India and China, both trying to secure and diversify oil and gas supplies, should use their fast growing energy needs to win cheaper prices from producers and gain the rights to overseas assets, officials said on Thursday.

Oil Minister Ram Naik said that Beijing had already shown a degree of cooperation with New Delhi when it, together with Malaysia allowed India's state-owned ONGC Videsh Ltd to take a 25 per cent stake in Sudan's Greater Nile development.

ONGC Videsh in March sealed a deal for the share in the 250,000 barrel per day Greater Nile project from Canada's Talisman for $771 million.

"China and Malaysia had the right of pre-emption, which they wanted to exercise, but we persuaded them not to. This was the first cooperation between India and China," Naik told Reuters in an interview.

He said that energy may be high on the agenda when Indian Prime Minister Atal Bihari Vajpayee visits China in June.

Under pressure from their governments, Indian and Chinese oil companies have been actively seeking oil and gas resources beyond their borders for the last two years to counter dwindling production at home and feed fast-pace economic growth.

India imports 70 per cent of its crude requirements, with 65 per cent coming from the volatile Middle East. China imports nearly one-third of its crude requirements, with roughly half coming from Middle East producers.

Subir Raha, chairman of ONGC Videsh, said competition among Asian firms from India, China and Malaysia for foreign assets had been aggressive.

"In some cases when looking at competing bids, the company looked to be making a decision in the context of national strategy. Purely on commercial considerations, the bids were not sustainable," Raha told Reuters.

As well as Sudan, ONGC holds exploration and production rights in Vietnam, Myanmar, Russia, Iraq, Libya and the United States.

China's oil firms have scooped up assets in Myanmar, Kazakhstan, Azerbaijan, Venezuela, Sudan. Indonesia and Australia.

Raha said China and India should coordinate to persuade major Middle East suppliers to form closer alliances with the countries, which are expected to notch up some of the highest growth rates in oil demand in the future.

He said the combined buying power of India and China should help reverse some of the so-called Asian premium, which Raha pegged at about $2 a barrel for current prices.

Asian buyers have long complained that they pay higher prices to Middle East term suppliers for crude than their European and North American counterparts, largely due to their dependency on Gulf supplies.

"I think cooperation is going to happen as there's a distinct trend of political settlement (between India and China) that should set the context for economic cooperation on a much larger level," Raha said.