India's oil relations with African and Latin American nations

Mar 26, 2008 01:00 AM

by Nirmala Ganapathy

Even as India competes with China to secure oil blocks in various parts of the world, public sector oil companies, which are going head-to-head with Chinese firms, have made several suggestions to the ministry of external affairs to help them push for energy deals in developing energy-rich countries in Africa and Latin America.
In what could translate into a renewed push for India’s oil diplomacy in emerging markets, the oil PSUs have sought the MEA’s help on specific projects and have given suggestions, including setting up trade promotion activities in oil rich countries, to help companies bid more effectively for oil blocks. The idea is to tap emerging markets like Angola, Mozambique, Nigeria, Sudan, Brazil, Ecuador, Guatemala and Cuba.

The need for a more calibrated approach combining political and economic leverage with oil acquisitions was highlighted at a meeting between top officials of oil refineries, oil PSUs, including ONGC Videsh Limited managing director R.S. Butola and an MEA team led by secretary (Economic Relations) K.C. Singh. Representatives from IOC, GAIL, Oil India Limited, HPCL, Numaligarh Refineries, NRL and BPCL were present at the meeting.
Among the suggestions made to the MEA at the meeting were to take a leaf from China’s policy of combining energy investments with aid and export credits. China’s aggressive policy includes helping oil companies compete effectively by combining aid with energy investments in many African and Latin American countries. Though India does not have the resources that China can muster for such a strategy, it was felt at the meeting that there is a need to follow a more calibrated approach.

After the interaction it was decided to hold regular meetings to look at specific issues and countries where there could be a coordinated push for energy deals. The next meeting has now been fixed for April 17 where apart from the PSUs, representatives from the petroleum and other related ministries will also be present.
Aspart of the coordinated approach, the MEA is also considering roping in other PSUs which are involved in developing infrastructure in Africa and Latin America like NTPC, BHEL and IRCON to participate in these brainstorming exercises.

With the growth of the economy and the growing demand for energy, there is a view that the old style of functioning where different wings of the government acting independently needs to be replaced by a more aggressive and cohesive policy. To this effect, an energy security division has been set up within the MEA to help entities acquire energy assets abroad.
The division is also expected to function as a nodal point in the ministry for all issues related to energy security and co-ordinate with concerned ministries and support their international engagement through diplomatic interventions.

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