Search the Internet          Tips  Sites: Finance, Investment

India eyes oil blocks in Iraq, Iran to boost output

Fakir Chand in Bangalore

Union Petroleum Minister Ram Naik will lead a high-level delegation to Iraq and Iran in the first week of July to finalise the acquisition of oil blocks in the two Gulf countries for boosting production and reduce dependence on imports in course of time.

Disclosing this in Bangalore on Tuesday, Naik said the state-owned ONGC Videsh Ltd would be entering into strategic alliances with Iraqi and Iranian oil companies for either outright bidding or equity stake in the blocks that have immense potential for extracting oil and gas.

"I will leave for Iraq and Iran on July 6 to discuss and finalise the deals. As co-chairman of the joint petroleum commission set up by the two countries (India and Iraq), I will also explore the possibility of purchasing crude oil subject to clearance by the United Nations, which has imposed sanctions on Iraqi exports in the aftermath of the Gulf War a decade ago," Naik stated.

Naik, however, declined to give specifics about the number of oil blocks to be bid by OVL, or the order of investment.

"Investment is not a matter of concern. The state-owned oil companies like OVL or OIC are quite resourceful. The investment will be made by OVL's internal resources and not by any budgetary support," Naik clarified.

Keeping in view the high-cost of oil imports and freight charges incurred by the Indian oil companies, Naik said the petroleum ministry had decided to step up crude production within the country as well as by outsourcing it from other countries so that the heavy dependence on imports was reduced gradually over a period of time.

"It is in this context that OVL has recently acquired 20 per cent stake in the Sakhalin oil field in Russia at a cost of Rs 80 billion to outsource 4-6 million tonnes of oil as its share from 2005 onwards.

Similarly, OVL has 45 percent stake in Vietnam Natural Gas for supply of gas, which would commence from this year-end after commercial production starts," Naik recalled.

Defending the acquisition of 25 per cent stake of Canadian Talisman Energy Inc., in the Greater Nile Oil Project in Sudan at a cost of Rs 37.50 billion last week, Naik said India did not anticipate any problem in securing oil from the African country despite on-going civil war there.

"The Canadian firm had a ethnic problem in operating there on account of the fighting between Christians and Muslims communities. Being a Christian-dominated country, Canada decided to pull out of Sudan to avoid further spat."

"We have stepped in for purely commercial purpose as the opportunity to source oil from there is to our advantage cost wise," Naik claimed, adding that the other two venture partners, China and Malaysia, with considerable stakes were continuing to operate.

OVL will also be looking for similar oil blocks or projects in Malaysia and Kazakhstan so as to step up oil production by Indian firms.

On the issue of Asian countries paying higher prices as premium for buying crude in the international markets, driven by OPEC benchmark, Naik said his ministry was seized of the matter and would be raising it at the next world petroleum conference to be held in Brazil in September.

"We have already represented to OPEC and other oil-producing countries that the developing countries should be given some sort of concession in the form of insurance or freight charges to neutralize the volatility in the international price of crude oil," Naik asserted.

Asked about the prospects of an Indo-Iranian pipeline being set up through Pakistan in the wake of the ongoing stand-off between the two neighboring countries, Naik said it was up to Iran to guarantee the safe delivery of oil at our borders through the pipeline, which has to invariably pass through Pakistan.

"India is confident that Iran will sort out the problem with Pakistan as the onus to ensure the supply of crude oil till our north-west borders lies with it. The alternative proposal for laying the pipeline through deep sea is cost-prohibitive and involves expensive maintenance," Naik affirmed.

ALSO READ:
Decision on oil companies' divestment by August: Naik
More Money Headlines