India steps on the gas for African hydrocarbon equity

India steps on the gas for African hydrocarbon equity
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First Published: Thu, Oct 18 2007. 11 39 PM IST

The Indian Oil building at Noida, outside New Delhi
The Indian Oil building at Noida, outside New Delhi
Updated: Thu, Oct 18 2007. 11 39 PM IST
In an attempt to check China’s growing influence in African countries and also provide a fillip to its own efforts to secure hydrocarbon assets in the continent, India has invited around 36 African countries to participate in a round-table conference to be held in New Delhi next month. China had organized a similar conference last year.
The Indian Oil building at Noida, outside New Delhi
India and China, both growing economies, need fuel reserves to feed their soaring energy needs. Africa is estimated to have around 10% of the world’s oil reserves.
“This (the conference) is being done to promote greater cooperation between India and African countries to facilitate more inflow of investment and technology for ‘mutual’ benefit. The conference will be for two days from November 6 to 7,” said a petroleum and natural gas ministry official, who didn’t want to be named.
The Chinese have a significant presence in Africa’s hydrocarbon sector and some experts partially attribute this to a failure on part of the Indian government to actively engage the African countries, both politically and economically.
India’s diplomatic relationship with many African countries goes back to the time of their independence, with the Indian government having played a significant role in promoting their efforts for independence. It is this link that India wants to revive through this conference and, in the process, boost its own business interests. The conference, titled India-Africa Hydrocarbon Conference and Exhibition, is being held by India’s petroleum and natural gas ministry in association with the Federation of Indian Chambers of Commerce and Industry (Ficci), an industry lobby, and United Nations Conference on Trade and Development. It will see participation from energy ministers, policymakers and energy companies from India and Africa.
“It is an interesting way of showing India’s influence. Also, as compared to other areas in the world, Africa is witnessing a lot of competition between the Indian and Chinese companies in the hydrocarbon space. However, China is very much ahead...,” said Arvind Mahajan, executive director at audit and consulting firm KPMG.
The participating countries include Libya, Nigeria, Algeria, Angola, Sudan, Egypt, Gabon, Congo, Chad, Cameroon, Tunisia, Ghana, Ethiopia and Mozambique
India is realizing that energy security is key to its ability to continue to expand its economy at over 9%. India consumes around 112 million tonnes of petroleum products a year. The country is the world’s fifth largest oil importer and procures 78% of its energy needs from abroad.
Countries in Africa have become a key focus area for the Indian firms; they present an alternative to oil-rich countries in West Asia which offer service contracts and not production-sharing ones (in the latter, the Indian companies get to share the output of a field in exchange for operating it). Companies actively seeking opportunities in Africa include ONGC Videsh Ltd, a unit of ONGC Ltd, Oil India Ltd and Indian Oil Corp. Ltd (IOC).
“A lot of African countries such as Libya and Nigeria want us to set up refineries there. We are willing to do it in lieu of equity in their oil blocks,” said B.N. Bankapur, director, refineries, at IOC.
Even for oil marketing companies such as IOC, Bharat Petroleum Corporation Ltd and Hindustan Petroleum Corporation Ltd (HPCL), the African countries and their untapped markets present an opportunity. HPCL, for instance, is marketing lubricants and liquefied petroleum gas in Kenya.
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First Published: Thu, Oct 18 2007. 11 39 PM IST