India Petroleum Update
Re-visiting the North-East
Oil India Limited, the big daddy of oil exploration in the North-East is expanding exploration horizons there. Home to India's earliest oil wells, most of the North-East has been well explored - so that only leaves the rather more difficult terrain. OIL plans to join hands with a foreign exploration expert to prospect for oil in the thrust belt of Assam and Arunachal Pradesh, which is believed to have high potential. Focus will also be on the riverine areas of Arunachal Pradesh and the Brahmaputra river belt.
The Saudi Angle
At 450,000 barrels per day, Saudi Arabia heads the list of petroleum suppliers to India. The Sauds are ready to increase that amount. That incidentally is just one aspect of a comprehensive oil trade relationship that India is proposing to build with Saudi Arabia.
With Saudi crude imports to India expected to double, India is seeking long-term oil deals with assured delivery, said Aiyar, who is currently in Riyadh as part of the first ever Indian Oil Minister visit to the kingdom. HPCL is interested in setting up a refinery in Saudi Arabia. Saudi Aramco is offering Indian companies a 50% stake in its giant refinery at Yanbu on the Red Sea. In return Aramco has been offered stake in HPCL's Vizag refinery and IOC's upcoming Paradip refinery. Aramco might also partner IOC in building a commercial oil storage facility in India. This is unlike the strategic reserves IOC is building and Aramco has similar facilities in Holland, Korea and the Caribbean.
Pipeline Politics
In the latest bargaining salvo Aiyar is asking that the Indo-Iran pipeline be routed through populated areas along the Paki coast, to minimize danger of terrorist attacks. Significantly there has been no comment on the refusal of Iran to sign the "supply-or-pay" clause, without which India is as good as offering its jugular as hostage to Pak (and to Iran too for that matter), though Aiyar did make a more sweeping statement when he said, "...security is not a concern for us. It is for Iran and Pakistan to work up enough safeguards to compensate India in case of disruption in supplies.".
The View From Here
When Condoleeza Rice was in India recently she asked India to keep away from Iran. The general reaction has been that India has to be far more concerned with its own growth and energy security than with the imagined risks for the US. The US has no oil or gas to offer us in return for junking the deal with Iran, so the US can go to hell, and we will suck up to Iran because it suits us. A reality check is in order here.
China was one of the nations most upset when the US invaded Iraq. Why? That's because they had signed oil and gas contracts worth billions with Saddam, and were just waiting for the UN sanctions to be removed. All these deals went down the drain when the US deposed Saddam. So what will happen if we decide to show the finger to the US, and deal with Iran? If and when the US invades Iran, all our deals will be buried in the Perian Gulf.
Alternately, what if we decide to go along with Uncle Sam? Rice offered India cooperation in the most sensitive of fields, nuclear technology, to help us override our energy crisis. May I suggest something better? How about energy effeciency? It has been estimated that energy usage in the US can be brought down by 70% if proper investments are made into energy effeciency technologies. And US industry in general is far more effecient than Indian industry, which includes power generation plants. If we can bring our own consumption down, we will not have to worry about new supplies so much. Energy effeciency as an industry will give a big boost to the economy. And if the US does invade Iran, then we can get the gas pipelines anyway!
