Page 6 - AsianOil Week 04

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India strives to reduce reliance on Middle Eastern oil
POLICY
INDIA’S bid to reduce its reliance on imports of Middle Eastern crude, amid increasing tensions in the region, has seen the South Asian giant turn to both Russia and Brazil for new supplies.
India relied on imports to cover 84% of its demand in 2019, with the majority of them com- ing from the Middle East. The country imported 4.48mn barrels per day last year, with Middle Eastern oil accounting for 2.68mn bpd. But while India’s overall oil imports fell by 2.1% year on year in 2019, supplies from the Middle East- ern shrank by 10%. This saw the region’s share of the Indian crude import market dwindle from 65% in 2018 to 60%.
India has become acutely aware of its energy vulnerabilities and, while it has urged its upstream companies to invest more in local production assets, the central government has also focused on finding new supplies of foreign oil and gas. As part of this effort, New Delhi approved of a memorandum of understanding (MoU) on energy co-operation with Brazil last week that will focus on the upstream as well as liquefied natural gas (LNG) opportunities.
Minister of Petroleum and Natural Gas Dhar- mendra Pradhan tweeted on January 23: “India is diversifying its crude oil supply and our oil companies have expressed interest in sourcing
more crude from Brazil if offered favourable commercial terms.”
The MoU was signed during Brazilian Presi- dent Jair Bolsonaro’s visit to India, which started on January 24.
Beyond the deal with Brazil, India’s largest crude oil importers – state-run refiners India Oil Corp. (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) – have reportedly begun trying to close deals for new supplies of Russian crude.
IOC intend to buy as much as 40,000 bpd of Russian crude from state-run Rosneft, Reuters quoted an unnamed industry source on January 22 as saying. “It is almost certain to sign a con- tract, a proposal has been sent to Rosneft,” the source said. “These are optional volumes. [IOC] will see the pricing then will decide when to draw the volumes.”
BPCL’s head of refineries, R Ramachandran, told the newswire that the company had already bought Urals crude from traders and was always interested in supplies where “the price is right”.
He said: “We have the capabilities to process Russian oil. We are evaluating procuring Russian crude directly from the producers.”
While HPCL was said to be planning a smaller deal, the newswire gave no details.™
ONGC’s PEC round attracts 12 bidders
PROJECTS & COMPANIES
INDIA’S state-run Oil and Natural Gas Corp. (ONGC) has reportedly received offers from 12 contractors interested in boosting production at 50 of its small and marginal fields.
ONGC invited bids for production enhance- ment contracts (PECs) at 64 onshore fields, which were split into 17 contract areas, in June 2019.
Bidding closed on January 17, with local newswire PTI quoting unnamed sources as say- ing that the round had attracted 28 bids for 50 fields in 14 contract areas. PTI said Duganta Oil and Gas had bid on four areas, while Orissa Ste- vedores, Priserve Infrastructure and Udayan Oil Solutions had each bid on three areas.
Under the terms of the PECs, contractors will earn a share of the oil and gas produced above a pre-agreed baseline and will enjoy a 10% dis- count on royalties.
PTI’s sources said contracts would be awarded based on how attractive ONGC found the revenue-sharing offers to be. The successful bidders will receive a 15-year contract, with the
option to extend by five years, that will allow exploration for all hydrocarbon types.
The sources added that ONGC had sweetened the deal by agreeing to grant complete marketing and pricing freedom to the winning bidders.
ONGC launched the bid round as part of a drive to improve its beleaguered oil production, which slumped to a 16-year low of 422,500 bar- rels per day (bpd) in financial year 2018-2019. ONGC is not alone in struggling to raise pro- duction, with national crude output recording its eighth consecutive year of declines in 2018- 2019, when oil production fell 4.15% from the previous financial period to 689,000 bpd.
New Delhi has previously considered pri- vatising controlling stakes in 11 of ONGC’s producing fields in an effort to encourage greater investment in smaller fields. The state major resisted the move and the PEC round was devised as a means of encouraging private investment while leaving field ownership in ONGC’s hands.™
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w w w. N E W S B A S E . c o m Week 04 29•January•2020