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India's burn rate going up

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  • P. Neuman self only
    ... From: ldcdnd To: Date: Sat, 31 Jul 2004 04:12:16 -0600 Subject: [energyresources] India s burn rate going up
    Message 1 of 1 , Aug 2, 2004
      --------- Forwarded message ----------
      From: "ldcdnd"
      To: <energyresources@yahoogroups.com>
      Date: Sat, 31 Jul 2004 04:12:16 -0600
      Subject: [energyresources] India's burn rate going up
      Message-ID: <003301c476e6$df44a4f0$777bf004@lynn2i31cigdju>

      Feeding India's energy hunger


      NEW DELHI - ONGC Videsh Ltd (OVL), the overseas-investment arm of India's
      state-owned Oil and Natural Gas Corp (ONGC), is furthering its status as
      a major player on the global oil scene, so far having invested US$1.9
      billion in oil ventures and gas fields in a number of countries.

      India's Upper House of Parliament was informed on Tuesday of the
      company's growing clout. "To enhance energy security of the country, OVL
      is pursuing acquisition of equity oil abroad, as well as acquisition
      abroad of oil and gas exploration acreages and producing properties,"
      Petroleum Minister Mani Shankar Aiyar reported in a written statement.

      OVL has stakes in an oil-producing field in Sudan and a producing gas
      field in Vietnam, besides interests in exploration blocks in Russia,
      Iraq, Myanmar, Iran, Libya and Sudan.

      The company is already extracting 3 million tonnes of equity oil every
      year from the 300,000-barrels-per-day Greater Nile Oil Project in Sudan,
      where it has invested in a 25% stake valued at $669.1 million.

      In Vietnam, of the $228 million investment planned for Block 6.1, OVL has
      invested $162 million. Of the $1.74 billion investment planned to take a
      20% stake in the Sakhalin-I oil and gas fields in Russia, an investment
      of about $1.07 billion has been made until now.

      In the Middle East, OVL has invested $1 billion each in Block 8 of Iraq
      and a Farshi offshore block in Iran against its commitment of $15 million
      and $10.8 million respectively. In A-1 block in offshore Myanmar, where a
      4-trillion-to-5-trillion-cubic-foot gas discovery has been made, OVL has
      so far invested $7 million out of the $27.5 million committed. On more
      exploration, another 12 trillion cubic feet is expected. The company has
      also acquired an oil block in Angola where production is set to commence
      some time in 2006 and is expected to achieve a peak production of more
      than 200,000 barrels of oil per day.

      Linkages with other energy companies are in the works as well. OVL is in
      talks to acquire Cairn Energy's stake in Bangladesh's Sangu gas field, an
      acquisition that will help OVL finally set foot in the gas-rich nation.
      ONGC officials have also said the company is in talks with Reliance
      Industries to participate jointly in exploration and development projects
      abroad, particularly in the United States and Africa.

      Meanwhile, this month OVL signed a $194 million contract with the
      Sudanese Ministry of Energy and Mining for construction of a
      741-kilometer multi-product pipeline, an expenditure energy-deficit India
      will be paid back for in crude oil. The 12-inch pipeline will evacuate
      gas oil and gasoline from the 50,000-barrels-per-day Khartoum refinery to
      Port Sudan. The pipeline throughput is expected to be 826,000 tonnes per
      year (about 18,330 barrels per day) in Phase I and 2.54 million tonnes
      per year in Phase II. The pipeline is expected to be ready for operation
      in 14 months, company officials said, adding that ONGC has awarded the
      contract for laying the line to Mumbai-based construction firm Dodsal of

      The investments will help meet the needs of this energy-hungry nation of
      more than a billion people, with company officials saying that that by
      2007, OVL will have an oil equity abroad of at least 15 million tonnes.
      India imports 70% of its crude-oil needs and produces only 65 million
      cubic meters of gas a day, less than half its daily requirement.

      (Asia Pulse/PTI)

      India's oil safari adds fuel to the fire
      By Raja M

      MUMBAI - On April 20, British firm Cairn Energy declared its third
      successive oil strike in India's desert state of Rajasthan, one of the
      largest oil finds in the world this year. India, the world's
      sixth-largest energy consumer, could do with similar buried treasures.
      The country imports 70 percent of its crude oil demands.

      As with other large economies, the energy question and hangs over India
      like an edgy executioner's ax. The American Department of Energy's Energy
      Information Administration (EIA) projects strong economic growth in Asia
      doubling world oil prices to $51 a barrel in the next decade. China,
      India and other developing countries will see a 91 percent jump in needs
      as these countries pursue rapid industrial development, says the EIA.

      India faces a shortfall of 300 million tonnes of oil by 2025, according
      to estimates based on projections from the Hydrocarbon Vision 2025, a
      prime ministerial paper to study India's future oil needs. India's
      state-owned Oil and Natural Gas Corporation, ONGC, which owns 30 percent
      of the Cairn finds in Rajasthan, produces 77 percent of India's domestic
      crude oil. Oil accounts for over 30 percent of India's total energy

      With domestic sources filling only 30 percent of demand, oil hunting
      abroad has already landed India in dubious waters. Through ONGC Videsh
      Limited (OVL), the overseas arm of ONGC, India has cut deals with a who's
      who of controversial (we are being polite here) governments: Sudan, Iran,
      Iraq, Libya and Myanmar. Besides those deals, India made its largest
      ever-overseas investment of US$1.7 billion in Russia's Sakhalin Island,
      and has interests in the South China Sea.

      This April, India declared plans to buy 50 percent of financially
      scandal-ridden Shell's stakes in Angola, a country facing a refugee and
      food crisis after 30 years of civil war. The $600 million deal could be
      finalized later this year. Given the complexity of oil exploration deals
      in trouble spots abroad, such deals rarely receive sufficient public
      discussion in India.

      OVL, India's largest corporate with a market capitalization of $11.3
      billion last fiscal, has nine overseas assets and wants more. India
      invested nearly $1 billion in civil war-stricken Sudan, buying the
      Canadian company Talisman Energy's 25 percent stake in the Greater Nile
      Petroleum Operating Company near the Sudanese capital Khartoum.

      India was making a "fateful mistake", warned rebels of the Sudan People's
      Liberation Army (SPLA), when the deal was struck in 2002. About 2 million
      people have died since civil war broke out in 1983 in Sudan. A report by
      Brussels-based think-tank International Crisis Group said that oil
      revenues allowed the Sudanese government to purchase more lethal weaponry
      and increase its air power. A shaky peace accord, following an oil wealth
      sharing agreement with the SPLA, crumbled earlier this April, with the
      Sudanese Air Force allegedly using attack helicopters to bomb villages in
      Darfur in northwest Sudan. The Sudanese government denied the charge of
      ethnic cleansing in its villages. The United Nations, however, says that
      over 10,000 people have been killed and approximately 1 million people
      displaced, with 95,000 fleeing to neighboring Chad.

      India, like Malaysia, has not allowed the question of human rights to
      affect its oil business with a government accused of causing such
      suffering. Indian petroleum minister Ram Naik blithely expressed, at the
      announcement of the deal in 2002, that his priority was to get equity
      oil. So never mind the United Nations accusing the Sudanese government of
      "widespread atrocities" against its own people. Indian President Abdul
      Kalam's visit to Khartoum last October boosted bilateral trade, during
      what seemed to be a peace process. But the renewed violence in northwest
      Sudan this month went largely unnoticed in India, a glaring omission
      considering India had made its second largest ever overseas investment in
      that country.

      "We believe there are significant risks in the Indian government
      investing heavily in countries like Sudan, Libya and Iran," says Sundeep
      Bhandari, director of Petrodril, a consultant to Cairn. "Returns on these
      projects will come after several years, and in some cases we are already
      hearing that there will be overrun of capital costs. India may be better
      off in buying in the spot markets and importing from sources that are
      more cost efficient."

      An OVL vice president telephoned this correspondent and ridiculed the
      idea that India would be doing better in the spot market (where a
      commodity is bought or sold for delivery immediately or in the very near
      future). "It's better to be a producer of oil as ONGC is doing, rather
      than shopping for oil," he told Asia Times Online, asking not to be
      named, elaborating that investing in equity oil helps to tide over
      unexpected crises.

      Jephraim Gundzik, president of the California-based world market analysts
      Condor Advisers Inc, agreed with the ONGC strategy. "Rather than sourcing
      all its needs from the spot market, I think India would be better off
      investing in projects overseas similar to China investing in Central
      Asia," Gundzik said. "As India's oil demand will accelerate in a few
      years, it's very sensible to invest in overseas projects despite the long
      build-out period."

      Three million tonnes of oil from Sudan reaches India, the senior OVL
      official said, and declared that any problems in Sudan are the internal
      matter of that country. "Don't write anything against OVL," he urged. "We
      are bringing equity oil to India and we are certain that our investments
      abroad are safe and secure." OVL aims to get 60 million tonnes of oil a
      year from abroad as equity oil by 2025.

      To increase domestic sources, ONGC on August 3 last year announced deep
      sea project "Sagar Samriddhi" (sagar meaning ocean, samriddhi meaning
      self-sufficiency) to hunt for hydrocarbon reserves in the Arabian Sea and
      the Bay of Bengal. The $2.6 million-a-day mission hopes to find about 11
      billion tonnes of oil. ONGC hopes that if it could produce one-fourth of
      these reserves, India would have 1 billion tonnes of oil and oil
      equivalent gas over 25 to 30 years.

      Other state-owned Indian companies want to expand their overseas roles.
      Last week, the Indian Oil Corporation (IOC) declared plans to invest up
      to $2 billion for acquiring an overseas exploration company. Unlike OVL,
      IOC has been restricted by a governmental norm that needs the Public
      Investment Board and the Indian cabinet to approve any investment
      exceeding $45.2 million.

      An oil ministry official told Reuters that IOC was assessing medium-sized
      exploration and production firms in Britain, Canada and Australia - more
      credible options than cutting oil deals with military dictators and
      despots accused of genocide. As India steps up a gear to quench its oil
      thirst, this quest needs much closer public scrutiny, and more debate
      than it seems to be getting.

      Raja M is an independent writer based in Mumbai, India.


      OVL signs contract to construct Sudan pipeline


      NEW DELHI - ONGC Videsh Ltd (OVL), the overseas arm of Indian oil major
      Oil and Natural Gas Corp (ONGC), has signed a US$194 million contract
      with the Sudan government for construction of a 741 kilometer long
      multi-product pipeline.

      "This is the maiden engineering & construction Project of ONGC Group
      abroad," a company release said here.

      Sudan Pipeline Project envisages laying a 12-inch diameter pipeline from
      Khartoum Refinery to Port Sudan for evacuation of petro-products from
      Khartoum Refinery, capacity of which is being upgraded by Sudan.

      The pipeline system is designed for a throughput of 0.826 million tonnes
      per annum in phase I and 2.54 million tonnes per annum in phase II, of
      gasoil and gasoline. The project is to be completed in 16 months.

      The project will be undertaken by OVL with the design, engineering and
      project management support of ONGC's Engineering Services, Mumbai, which
      has experience in the construction and maintenance of its own existing
      onshore as well as offshore pipeline network of over 10,000 km.

      The consortium led by Dodsal Pte, Dubai, has been already selected as the
      engineering, procurement and construction contractor.

      "Discussions on Rehabilitation and Expansion of the Port Sudan Refinery
      in Sudan are at advanced stage. A detailed feasibility report and various
      options, keeping in view the local demands and export potential, have
      been submitted to the government of Sudan," the release added.

      (Asia Pulse/PTI

      [Non-text portions of this message have been removed]

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