The Hindu : India to invest $1 b in overseas ventures

Online edition of India's National Newspaper
Wednesday, Jan 14, 2004

Business

Business

India to invest $1 b in overseas ventures

By Our Special Correspondent

NEW DELHI, JAN.13. India plans to invest one billion dollars annually on acquiring equity oil abroad in a bid to bridge the widening gap between demand and supply of petroleum products. While intensive efforts continue to find oil and gas within the Indian economic zone, domestic oil companies are investing in several countries including Sudan, Russia, Libya, Vietnam, Iran, Syria, Iraq, Myanmar and Sri Lanka.

This was disclosed here today by the Petroleum Secretary, B. K. Chaturvedi, who stressed that these efforts along with the proposed new oil strategic reserve would provide oil security to the country. In addition, he said the challenge for clean energy was being addressed through hydrogen and India had joined the group of 24 countries led by the U.S. to develop this as the fuel of the 21st century. Research on gas hydrate, a resource for natural gas, was also being intensified. "Major investments are planned in the oil sector of nearly $25 billion in the next five years to provide adequate clean fuels in both liquid and gaseous form to the consumers,'' he said.

Underlining the urgency of efforts to find new oil sources, he said given the existing level of domestic production at 33 million tonnes, India would continue to import at least 75 per cent of its requirements on a long term basis. Domestic gas availability was also only 70 million standard cubic metres per day as against the demand of 119 mscmd, he said.

Delivering the keynote address at the fifth Indian Oil and Gas conference today, Mr. Chaturvedi warned that the country's demand for crude oil and gas in the next two decades might rise steeply. With current demand for crude oil estimated at 115 million tonnes, a revised assessment for requirements by 2025 was that the country would need 350 million tonnes crude oil and 300 to 350 mscmd of natural gas.

Going a step further, he said in case the country was to match the present world per capita average consumption of energy, the demand would go up to nearly 514 million tonnes of crude oil and 411 mscmd of natural gas. In any case, he said clearly there would be a "very sharp increase'' in domestic demand over the next two decades.

In the light of these scenarios, he said Indian oil companies were constantly looking for new opportunities. These included the gas reserve in offshore block of Myanmar being drilled by ONGC Videsh Ltd., Gas Authority of India Ltd. and Daewoo. Possibilities also existed of getting surplus gas from Bangladesh, Iran and other neighbouring central Asian republics. All these had to be explored, he said.

Describing oil sector reforms as one of the most exciting events in the Indian economic scene, he gave credit to them partly for the bullish trend in the Indian stock market. The opening up of the sector, its alignment with the world oil prices and dismantling of oil pool account had led to a substantial resource generation and the annual profit of $5 billion for equity oil investment, further exploitation of oil value chain and movement towards vertical integration. As for reforms in the gas sector, he said these were ongoing and when completed would lead to further major investments in the sector.

Earlier, inaugurating the conference, the Union Petroleum Minister, Ram Naik, said private sector oil firms would start selling transport fuels through about 500 petrol stations in the country by April. The Government had given Reliance Industries Limited (RIL) a licence to set up 5,849 petrol pumps, Essar Oil 1,700 stations and the world's third largest oil company Royal Dutch/Shell 2,000 petrol stations. ONGC and Numaligarh Refinery had also been permitted to set up 1,100 and 510 petrol stations.

Mr. Naik said the Government would sell its remaining 26 per cent stake in IBP Co through a public offer this fiscal besides offloading 10 per cent equity in ONGC and GAIL to raise Rs. 15,000 crores.

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