India looks to Africa for secure energy supplies

India looks to Africa for secure energy supplies

New Delhi: As part of India’s effort to counter the growing Chinese influence in Africa and provide a fillip to India’s efforts to secure hydrocarbon assets in the continent, at least 16 countries will be participating in the third India-Africa hydrocarbons conference starting on 9 December.

India’s efforts are targeted towards diversifying its import basket and come in the backdrop of China organizing similar conferences previously.

The need for diversification of supplies is critical for India as it imports more than 80% of its energy requirements. Consumption of energy in India is likely to double by 2030 to the equivalent of 833 million tonnes (mt) of oil, according to an International Energy Agency forecast.

“The race to Africa to access the natural resources has been intensely led by China in the past decade," said Gokul Chaudhri, partner at consultant BMR Advisors Pvt. Ltd. “India needs to demonstrate an integrated approach, involving political, diplomatic and economic cooperation, focused on institutional building and social engagement with Africa. Our efforts, so far, have been sporadic with limited success."

The conference, being held by the petroleum and natural gas ministry in association with the lobby group Federation of Indian Chambers of Commerce and Industry (Ficci), will be attended by Andre Raphael Loemba, hydrocarbon minister of the Republic of Congo; Noel Guetat, deputy minister of mines, petroleum and energy of Cote d’ Ivoire; and Tolesa Shagi, Ethiopia’s state minister of mines.

The focus on Africa stems from the fact that Africa accounts for 9.5% (132 billion barrels) of the world’s proven oil reserves and 12% (478 mt per annum) of the world’s production. “The preferred approach of the Indian companies is to partner with the national oil companies of the African countries," said Singh.

Countries in Africa have become a focus area for 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, Indian companies get to share the output of a field in exchange for operating it.

“Africa will be our focus area for oil and gas import," said Sudhir Bhargava, additional secretary in India’s oil ministry. India and China, both growing economies, need fuel reserves to feed their soaring energy needs and this has pitted them in a geopolitical race to acquire as much of the world’s resources as they can. The Chinese have a significant presence in Africa’s hydrocarbons sector and some experts partially attribute this to a failure on the part of India to actively engage African countries, both politically and economically.

“This (the conference) is not an exercise dictated solely by our search for resources. India has become one of the largest investors in many of the African countries," said Shiv Shankar Mukherjee, former Indian high commissioner to South Africa and adviser to Ficci on international affairs. In recent years, India has scrambled to come up with a cohesive economic diplomacy policy in Africa.

“In the current decade there has been a quantum jump in our engagement with Africa. There were quite often criticism regarding the neglect of Africa. That was not really the case," Mukherjee said.

In another development, Singh, responding to questions about Reliance Industries Ltd (RIL) beginning arbitration proceedings in anticipation of the government’s reported move to restrict the cost recoverable by the firm for developing the D6 field in the Krishna-Godavari basin depending on the level of utilization, said, “we’ve got a letter from RIL. Whatever issues have been raised, we would study and whatever needs to be done, will be done."