WATCHING THE WORLD: India’s oil diplomacy

June 6, 2005
India is not a top-tier producer of oil or natural gas, but it is certainly making itself felt in energy markets around the globe, not least due to an aggressive new policy of oil diplomacy.

India is not a top-tier producer of oil or natural gas, but it is certainly making itself felt in energy markets around the globe, not least due to an aggressive new policy of oil diplomacy.

On Jan. 6, for example, India’s Petroleum Minister Mani Shankar Aiyar got representatives from Saudi Arabia, Iran, Kuwait, the UAE, Oman, and Qatar together with officials of prime consumers India, China, Japan, and South Korea to give shape to a new regional energy forum. Saudi Arabian delegates reportedly observed that 60% of their country’s crude oil production already is being sold to Asia. At the same meeting, India even proposed the idea of the Organization of Petroleum Exporting Countries having a special price band for Asian countries.

Caspian meeting

Fresh from that foray, the Indians plan to host a meeting of the Central Asian oil producers with the four largest consumers in Asia, again with a view to forming a so-called Asian Oil Community.

“In the week beginning Oct. 17, we propose to host the oil ministers from Russia, Kazakhstan, Turkmenistan, Uzbekistan, and Azerbaijan to a meeting with four prime Asian buyers-the Chinese, Japanese, [South] Korean[s], and of course Indian[s],” Aiyar said on May 31. Like the Jan. 6 meeting, the agenda would aim at setting up an Asian oil market by evolving a marker crude that is produced and traded in the region as opposed to the current practice of oil being sold to Asians at a discount or premium to benchmark prices of North American or European markets.

But New Delhi has hardly given up looking for oil and gas, whether at home or abroad. On May 31, even as he announced the Caspian meeting, Aiyar also said India had received 69 bids from various international and domestic companies for 20 new oil and gas exploration blocks.

“Eighteen bids for six deepwater blocks, seven bids for two shallow-water blocks, and 44 bids for 12 onshore blocks were received,” said Aiyar, who added that successful bidders for the blocks will be announced by July 31 with production-sharing agreements signed by Sept. 30.

World acquisitions

Meanwhile, Indian exploration and production companies are actively pursuing acquisition of equity in foreign oil companies as well as acquiring oil and gas exploration acreage, producing properties, and infrastructure the world over.

Indian firms already have participating interests in projects as far afield as Vietnam, Sudan, Russia, Iraq, Iran, Burma, Libya, Syria, Australia, Ivory Coast, Qatar, and Egypt, with other opportunities being investigated in Venezuela, Kazakhstan, Kuwait, Yemen, Chad, Niger, Nigeria, Angola, Cuba, Sierra Leone, and Ecuador.

Little wonder that the Confederation of Indian Industries claims the country soon “could become the most important Asian oil junction, with oil and natural gas pipelines branching to Burma, Thailand, and Bangladesh in the east, China in the north, and Iran, Turkmenistan, and other central Asian republics in the west and northwest.”