Amid the tumble in global crude-oil prices, India is accelerating a push to secure overseas oil and gas assets while taking a series of steps to encourage more exploration and development of its own reserves, the country’s oil minister said.
“We are taking advantage of the changing geopolitical scenario,” Dharmendra Pradhan, minister of state for petroleum and natural gas, said in an interview. “We are eyeing huge overseas investment.”
With lower crude prices making investments in energy development abroad more affordable, India has asked state enterprises to look for deals with resource-rich nations such as Russia, Saudi Arabia, the United Arab Emirates and, now that international sanctions have lifted, Iran.
Mr. Pradhan said the overseas investment arm of India’s state-run Oil & Natural Gas Corp. Ltd. is expected to finalize a deal to acquire a 15% stake in an oil-and-gas block run by Russian state-run oil company OAO Rosneft by the end of the month.
The Indian company agreed in September to pay up to $1.3 billion for the stake in the Vankor oil field, one of Rosneft’s largest, in Siberia. Mr. Pradhan said India is considering seeking to increase the size of its stake in the future.
ONGC is also pursuing talks with Iranian state company Pars Oil and Gas Co. to resume participation in a $10 billion gas project, Mr. Pradhan said. Indian companies, including ONGC have also been active in Africa.
To boost development of India’s domestic hydrocarbon reserves, its government last week approved policy changes aimed at making the sector more attractive to investors.
From now on, Mr. Pradhan said, companies would be able to bid for exploration and production rights for all hydrocarbons in blocks of their choosing. Companies would enter into a revenue-sharing agreement with the government, rather than the current profit-sharing mechanism.
They would have more freedom to set sales prices for their output, subject to caps determined by the prices of a basket of alternative fuels.
“Our aim is to boost investment, enhance production, create employment and reduce administrative discretion,” Mr. Pradhan said. “This is one of the big bang reforms everyone has been expecting from Prime Minister Narendra Modi.”
India is the world’s third-biggest energy consumer and imports roughly 75% of its oil. Global crude has fallen to nearly 12-year lows this year under pressure from a deepening supply glut and signs of economic weakness in China, the world’s second-biggest oil consumer.
On Monday, the U.S. contract ended down 3.4% at $37.18 a barrel on the New York Mercantile Exchange, while the Brent contract settled down 2.1% at $39.53 a barrel on the ICE Futures Europe exchange.
Mr. Pradhan said India is the most important driver of energy demand growth in the world, thanks to its rapidly rising oil consumption. “India is the market the world is looking at in the future,” Mr. Pradhan said.
By Vibhuti Agarwal
Source: Wall Street Journal
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