| From
Tehelka Magazine, Vol 5, Issue 36, Dated Sept 13, 2008 |
|
| BUSINESS & ECONOMY |
|
Oil & Gas |
|
Oil Over
The World
Indian companies chart the globe to secure oilfield
assets, report SHANTANU GUHA RAY and JAMES BRAY
WITH INDIAN oilfields not
able to run to much depth
— their reserves are not
particularly rich — Indian
oil and gas companies
have stepped up the exploration heat across the
world. And the result of all this effort is encouraging.
Essar, Videocon, ONGC Videsh or
Reliance, Indian companies have been tapping
into the global oil pool with some success.
Videocon Industries, through its overseas
subsidiary Videocon Energy Resources, has just
picked up a 10 per cent stake in Area I of
Rovuma offshore oil block in Mozambique for
$75 million by signing a participation agreement
with a subsidiary of Anadarko Petroleum
Corporation of the US. Videocon chairman
Venugopal Dhoot hopes to fund the new project
through internal accruals and eventually
send his share of crude to Indian state-owned
refineries. “The Rovuma explo ratory block has
good potential,” Dhoot told TEHELKA. The slogan
on his website reads: India Today, World
Tomorrow. Dhoot is not alone in the business.
State-owned Bharat Petroleum will have a 10
percent share in the same block through its subsidiary, BPRL Ventures.
“Indian companies are focusing
on upstream activities because the
driver is oil security: their goal is to
secure oilfield assets,” says Narendra
Taneja, commentator with Upstream,
the world’s largest oil and
gas newspaper. He calls it a battle
for energy security, especially at a
time when 73 percent of India’s
crude requirement is imported. “It
leaves us very vulnerable strategically.
Just look at what happens
with a $200 oil price. We can easily
see the damage the commodity
can do to the economy.”
MANY CITE the recent example
of ONGC Videsh
Limited (OVL) acquiring
Imperial Energy Corporation for a
staggering $1.8 billion. Imperial is
an independent upstream oil exploration
and production entity,
with its main activity in CIS countries.
It produced 10,000 barrels of oil a day in
December 2007 and is contemplating raising
this to a massive 80,000 barrels a day by the end
of 2011. A December 2007 assessment of the
reserve by DeGolyer and McNaughton suggested
in-place reserves of 920 million barrels
of oil equivalent. The deal attracted attention
since OVL was facing competition from China
Petroleum and Chemical Corp
(Sinopec). “The acquisition represents
an important addition to
OVL’s operations,” OVL MD RS Butola
told TEHELKA.
for energy
security
New Delhi is offering
both political and
diplomatic help to
Indian companies
seeking global projects
During the 1971 war,
many Western oil
companies stopped
supplies to India
Essar has projects in
Vietnam, Myanmar,
Madagascar and
Nigeria. Videocon and
BPCL have oil blocks
in Mozambique
Reliance’s presence
is in Oman, East
Timor, Australia,
Peru, Columbia,
Kurdistan and Yemen |
Consider Petronet LNG: it is
aiming to bid for liquefied natural
gas (LNG) from Exxon Mobil’s interest
in Australia’s Gorgon project.
LNG, say reliable sources, is
keen to secure Exxon’s entire stake
of 3.75 million tonnes per annum
(mtpa) from the project. Petronet
is also in talks with companies in
Algeria, Oman, Equatorial Guinea
(South of Nigeria), and Qatar for
long-term contracts.
The Essar group, which holds
exploratory interests in a number
of assets in India and overseas, is
keen to bid for more oil and gas
blocks in Australia during the
forthcoming bidding round later
this year. The company, which was
awarded exploration rights in one
offshore block in Vietnam’s Song Hong basin,
has operating interests in one onshore and one
offshore block in Myanmar, three blocks in
Madagascar and one block in Nigeria. In India,
Essar has both offshore and onshore
assets: the Mehsana block in Gujarat
is in the development and production
stage and the rest onshore (located
in Assam) are in various stages of exploration.
Last year, the company spent $75 million
on exploration and production. “Essar is exploring
for a number of supply contracts,” says
Kumar Manish of KPMG.
Reliance Petroleum has not recently picked
up any stake, but is scouting for big deals in
Latin America and Africa, say company
sources. The National Iranian Oil Company
(NIOC) could seal a deal to boost crude sales to
Reliance this month, which will be run at the
giant 580,000 barrels per day Jamnagar refinery,
scheduled to start operations later this year.
Interestingly, NIOC and Reliance already have
a deal in place to exchange crude exports for
gasoline. The exchange saves both companies
from having to open lines of credit with banks
to guarantee shipments. The Indian conglomerate
restarted fuel exports to Iran in July after
halting shipment last year when French banks
Calyon and BNP Paribas stopped offering credit
in response to Western political pressure.
Oil analysts say the fight for world oil is
basically between New Delhi and Beijing,
which consumes more than one-third of
global oil supplies.
The driver for tying up oil contracts is historical:
during the 1971 war with Pakistan, several
Western companies stopped selling oil to New
Delhi because of its proximity to Moscow.
Today, however, New Delhi offers only diplomatic
and political support to companies targeting
assets across the world. “Indian companies
do not need the government to bankroll
their projects,” says Taneja.
The International Energy Agency (IEA) estimates
the current world oil production at 85
million barrels per day, while consumption
stands at 87 million barrels. Worldwide demand
for oil is expected to grow to 98 million barrels
per day by 2015, an increase of 11 million barrels
per day in just over the next six years. Not just
IEA, Lehman Brothers Original Exploration &
Production Survey shows global spending for oil
and gas exploration and production
expected to be $369 billion in 2008.
No wonder then that Indian companies
too want a place in the sun. •
WRITERS’ E-MAIL
shantanu@tehelka.com
bray.james@gmail.com |
Archive.tehelka.com
