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Deora in Saudi Arabia to give petro deals a diplomatic push

Deora in Saudi Arabia to give petro deals a diplomatic push
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First Published: Thu, May 03 2007. 12 43 AM IST
Updated: Thu, May 03 2007. 12 43 AM IST
Taking a leaf out of Chinese oil diplomacy, Murli Deora, the Union minister for petroleum and natural gas, is visiting Saudi Arabia to lobby for Indian public sector oil companies in their quest for deals in West Asia.
Officials, who did not wish to be identified, say this is the first time such a concerted effort has been initiated by the government to swing deals in India’s favour by using diplomatic clout.
Deora is in West Asia to drum up support during the second Asian Ministerial Energy Roundtable and is hopeful of specifically leveraging the Indian government’s diplomatic influence for ONGC Videsh Ltd’s (OVL) interests in Iraq, the bid by the consortium of Indian Oil Corporation (IOC), OVL and BP for development of Kuwaiti oil fields, investment by Kuwait in the grassroot refinery projects at Paradip (Orissa), Bathinda (Punjab) and Bina (Madhya Pradesh), and the participation of GAIL (India) Ltd and Engineers India Ltd in projects in Qatar.
West Asia holds the key to energy security for India, the world’s fifth-largest oil importer. Energy supply deficits in East Asia are a cause of concern for the growing economies of China, India, Japan and South Korea.
In 2006, the Asia-Pacific demand was 15.6 million barrels per day (BPD) compared withlocal crude and gas production of 6.85 million BPD. India’s consumption of petroleum products is around 112 million tonnes (mt) per annum.
Deora’s visit holds a lot of importance as West Asia supplies around 70% of the Asian oil consumption.
This calls for cross-investments in energy markets to promote shared interest of energy producers and consumers and in such a situation, India’s long-standing good relationship with the Emirates could be leveraged in its favour.
Analysts approved of the move and said the Chinese oil and gas firms have succeeded on account of bilateral talks. “The key to becoming successful will be in the approach of the Indian government which has to be multi-pronged. Customized approach is the need of the hour,” said Arvind Mahajan, executive director at accounting and advisory services firm KPMG.
OVL had signed an exploration and development contract for 100% participating interest in exploration of Block 8 in the western desert of Iraq with the Oil Exploration Company of Iraq.
However, the seismic survey could not be carried out due to the volatile political situation in Iraq that led to war with the US. The Indian government now wants the validity of the contract to be maintained and ratified by the new US-installed Iraqi government.
In Kuwait, two public sector firms—IOC (with a 10% stake) and OVL (5% stake)—have in a consortium along with BP (lead promoter with a 65% stake) and Occidental (25% stake) jointly bid for the development of four northern Kuwaiti oil fields of Raudhatain, Sabriyah, Ratqa and Abdali.
However, the consortium faces stiff competition from Chevron Texaco and Exxon Mobil. In such a situation, the Indian government wants to use the diplomatic lever to swing the deal in the consortium’s favour.
“Other business deals that will be chased at the ministerial level include asking the Saudi Arabian government to allow GAIL to participate in the farm-in along with Sinopec of China and Lukoil of Russia in the existing fields in the Emirates,” a senior Indian petroleum and natural gas ministry official said.
GAIL had approached Sinopec and Lukoil for farm-in of their fields in Saudi Arabia to which Saudi Aramco had objected.
The Indian government is also seeking Saudi Arabia’s participation for the grass-roots refinery projects that are coming up in India.
India also wants the Oman government to allow IOC to import 0.5 mt of crude oil from the Emirates. Earlier, IOC had been rebuffed when it approached the Oman government to supply crude oil—the former claiming that it had prior commitments.
“Compared with Africa, competition in West Asia is intense from the ‘big oil’ companies. Even participation with the private sector companies shall be encouraged along with innovative solutions that can leverage India’s capability,” Mahajan said.
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First Published: Thu, May 03 2007. 12 43 AM IST