India Petroleum Update

Videocon - New Kid On The Block

After the PSU's and Reliance, Videocon is the latest new Indian entity to foray for the holy grail of Indian oil security - oil equity abroad. Hyperboles be pardoned, and the amount of money Videocon comes in with is less than modest by global standards, but it does open up a new front (however small) and it can only help.

After revealing that Videocon Industries Ltd had signed an MOU with the Govt in Sudan for investing in oil there, the notice to the BSE also said that the Middle East was another frontier they were looking at. Predictably the stock price shot up. Chairman Venugopal Dhoot separately told Reuters that Videocon was also looking at Ukraine for oil investments. Earlier Petrocon India, a Videocon Group company, which owns 25% of the Ravva oil field in the K-G basin, was merged with the Videocon Industries. The field produces 50,000 barrels of oil a day at an operating cost of just $1 per barrel.

The Qatari Angle

Relations between India and Qatar are all set to enter a strategic phase, following the recent visit of the Emir of Qatar, Sheikh Hamad bin Khalifa al-Thani, who was in India from Wednesday to Friday.

Tiny Qatar has the third highest gas reserves in the world (after Russia and Iran). It is already supplying 5 million tonnes of gas a day to Petronet's Dahej terminal. Proposals are to double the capacity of this terminal and build one more in Cochi for 2.5 million tonnes.

India is also planning to buy Qatari crude and Qatari fighter planes.

Qatar wants Indian tourists, particularly with air connectivity set to improve after the bilateral air services agreement between Qatar and India.

Burmese Gas

A new discovery of gas was made on Block A-1 in Burma. Since ONGC and GAIL together own 30% of the block, this puts even more focus on the Burma-Bangladesh-India pipeline. Burma has almost four times India's gas reserves (87 tcf versus 23 tcf), and India is naturally the first choice as a market for Burmese gas. What remains to be seen is whether Bangladesh wants to/will profit from Indo-Burmese trade in the longer run.

Elsewhere...

IOC was stopped from bidding for a Pakistani state oil company by the Ministry of External Affairs, who felt the effort was pointless. If it was successful the MEA fears a rise in anti-India sentiment. IOC had seen it as a good way to make inroads into selling diesel to Pak from its surplus Panipat refinery.

A primer on India's oil diplomacy in Kazakhstan - what went wrong, what we should and should not do today.

Finally another article talking about India taking its place among the global scramblers for oil.