India seeks alliance with Africa for long term energy needs
DSIJ Intelligence / 10 Dec 2011
The Ministry of Petroleum and Natural Gas (Govt. of India), in association with Federation of Indian Chambers of Commerce & Industry (FICCI) organized the 3rd India-Africa Hydrocarbons Conference on December 09th & 10th, 2011 at New Delhi, India.
This conference aimed at developing strategies that would further enhance mutually beneficial trade & investment, and understand the opportunities and challenges being faced by India and Africa in exploration and utilization of hydrocarbon resources.
On the first day of the conference, Finance Minister, Pranab Mukherjee emphasized on the opportunity at hand and the necessity to further reinforce mutual commitment between the two regions to tap the crucial energy sector.
According to him, at such trying times where the world economy is facing sever a crisis, owing to the unprecedented downgrade of the US economy, the unabated Euro-debt crisis and fears of rising inflation consequently leading to slowdown in emerging economies, it would be prudent to ignore the hydrocarbon space and treat it like a zero-sum game.
With a view to achieving India’s long term energy security needs and open up a truly global, integrated and competitive energy market, it is the need of the hour to build a long standing partnership with the oil-rich African nations.
In 2010, with oil reserves of 132 billion barrels and oil production at 478 million tons per annum, Africa accounted for nearly 12 per cent of the world’s total oil production. With the country seeking to develop its oil & gas industry in a sustainable manner, the region offers great opportunities as most of its oil reserves are unexplored.
As for India, in order to meet its growing import demand for oil & gas, the country is tirelessly diversifying its prospects in a bid to reduce its dependence from any particular region of the world.
Moving on to the oil trade front between Africa and India, import of crude oil from the African continent has increased from about 22 million tonnes per annum during 2004-05 to more than 35 million tons during 2010-11, registering a CAGR of 9-10 per cent. Today, more than one-fifth (21.5 per cent) of India’s crude oil imports are from the major suppliers like Nigeria, Angola, Algeria, Egypt, Cameroon Equatorial Guinea and Sudan.
Owing to the robust plan to ramp up India’s refining capacities and take it up to 238 MT in 2013 from the present 194 MT, Africa will play a very crucial role in meeting the excess crude requirements. One can also not ignore the Natural Gas space, where the govt. is laying strong emphasis on increasing share of natural gas in the country’s energy basket from the present 10 per cent to 20 per cent in the near future.
Keeping in mind our domestic gas production woes and growing demand from the end-user sectors, it is imperative to rely on LNG imports. This would mean a major role to be played by African countries to meet our requirements. In fact, according to media reports, oil minister, S Jaipal Reddy was quoted as saying that players like IOC and GAIL were looking at picking up an equity stake in LNG projects in Africa.
However, looking at the current turmoil that is prevailing in most of the African countries, in relation to civil unrest and political instability, it will be quite some time before one can expect unlocking of value from such business ventures. As of now one may treat it as a positive development.
This conference aimed at developing strategies that would further enhance mutually beneficial trade & investment, and understand the opportunities and challenges being faced by India and Africa in exploration and utilization of hydrocarbon resources.
On the first day of the conference, Finance Minister, Pranab Mukherjee emphasized on the opportunity at hand and the necessity to further reinforce mutual commitment between the two regions to tap the crucial energy sector.
According to him, at such trying times where the world economy is facing sever a crisis, owing to the unprecedented downgrade of the US economy, the unabated Euro-debt crisis and fears of rising inflation consequently leading to slowdown in emerging economies, it would be prudent to ignore the hydrocarbon space and treat it like a zero-sum game.
With a view to achieving India’s long term energy security needs and open up a truly global, integrated and competitive energy market, it is the need of the hour to build a long standing partnership with the oil-rich African nations.
In 2010, with oil reserves of 132 billion barrels and oil production at 478 million tons per annum, Africa accounted for nearly 12 per cent of the world’s total oil production. With the country seeking to develop its oil & gas industry in a sustainable manner, the region offers great opportunities as most of its oil reserves are unexplored.
As for India, in order to meet its growing import demand for oil & gas, the country is tirelessly diversifying its prospects in a bid to reduce its dependence from any particular region of the world.
Moving on to the oil trade front between Africa and India, import of crude oil from the African continent has increased from about 22 million tonnes per annum during 2004-05 to more than 35 million tons during 2010-11, registering a CAGR of 9-10 per cent. Today, more than one-fifth (21.5 per cent) of India’s crude oil imports are from the major suppliers like Nigeria, Angola, Algeria, Egypt, Cameroon Equatorial Guinea and Sudan.
Owing to the robust plan to ramp up India’s refining capacities and take it up to 238 MT in 2013 from the present 194 MT, Africa will play a very crucial role in meeting the excess crude requirements. One can also not ignore the Natural Gas space, where the govt. is laying strong emphasis on increasing share of natural gas in the country’s energy basket from the present 10 per cent to 20 per cent in the near future.
Keeping in mind our domestic gas production woes and growing demand from the end-user sectors, it is imperative to rely on LNG imports. This would mean a major role to be played by African countries to meet our requirements. In fact, according to media reports, oil minister, S Jaipal Reddy was quoted as saying that players like IOC and GAIL were looking at picking up an equity stake in LNG projects in Africa.
However, looking at the current turmoil that is prevailing in most of the African countries, in relation to civil unrest and political instability, it will be quite some time before one can expect unlocking of value from such business ventures. As of now one may treat it as a positive development.
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