IOC enters into business deals with Sinopec, Sinochem

Beijing, Dec 16 (Reuters) Petroleum Minister Murli Deora today announced here that state owned Inidan Oil Corporation has signed a Memorandum of Understanding with Chinese Petroleum major Sinopec for cooperation in upstream exploration and production.

The Minister, who is in the Chinese capital for five-nation energy talks, said that a business deal also has been signed between Indian Oil Corporation and Sinochem, but refused to give further details.

The grouping of China, Japan, South Korea, the United States and India agreed they would strengthen cooperation on strategic oil stocks to boost the energy security of major consumers.

Petroleum Secretary M S Srinivasan expressed the hope that this summit of the top curde consumers would lead to a regional stock pile network to tackle emergencies. India will start building its strategic reserve in March.

The consuming nations cited the case of International Energy Agency, which helps industrialised nations manage the strategic reserves as an example of how cooperation of stock piles could help contain market volatility.

''It would be a desirable phenomenon if we could act collectively in times of supply disruption, one coming to the help of another...

sharing our strategic stocks,'' Mr Deora told Reuters in an interview after the Summit ended.

Delhi earlier this year firmed up stalled plans to build its 5 million-tonnes (37 million barrel) strategic crude oil reserve by 2015. It will hold the equivalent of 15 days of demand.

But India has not even started building its storage space and will not fill the underground caverns it has opted to use until they are all ready, which is scheduled to take around three years, Petroleum Secretary M.S. Srinivasan told Reuters.

''We are commencing physical work on the ground sometime in March and we have targeted to finish it in 36 months,'' he said.

''We will wait until we have finished construction and find an opportune moment to start (filling),'' he said, but added that if prices were high they would be happy to follow China's example and wait a few months to start pumping in the oil.

The three nations which have already built up considerable reserves -- the United States, South Korea and Japan -- offered help with technology and management to both China and India.

The meeting pledged greater transparency on data and India would be open about how much oil it was putting into its store.

China has drawn criticism for its secrecy over how much crude is flowing into its tanks and what it plans to do with the oil.

Sensitive about its demand growth being fingered as a contributor to high oil prices, Beijing worries paranoid traders will over-react to news about its stockbuild, while analysts counter that official secrecy exacerbates the problem.

Mr Mani Shanker Aiyer, Minister for Petroleum in the NDA regime, had pushed the two neighbouring countries to work on joint bids for overseas oil and gas fields. The rationale advanced by Mr Aiyer was that the two booming countries scouting the globe for resources were being sucked into bidding wars that benefit only producer nations.

Their firms are working together on joint projects in Syria and Colombia.

REUTERS RL BD2214