By Anayo Korie / Ag Energy Editor
Indian government has signified interest to invest in Nigeria and other African oil and gas countries as part of the agenda to boost the oil sector under the umbrella of South–South Cooperation.
The investment by India is expected to be one that will boost oil and gas, thereby dousing price war between Africa producers and their Gulf Counterpart.
India’s oil minister, Jaipal Reddy, said in Abuja: “Today, over 21.5 per cent of India’s crude oil imports came from Africa. In the years ahead, we seek a lot more crude oil and liquefied organic gas from Africa.”
According to him, India has been facing a substantial energy deficit and imports about 80 per cent of its crude oil needs and is scouting for hydrocarbon assets that can boost its energy safety in the long term.
“Our firms are also interested in farm-in possibilities in creating blocks, especially in Libya, Algeria, Egypt and Nigeria, adding that firms like GAIL (India) Limited, Petronet LNG and Indian Oil Corporation (IOC) are interested in sourcing all-natural gas on a long-term basis from Africa,’’ he added.
There are fears that some African producers such as Nigeria and Angola, now faced with precarious finances due to plunging oil prices, are struggling to make inroads into Asia, which is a Middle Eastern stronghold.
Low operating costs in Saudi Arabia, Kuwait and the Emirates allow these countries to offer bigger discounts while African exporters face higher transport costs and are more exposed to fluctuations in freight rates between Africa and Asia given the relative advantage of Middle Eastern shipping distances to Asia.
West African producers traditionally sold most of their oil to North America and Europe, but exports dwindled given the increase in domestic oil production in the United States via Shale oil gas development and higher output from nations outside the Organization of the Petroleum Exporting Countries (OPEC).
This has been a big setback for West African oil producers but the news about India’s state-run companies looking to acquire stakes in oil and gas blocks in Africa comes as a relief to African exporters.
With Africa’s economic development picking up momentum and a drop in global oil prices by 46 percent in 2014, India is a welcome option for African oil produce.
Source : Independent