Norway-based energy firm Equinor ASA is close to finalising a ‘framed’ contract with an Indian refiner for long-term supply of crude oil and is likely to appoint a country manager by February.
Norway-based energy firm Equinor ASA is close to finalising a ‘framed’ contract with an Indian refiner for long-term supply of crude oil and is likely to appoint a country manager by February. The company is also looking for an Indian partner in the renewable energy space.
India and the rest of Asia increasingly needs to look for stable supplies of crude oil and given the uncertainty over availability of crude, Equinor can mitigate some of the requirement, Tor Martin Anfinnsen, senior vice-president for trading and marketing, Equinor, told FE. He, however, declined to name the Indian company. “We are discussing long-term contract and have ramped up our supplies in 2018. We expect to increase our supply (to India) from 13.5 million barrels last year,” said Anfinnsen, adding that the crude oil deal will be concretised soon.
A ‘framed’ contract is one wherein buyer and seller can supply or demand, respectively, a certain number of cargoes within a given period of time. In most cases, there is flexibility for both sides. The deal is coming at a time when India has cut down crude oil imports from its third-largest supplier Iran, owing to sanctions from the US.
Equinor plans to establish an office in India soon and though it will start with less than 15 employees, it will increase the number in case requirement arises, said Anfinnsen, who is in India to attend the India-Norway Business Summit 2019.
Equinor (earlier Statoil) had presence in India through Norway’s Norsk Hydro, which had merged its oil and gas operations with Statoil in 2007. Norsk Hydro and Brazil’s Petrobras held 10% and 15% stake, respectively, in ONGC’s KG-DWN-98/2 block in the Krishna-Godavari basin off the coast of Andhra Pradesh.
However, both the companies quit the partnership in 2010 citing government delays in approving participation in the project. In 2008, Equinor signed a memorandum of understanding with state-run ONGC but no projects materialised because of the ‘above-the-ground risks’ in terms of regulations.
“So, while we look at geology and prospects of an area before venturing, we also look at the above-the-ground risks – fiscal and regulatory regime such as whether it will be a market price or a regulated price, among others,” said Anfinnsen. According to reports, Equinor is engaging with ONGC again.
“The changes we have seen in the licensing regime, which we consider right step in the direction of putting up a regulatory regime that we can relate to. That makes it easier for us to consider India for investments,” he added.
However, the company will like to see if rules for new licences or something similar can be made applicable for existing acreages as well.
Interestingly, petroleum minister Dharmendra Pradhan on Monday said the government is looking to provide fiscal incentives for hydrocarbon fields from the nomination era. The move is likely to benefit ONGC and Oil India.
The company—with a large portfolio of offshore wind energy—is also looking for an Indian renewable partner, which can complement its strengths. “India is an important and growing energy market with prospects along so many dimensions. We are already here in terms of marketing and trading, and consultancy services. But it won’t stop here and become more,” said Anfinnsen.