. On the other
hand, the relationship is fragile because of the geopolitical competition between the two countries.
Therefore, by strengthening cooperation between the two countries in seeking overseas oil resources,
the two countries can avoid the “resource premium” caused by the competition between the two
countries. Based on this cooperation, the two countries will collaborate in a series of other energy source
development programs and achieve the “win-win” objective.

Acknowledgments
The work described in this paper was supported by Energy Security Comprehensive Research and
Evaluation of Dynamic Tracking, the geological survey projects of China (12120115057001).

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2018 2nd International Workshop on Renewable Energy and Development (IWRED 2018) IOP Publishing
IOP Conf. Series: Earth and Environmental Science 153 (2018)
1234567890 ‘’“” 032046 doi:10.1088/1755-1315/153/3/032046

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