The Bush administration took its campaign against Iran’s energy economy, to the Senate by cautioning customers, such as India and China, against buying gas or oil from Tehran.

A senior State Department official told the Senate Foreign Relations Committee that the willingness of China and India to invest in countries such as Iran and Sudan was “a more troubling aspect of the recent surge in overseas energy deals”.

He said Secretary of State Condoleezza Rice has already expressed concern over the proposed Iran-Pakistan-India gas pipeline project.

“Both Chinese and Indian firms have reportedly been involved in oil and gas sector deals in Iran that raise concerns under US law and policy,” said Assistant Secretary of State for Economic and Business Affairs Anthony Wayne. He said India, and to a much larger extent China, have significant upstream investments in Sudan’s energy sector.

Then in diplomatic language, he went on to say that the deals with Iran and Sudan, ‘can undermine efforts to encourage policy changes that will reduce global instability and energy security for all’.

Against China which has a public sector in the oil and gas industry, he voiced an additional complaint: “Industry analysts have noted that Chinese national oil companies have accepted terms that would often not be considered commercially viable for major Western oil companies.”

Plight of US companies

The American companies are peeved about not being able to compete against the Chinese. A Chinese company’s bid to buy America’s Unocol is faced with hurdles even though it has made an attractive commercial offer.

American politicians want to ensure that Unocal’s gas and oil fields in Indonesia remains under the control of an American company. In order to frustrate the Chinese bid, Chevron has sweetened its offer.

However, the State Department official, in the same breath, claimed that US has promoted the reduction of barriers to energy trade and investment around the world. Perhaps that means the US corporations investing in the Chinese energy sector.

As per the current US policy, oil and gas producers such as Iran, Sudan, Burma and Venezuela are bad boys which makes it difficult for the US companies to have dealings with them. But then, the US does not want others to deal with them either.

The State Department official said that US engagement with India and China is the best way to help them use energy in the most efficient, affordable and environmentally sound manner.

Energy dialogue

The energy dialogue with China and a similar, newly launched energy dialogue with India will allow the US to expand and deepen bilateral and multilateral energy cooperation with the two countries. He said those efforts will include cooperating on civil nuclear energy with India and on clean and renewable energy technologies with China.