Discoveries of oil in newer regions in Africa such as Uganda and Mozambique, offer renewed hope for the world not running out of oil. Gulf countries often turn the tap on their production wells in knee jerk reaction to preserve and benefit from future increased revenues.
So when news comes in that more countries are joining the bandwagon of oil producers, then there is a ray of hope:
• Adequate supplies will have a soothing effect on international prices as it may prevent them from rising further.
• Future trading in oil will also stabilise as bountiful supplies will bring more comfort and relief to this trade against fear and anxiety that dominated it in the past.
The Gulf countries have realised that discoveries of oil outside its region will hurt them if they play truant with their production wells. It will now force or encourage them to produce at a constant level. OPEC might review its production policies and also take a fresh look at pricing.
Oman is one of the leading exporters of oil to the world. “We are aware of the new developments in the geo political world where producers are turning consumers and consumers, producers. We don’t see this as a threat but as a welcome opportunity to supplement Middle Eastern efforts to supply oil to the world,” said Mohammed Bin Al Rahmi, Oil Minister of Oman.
Signs of enhanced energy security
A statement like that brings great relief to the world. As USA exhibits signs of coming out of recession and oil prices set to stabilise, the world could look for better energy security at a sustainable cost.
That Petrotech became the platform for it at this opportune time is a welcome sign. This has brought opportunities for downstream companies for more manageable imports as the basket spreads and for upstream companies that pursue exploration, production and research opportunities.
Some of the oil rich countries owing allegiance to the Organisation of Oil Exporting Countries (OPEC), offered new deals to India. Some others such as Uganda, Mozambique and Sudan offered new deals in exploration and production activities. And this was even as India unveiled 46 new blocks for exploration and production under the 10th round of National Exploration Licencing Policy (NELP) because leading oil companies from USA and Europe were also participating in the conference.
India has wonderful offers to spread its energy basket by acquiring assets through its state-run ONGC’s overseas arm, ONGC Videsh Ltd.(OVL). A joint Indo-Ugandan working team is under formation to look into opportunities for cooperation in the newly opened up Ugandan hydrocarbon sector. Sudan and South Sudan are now coming to terms with the emerging opportunities in global cooperation and Indian companies are tapping the potential. Two blocks in Sudan have been offered to India. State run explorer OVL is already present in Sudan in a big way and future may see its presence expanding in this oil rich nation.
Offer to tap the TAPI pipeline
Significant development at the Petrotech conference was Turkmenistan’s renewed offer for India to participate in its near 800 km long gas pipeline that will traverse from Turkmenistan through Afganisthan, Pakistan and onto India (TAPI pipeline).
Petroleum and Natural Gas Minister Veerappa Moily said India was keen to source gas through the TAPI pipeline and hoped it would become a reality by 2017. And if that happens the current gas shortage that has plagued gas based and combined cycle power projects would become a thing of the past and projects in limbo could regenerate at competitive power tariffs.
As Finance Minister P Chidambaram observed India is becoming the major hub for global oil and gas business. The country has to brace itself to meet this challenge as issues of competitive pricing arise as consumers want oil at a lower price and producers a higher price.