India's oil majors in global
hunt By Siddharth Srivastava
NEW DELHI - Given runaway international
crude oil prices, India's top energy firms are
gearing up massive expansion and exploration plans
both at home and abroad.
At the same time,
top global energy firms such as ExxonMobil,
ConocoPhillips, Chevron and Total are expected to
bid for India's seventh oil and gas exploration
round, tentatively scheduled for next April. New
Delhi is looking to begin marketing as many as 70
exploration areas in October
or November
Mukesh Ambani's private-sector
behemoth Reliance Industries Limited (RIL) has put
in place a multi-billion dollar exercise to invest
almost US$15 billion over the next three years in
oil exploration and production. This includes
laying a 1,400-kilometer gas pipeline connecting
the east and west of India for about $3 billion.
RIL has also been buying assets across India,
Columbia, Yemen, Oman, East Timor, Egypt and
Russia.
In Egypt alone, RIL plans to spend
$10 billion to produce petrochemicals and oil
products for the growing markets of Europe and the
United States. Ambani - this week calculated as
the world's richest man - told shareholders that
at the current price of crude, RIL is possibly
sitting on oil-equivalent reserves worth $352
billion world-wide at an oil price of about $80 a
barrel.
India's top state-owned explorer,
Oil & Natural Gas Corp (ONGC) , has revealed
it will invest a whopping Rs750 billion (over
US$18 billion) over the next five years, with over
35% marked for exploring new ventures. This is its
most aggressive push yet by the company.
ONGC is looking at an investment outlay of
over $5 billion to produce 25 million standard
cubic meters a day of gas from its eastern
offshore Krishna-Godavari (K-G) fields by 2013.
ONGC has tied up with Norway's Norsk
Hydro, Italy's Eni, Petrobras of Brazil and
British oil major BP for oil and gas exploration
and production in India and abroad, including
Myanmar, Colombia, Libya, Yemen, Nigeria and Sri
Lanka.
"We have made nine hydrocarbon
discoveries in the current year, in Cambay Basin,
Mumbai Offshore, Assam Shelf and Cauvery Basin and
the East Coast deepwater," said ONGC chairman and
managing director R S Sharma. "I am optimistic
that the ONGC Group will not only reach but
overshoot the $50 billion turnover target by
2012," he said.
ONGC has approved
investments of $1.4 billion for the second-phase
redevelopment of Mumbai High in Western Offshore
that contributes over 60% of the total crude
production of the firm.
Last month, ONGC
Videsh Ltd (OVL) won three offshore exploration
blocks in Myanmar, underlining New Delhi's
approach of precedence to energy security.
And, along with two partners, RIL and
British Gas, ONGC plans to spend an additional $1
billion on the Panna-Mukta and Tapti oil and gas
fields off the country's west coast.
Mittal Steel, owned by steel baron Laksmi
Mittal and ONGC, under a joint venture name, OMEL,
has chalked out an investment profile of $6
billion to establish a refinery, power plant,
roads and railway lines in Nigeria in exchange for
three oil blocks. Mittal and ONGC have also agreed
to jointly operate through OMEL in Angola,
Azerbaijan, Congo, Indonesia, Kazakhstan, Romania,
Trinidad and Tobago, Turkmenistan and Uzbekistan.
ArcelorMittal, the world's largest steel
maker, is building a 9 million ton refinery in
Punjab jointly with Hindustan Petroleum Corp
Limited (HPCL), India's second-biggest state
refiner. The plant is expected to be completed by
September 2010.
This month the Mittal
group inked an agreement with HPCL, Total, the
government-owned Gas Authority of India Limited
(GAIL)and state-owned exploration firm Oil India
Limited (OIL) to jointly develop another
refinery-cum-petrochemical complex in
Visakhapatnam, a port city in the state of Andhra
Pradesh. The 15 million ton per year refinery
project will involve about $6 billion in
investment.
Indian refiners are expected
to spend over $25 billion by 2010 to raise
capacity, which includes the large facility being
built by RIL at Jamnagar, Gujarat state.
Not to be left behind, OIL's initial
public offering is scheduled for early next year
to raise up to $5 billion by off-loading 10% of
its stake, chairman and managing director M R
Pasrija said recently. He said the government will
also dilute an additional 10 % stake in the
company through disinvestments and use the money
to hunt for oil and gas.
The state-owned
Assam Hydrocarbon and Energy Company Ltd has
joined hands with OIL to explore and produce oil
and natural gas. GAIL, the country's largest
transporter and marketer of gas, plans to set up a
mega $2.3 billion petrochemical plant in Iran,
though how the project pans out will depend to
some degree on international politics.
State energy firms are also looking at
productive partnerships with Indian private
hydrocarbon companies. Tata Sons recently joined
hands with state refiner Indian Oil Corp (IOC) and
OIL to consider bidding for acquiring Caspian
Energy Group LLP's interest in an Azerbaijan oil
field.
RIL and IOC have also been in talks
for a possible tieup to acquire oil and explore
gas assets abroad, including in East Timor. IOC
has outlined ambitious plans to create a $10
billion first-of-its-kind petrochemical park in
Haryana.
Among private firms, Essar Global
Limited plans to spend over $2 billion on
developing oil and gas fields in India, Myanmar
and Nigeria. It is looking to raise capital of up
to $750 million from the overseas market. A
consortium of state-owned Gujarat State Petroleum
Corporation and Essar has bid for a block in
Syria. Energy major Cairn India has lined up big
investment plans for both the Ravva field off the
coast of Andhra Pradesh and oil blocks in
Rajasthan state.
Siddharth
Srivastava is a New Delhi-based
journalist.
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