India to focus on Angola after losing out in energy auctions

India to focus on Angola after losing out in energy auctions
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First Published: Tue, Apr 01 2008. 12 19 AM IST
Updated: Tue, Apr 01 2008. 12 19 AM IST
New Delhi: India, Asia’s third largest consumer of oil, will focus on obtaining energy assets in Angola after failing to secure supplies closer to home.
“Angola is the next country where we are going to concentrate,” petroleum minister Murli Deora said. “We lost because our bid wasn’t good enough” in previous auctions, he said. “We have learnt from this.”
State-run explorers from India and China have submitted bids for oil blocks in Angola as the world’s two most populous nations need imports to sustain economic growth.
India’s oil shortage has spurred Deora to turn to Angola, the fastest growing member of the Organization of Petroleum Exporting Countries (Opec) with reserves equivalent to 11 years of India’s imports, after losing out to China in $10 billion (Rs400 billion) of auctions.
India’s energy independence has been threatened because it hasn’t been able to increase production at home, where output from three-decade-old fields is declining. India will also compete for oil in Nigeria, Africa’s biggest producer, and Sudan.
“India has to acquire assets overseas. There is no other way,” said Prashant Periwal, an analyst at stock broking and equities research firm Batlivala and Karani Securities in London. “China has slowly and steadily spread across most of Africa and is sitting on huge resources. For fuel security, you have to take control of supplies.”
India has been beaten by China to auctions for energy assets in Kazakhstan and Myanmar in the past three years. India has offered to build ports and railways in Nigeria and Sudan, copying tactics used by China.
The South Asian nation hosted a two-day India-Africa conference in November to discuss oil cooperation, where Deora offered to build refineries and pipelines.
India sought stakes of as much as 32% in two fields in Sudan, R.S. Butola, managing director of ONGC Videsh Ltd (OVL), the overseas exploration unit of India’s largest producer Oil and Natural Gas Corp., said during the November conference in New Delhi. Petroliam Nasional Bhd., Malaysia’s state oil company, and Total SA, Europe’s third largest oil company, control the areas, he said.
India, the fastest growing economy after China, estimates demand for oil will rise 62% over the next five years to 241 million tonnes a year, or 4.8 million barrels a day.
Deora will travel to Venezuela next month to complete an agreement to acquire a stake in fields in the biggest crude-exporting nation in the Americas.
OVL will invest up to $356 million (Rs1,424 crore) in a venture with state-owned Petroleos de Venezuela SA to operate the San Cristobal area.
OVL and China Petroleum and Chemical Corp., Asia’s largest refiner, are among 43 companies that will bid to explore for oil in Angola, according to state-run Sonangol SA. The African nation is offering 11 licences for fields with a potential of 9.6 billion barrels of oil reserves, Sonangol said on its website.
The bidding has been delayed after Angola extended the deadline indefinitely. The offers originally had to be submitted by 13 March, according to Sonangol.
The auction will take place after elections in September, Diario Economico reported on 19 March, without saying where it got the information.
Angola, which became a member of OPEC last year, was set a daily production target of 1.9 million barrels at the group’s meeting in Abu Dhabi on 5 December. Angolan output increased 18% last year to 1.61 million barrels a day, according to the International Energy Agency.
Crude oil futures have risen 59% from a year ago on concern of supply disruptions from major producers, including Nigeria and Iraq. Crude oil for May delivery fell as much as $1.28, or 1.2%, to $104.34 a barrel on the New York Mercantile Exchange.
The South Asian nation expects a decision from Russian authorities on another stake in an exploration area in Sakhalin Island “soon,” Deora said. OVL is keen on acquiring a stake in the Sakhalin-3 area, R.S. Sharma, chairman of the parent company, had said on 12 October.
India plans to resume talks with Pakistan over a $7.4 billion pipeline to transport natural gas from Iran after more than a decade of delays, Deora said.
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First Published: Tue, Apr 01 2008. 12 19 AM IST