Iran row fuels hunt for new oil sources
Indrani Bagchi, TNN | May 13, 2012
NEW DELHI: An unstable Persian Gulf and West Asia, coupled with the US pressure on India to cut oil imports from Iran, is driving New Delhi to make diversification a major plank of its energy policy. Now, India is looking at Canada, Nigeria, Venezuela and even Brazil as new sources of oil and gas.
In the past year, as India's oil demand grew, the sources of oil that India has traditionally depended on are either caught in the throes of what is popularly known as Arab Spring, or in varying degrees of political unrest. This may augur well for the ultimate spread of democracy among these authoritarian nations, but in the short term, many of these countries will remain unstable. The assessment among Indian policymakers is veering to something that the nation should have thought of long ago - to diversify sources of energy.
Canada is emerging as a significant suitor for India's energy needs, oil, gas and uranium. With gas reserves of an estimated 62 trillion cubic ft, and the third largest oil reserves in the world (much of it in tar sands) Canada is an attractive energy option.
The Canadian government has been assiduously courting India to tap its energy reserves. Canadian oil exports rose about 9% last year, and though the US is the prime buyer of Canadian energy, a recent American decision to block the Keystone pipeline from Canada has prompted a re-look at Asia.
Along with China and Japan, India is looking an attractive buyer, which can be a market for both light and heavy oil. Canada's attractiveness stems from the nation's stable, proven infrastructure and oil sources, and that's how the Canadian government is marketing itself to India.
Nigeria, Africa's top oil producer and is already a major source of oil for India, but New Delhi is looking to raise the share of Nigerian oil in its energy basket.
However, it is looking askance at Nigeria's growing terror problems with al-Qaida affiliate, Boko Haram, but it's no longer possible to find energy sources that are not politically fragile. But a recent increase in oil production by Nigeria in the Usan offshore oilfield is attractive. Usually, Nigerian oil is high quality, with less contaminant.
Venezuela, which is trying to diversify its own energy markets from the US to Asian countries, is another contender. Reliance Industries Ltd; already refines some Venezuelan oil, but India is now actively trying to secure oil sources from there. India's BRICS partner, Brazil, which has come into some oil itself, may also become a source.
Though India's OVL is exiting Blocks 128 (earlier it had exited Block 127) in the South China Sea because there is no oil in the rocky seabed, OVL continues to retain Block 06.1 in South China Sea. Its decision to exit the other two blocks, officials said, have little to do with any strategic concern, but commercial reasons.
In the coming weeks, US's senior official in charge of global energy issues will be here to try to pressure India to reduce its oil imports from Iran, making the argument that there was enough oil to go around in the market, and New Delhi did not need to stay wedded to Iran. India will make the case that switching sources is not as easy as it sounds, and that it wasn't just New Delhi that is facing this problem.
India's oil demands too have shot up: its crude imports in this fiscal rose 5.2% to 172.11 million metric tonnes. India is also looking at the recent offshore oil and gas discoveries off the eastern coast of Africa in the Indian Ocean. Mozambique, Tanzania, even Somalia have all reported oil and gas finds. The biggest are offshore fields in Somalia, which, if the estimates of 100 billion barrels of oil prove correct, could make Mogadishu a bigger oil producer than Kuwait.
Over in northwestern Australia, which is also in the Indian Ocean, recent energy finds have been made as well.
Indian strategists say it stands to reason that a deeper study of the geology of the Indian Ocean could yield more energy finds closer to Indian shores. This will form part of India's discussions with the US next week - the American firm, Anadarko, and Italy's Eni that have discovered the oil and gas in Mozambique. India is building its own reserves of oil, which, when completed, should give it a 90-day breather during an energy crisis.
http://timesofindia.indiatimes.com/business/india-business/Iran-row-fuel...
