WSJ.com - India Increases Search for Oil, Gas
WSJ.com - India Increases Search for Oil, Gas
Record-High Crude Prices
Fuel Concerns Over Supply
Of Energy, the Economy
By HIMENDRA KUMAR
DOW JONES NEWSWIRES
September 16, 2005
NEW DELHI -- India is intensifying its world-wide search for petroleum, and promoting alternative fuels, as record high oil prices threaten its energy security and economic growth.
It is a multipronged strategy that pits it against tough international competitors for oil and gas supplies, has it engaging directly with what the U.S. sees as pariah states and one which involves close cooperation with Washington in the increasingly important nuclear-power sector.
"We need energy and we don't have enough of it," says India's Petroleum Minister Mani Shankar Aiyar. "With a trend of rising oil and gas prices in the international markets, we have to make every effort to get that extra bit that can ensure and strengthen our energy security."
About three-quarters of India's energy needs are met from coal and oil products, with the remainder coming from oil imports, locally produced natural gas, hydroelectricity, nuclear reactors and a still-tiny renewable energy sector.
India's annual oil-products demand will more than double and reach 274 million metric tons by 2025, while natural gas demand will triple to around 400 million cubic meters a day, government forecasters say.
In its search for energy security, India aims to boost imports of liquefied natural gas, to import gas by pipeline and to rapidly build up its civil nuclear-reactor program.
"The solution lies in finding new sources of energy at costs which aren't prohibitively expensive," said Mr. Aiyar.
However, it is easier said than done.
India's dominant exploration company, Oil & Natural Gas Corp., has repeatedly been outplayed by Chinese oil majors when trying to buy stakes in overseas petroleum operations.
This week its wholly owned overseas exploration unit ONGC Videsh Ltd. was beaten to the punch by several Chinese companies when trying to buy oil reserves and a pipeline in Ecuador.
Last month it lost out to China National Petroleum Corp. in a bid to buy Canadian company PetroKazakhstan Inc. Last year it lost a bid for an oil block in Angola, again to a Chinese rival.
In trying to manage the soaring cost of crude oil, India is processing more oil for export and is fast emerging as a significant supplier of oil products to Asia and beyond. It certainly needs to find solutions. Government forecasts show India will spend $39 billion this fiscal year on petroleum imports, up from $29 billion last year.
"China has three companies that are bidding for stakes overseas; India has only ONGC Videsh, [and] raising big-time money is always a problem because approval of the cabinet is needed and we lose out often due to delays in getting approvals," said Ketan Karani, an energy analyst with Kotak Securities.
But India hasn't been without successes. It has built up energy-related stakes in Venezuela and is pursuing new opportunities vigorously in Colombia, Cuba, Ecuador, Trinidad and Tobago, Brazil and Argentina, External Affairs Minister K. Natwar Singh said recently.
While India doesn't import any gas by pipeline, it is at an advanced stage of talks with the Iranian and Myanmar governments to build pipelines to India.
Domestic gas output of 80 million cubic meters a day meets 70% of demand, and LNG imports make up the difference. To diversify beyond current LNG supplier Qatar, India signed a $22 billion, 25-year deal in June with Iran to buy LNG, starting in 2009.
India is encouraging use of renewable, more environment-friendly fuels like hydro, solar and wind power to cut reliance on thermal power that makes two-thirds of India's electricity.
More importantly, it aims to boost nuclear-power output nearly tenfold by 2020, even though a new nuclear-power plant costs five times more than a coal or oil-fired one.
In July, the U.S. said it would share its civil nuclear technology with India, in a sharp reversal of a previous policy of isolating it due to its nuclear-test explosions and a refusal to sign the international Nuclear Nonproliferation Treaty. And just this week, India and France agreed to negotiate a pact to cooperate on nuclear power.
Expansion of the hydropower sector, which meets around 20% of power needs now, will be more modest. The government aims to lift current hydropower capacity of 23,488 megawatts by 50,000 megawatts by 2017.
Record-High Crude Prices
Fuel Concerns Over Supply
Of Energy, the Economy
By HIMENDRA KUMAR
DOW JONES NEWSWIRES
September 16, 2005
NEW DELHI -- India is intensifying its world-wide search for petroleum, and promoting alternative fuels, as record high oil prices threaten its energy security and economic growth.
It is a multipronged strategy that pits it against tough international competitors for oil and gas supplies, has it engaging directly with what the U.S. sees as pariah states and one which involves close cooperation with Washington in the increasingly important nuclear-power sector.
"We need energy and we don't have enough of it," says India's Petroleum Minister Mani Shankar Aiyar. "With a trend of rising oil and gas prices in the international markets, we have to make every effort to get that extra bit that can ensure and strengthen our energy security."
About three-quarters of India's energy needs are met from coal and oil products, with the remainder coming from oil imports, locally produced natural gas, hydroelectricity, nuclear reactors and a still-tiny renewable energy sector.
India's annual oil-products demand will more than double and reach 274 million metric tons by 2025, while natural gas demand will triple to around 400 million cubic meters a day, government forecasters say.
In its search for energy security, India aims to boost imports of liquefied natural gas, to import gas by pipeline and to rapidly build up its civil nuclear-reactor program.
"The solution lies in finding new sources of energy at costs which aren't prohibitively expensive," said Mr. Aiyar.
However, it is easier said than done.
India's dominant exploration company, Oil & Natural Gas Corp., has repeatedly been outplayed by Chinese oil majors when trying to buy stakes in overseas petroleum operations.
This week its wholly owned overseas exploration unit ONGC Videsh Ltd. was beaten to the punch by several Chinese companies when trying to buy oil reserves and a pipeline in Ecuador.
Last month it lost out to China National Petroleum Corp. in a bid to buy Canadian company PetroKazakhstan Inc. Last year it lost a bid for an oil block in Angola, again to a Chinese rival.
In trying to manage the soaring cost of crude oil, India is processing more oil for export and is fast emerging as a significant supplier of oil products to Asia and beyond. It certainly needs to find solutions. Government forecasts show India will spend $39 billion this fiscal year on petroleum imports, up from $29 billion last year.
"China has three companies that are bidding for stakes overseas; India has only ONGC Videsh, [and] raising big-time money is always a problem because approval of the cabinet is needed and we lose out often due to delays in getting approvals," said Ketan Karani, an energy analyst with Kotak Securities.
But India hasn't been without successes. It has built up energy-related stakes in Venezuela and is pursuing new opportunities vigorously in Colombia, Cuba, Ecuador, Trinidad and Tobago, Brazil and Argentina, External Affairs Minister K. Natwar Singh said recently.
While India doesn't import any gas by pipeline, it is at an advanced stage of talks with the Iranian and Myanmar governments to build pipelines to India.
Domestic gas output of 80 million cubic meters a day meets 70% of demand, and LNG imports make up the difference. To diversify beyond current LNG supplier Qatar, India signed a $22 billion, 25-year deal in June with Iran to buy LNG, starting in 2009.
India is encouraging use of renewable, more environment-friendly fuels like hydro, solar and wind power to cut reliance on thermal power that makes two-thirds of India's electricity.
More importantly, it aims to boost nuclear-power output nearly tenfold by 2020, even though a new nuclear-power plant costs five times more than a coal or oil-fired one.
In July, the U.S. said it would share its civil nuclear technology with India, in a sharp reversal of a previous policy of isolating it due to its nuclear-test explosions and a refusal to sign the international Nuclear Nonproliferation Treaty. And just this week, India and France agreed to negotiate a pact to cooperate on nuclear power.
Expansion of the hydropower sector, which meets around 20% of power needs now, will be more modest. The government aims to lift current hydropower capacity of 23,488 megawatts by 50,000 megawatts by 2017.
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