Indian firms plan on expanding their presence in Africa.
India’s state-run companies are looking to acquire stakes in oil and gas blocks in Africa, form joint ventures in the continent and source natural gas to meet rising fuel demand at home, Indian Oil Minister S. Jaipal Reddy said Friday.
“Today as much as 21.5% of India’s crude oil imports are from Africa. In the years ahead, we seek more crude oil and liquefied natural gas from Africa,” Mr. Reddy said at a conference.
Africa is considered to have good hydrocarbon potential, with significant oil production coming from West Africa, and new promising gas discoveries in East Africa. Countries like China have already invested heavily in the region to develop its resources.
India, which faces a huge energy deficit and imports about 80% of its crude oil requirements, is scouting for hydrocarbon assets that can boost its energy security in the long term.
“Our companies are also interested in farm-in opportunities in producing blocks, especially in Libya, Algeria, Egypt and Nigeria,” Mr. Reddy said. He added that companies like GAIL (India) Ltd., Petronet LNG Ltd. and Indian Oil Corp. are interested in sourcing natural gas on a long-term basis from Africa.
He said the companies would “explore possibilities of equity participation” in natural gas export projects, gas processing businesses and gas-based petrochemical projects in Africa.
“There is no ceiling on imports from Africa. We are trying to maximise our [oil supply] sources in Africa,” Mr. Reddy said.
He didn’t specify which projects Indian oil companies were eyeing, how much they would invest and where the money would come from. He said that “with Africa’s economic development picking up momentum and its energy demands rising, India is keen to become a dependable supplier of petroleum products to Africa.”
Mr. Reddy also said that India’s crude oil imports from Iran remain on schedule and aren’t facing any bottlenecks.
Trade settlement between the two countries was hit after India’s central bank barred Iran-related payments from being processed through the Asian Clearing Union, a regional clearinghouse which the U.S. says is opaque and could be used by Tehran to finance its alleged nuclear-weapons program.
“The government of Iran is eager to help us in supplying oil in spite of many disturbing developments at the global level. Payment issues are being settled,” Mr. Reddy said.
Energy security is of top concern for India. Facing the critical challenge of meeting a rapidly increasing demand for energy, India is looking for more sources. Africa naturally comes to mine. Although India has significant reserves of coal, it is relatively poor in oil and gas resources. Its oil reserves amount to 5.9 billion barrels, (0.5% of global reserves) with total proven, probable, and possible reserves of close to 11 billion barrels. The majority of India’s oil reserves are located in fields offshore Bombay and onshore in Assam.
Due to stagnating domestic crude production, India imports approximately 70% of its oil, much of it from the Middle East. Its dependence is growing rapidly. The World Energy Outlook, published by the International Energy Agency (IEA), projects that India’s dependence on oil imports will grow to 91.6% by the year 2020.
Concerned about its growing reliance on oil from the Persian Gulf – 65% of its energy is imported from the region – India is following in the footsteps of other major oil importing economies, and seeking oil outside the Gulf. Indian firms’ investment in overseas oilfields is projected to reach $5 billion within a few years. Of particular interest is Africa