Demand Growth Drives Indian Companies to Secure African Gas and Oil Resources

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--The need for future energy security is driving Indian companies, including state-owned Indian Oil Corporation (BSE:530965) (IOC) (New Delhi, India) and GAIL India Limited (BSE:532155) (New Delhi), to seek equity stakes in liquefied natural gas (LNG) projects in Africa.

At the Third India-Africa Hydrocarbon Conference in New Delhi, Indian Oil Minister S. Jaipal Reddy said that Africa currently supplies 35.31 million tons of the country's crude oil requirements, which represent 21.5% of the total annual requirement.

Indian companies were interested in farm-in opportunities in producing blocks, especially in Libya, Algeria, Egypt and Nigeria. With India's national natural gas demand projected to double in five years, the country was looking to tie up long-term supplies of LNG from Africa.

Companies such as GAIL, Petronet LNG (New Delhi) and IOC were interested in sourcing LNG on a long-term basis from Africa. They would explore possibilities of equity participation in existing and proposed LNG liquefaction projects and business opportunities in gas processing and gas-based petrochemical projects in Africa, as well as farm-in opportunities in producing gas blocks for conversion to LNG and dispatch to India, Reddy said.

India is looking to participate in exploration and production opportunities in Angola, Ghana, Sudan, Algeria, Congo, Nigeria, Uganda, Cote d'Ivoire, Mozambique, Chad, Gabon and Tanzania. Companies also are interested in farm-in opportunities in gas producing blocks, especially in Libya, Algeria, Egypt and Nigeria, the minister said.

India is currently the world's fourth-largest oil importer behind the U.S., China and Japan. During the next five years, India's demand for liquid petroleum products is projected to grow at a compound annual growth rate (CAGR) of 4.7%, and demand for gas is projected to grow at a CAGR of 14%.

Currently, natural gas represents about 10% of India's primary energy basket, whereas the world average is 24%. India will increase its regasification capacity from the current 13 million tons a year to 30 million tons by 2015.

To transport this gas throughout India, 8,000 kilometers of gas pipelines are now being laid, and another 5,000 kilometers are at the bidding stage.

Reddy said that in the future, India would seek more crude oil and LNG from Africa as the country's oil-refining capacity would increase from an annual 194 million tons to 238 million tons by 2013. India exported 509 million tons of refined petroleum products during 2010- 11. Parallel to the increase in refining capacity, the export figure was likely to hit 70 million tons by 2014, which would make India one of the world's major exporters of petroleum products.

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