With the leaders of as many as 40 African nations heading to Delhi next month for the third edition of India-Africa Forum Summit, the Union government is gearing up to forge strong partnerships aimed at getting access to energy assets in these countries.
Africa is estimated to have 130 billion barrels of oil reserves and 500 tcf of gas reserves. The total comes to a little more than 7.5% of global reserves.
Currently, about 16% of Indian imports are sourced from Africa, said a government official, adding, “Africa provides significant potential for growth of our imports. Currently, we have made investments in Mozambique, Sudan and South Sudan, Egypt and Libya.”
Major suppliers to India are Nigeria, Algeria, Angola, Mozambique and Egypt. Energy-deficit India imported $125-billion crude oil and products in FY15.
India is also looking at Africa as potential market for petroleum products. Currently Mauritius’ requirement for petroleum products is met by India. GAIL also has stakes in gas distribution companies in Egypt.
With Prime Minister Narendra Modi focusing on oil diplomacy to seek better crude sourcing deals, India’s energy needs will be discussed at the highest level during the forthcoming summit.
External affairs minister Sushma Swaraj, during her visit to Cairo in August, met with President Abdel Fattah al-Sisi in an effort to further deepen relationship between the two sides. The visit was significant as it coincided with two major events in the region: the opening of the ‘new’ Suez Canal and discovery of the largest gas field in recent time off the coast of Egypt.
In fact, petroleum minister Dharmendra Pradhan had visited Nigeria recently and discussed with President Goodluck Jonathan on IOC seeking more crude oil on long-term contracts from that country. At the same time, the African nation is seeking investments to modernise its refineries. Industry watchers are of the view that IOC may consider taking up modernisation jobs of existing refineries in Nigeria subject to allocation of equivalent oil equity in the producing blocks with substantial recoverable reserves in its favour. This would be a win-win situation for both the nations.
Currently, IOC buys crude oil from Nigeria. Although, the PSU refiner is seeking larger supply of Nigerian crude on term contracts, but nearly 90% of imports are under spot market deals. Nigerian crude is preferred under low sulphur category for IOC refineries. In 2013-14, it imported about 8.5 million tonne of Nigerian crude.
In August, Filipe Jacinto Nyusi, President of the Republic of Mozambique, visited India and several issues including India’s energy security was high on the agenda of talks with Modi.
While state-run Indian oil companies have already invested about $7 billion in Mozambique, India has promised to invest more in the African nation. “India is eyeing a chunk of Mozambique’s 180 trillion cubic feet offshore gas reserves in its campaign to achieve energy security. Both sides are keen on expanding bilateral energy relations from hydrocarbons and coal to renewable energy resources and have also concluded a pact on non-conventional energy resources,” say officials.
The investments made by ONGC Videsh, Oil India and Bharat PetroResources in the giant gas field Rovuma Area 1 in offshore Mozambique are facing delays on the issue of exploration and production concession contracts, similar to India’s production-sharing contracts. This will be discussed bilaterally on the sidelines of the four day summit.