When Ranbir Singh Butola took over as the managing director of ONGC Videsh Ltd (OVL) in 2004, the overseas subsidiary of Oil and Natural Gas Corporation (ONGC), his brief was to expand India’s oil and gas footprint. Not surprising then that Butola has spent the last six years living out of a suitcase, logging countless air miles and crisscrossing as many as four continents in less than a fortnight. Butola’s shopping bill adds up to a whopping Rs 54,000 crore, but he isn’t done yet. According to Petroleum Minister Murli Deora, India’s oil PSUs, led by OVL, have invested nearly $12 billion in acquiring overseas assets, taking the country’s share of oil and gas production from these assets to 8.8 million tonnes in 2009-10.

The rush for oil assets is understandable. Already, the nation’s oil import bill has grown six-fold in the past decade to $85.47 billion, equivalent to almost 7 per cent of the country’s GDP. As the Indian economy continues to expand, oil imports are expected to account for 90 per cent of the country’s requirement by 2030, up from 70 per cent at present. As India’s economic growth depends on a steady supply of oil and gas, it’s imperative for the country to secure oil assets overseas. Explains Deora: “Acquisition of exploration and oil producing properties overseas is a key strategy to enhance oil reserves in the country and reduce our dependence on world’s oil reserves.”

The Planning Commission has earmarked an investment of Rs 45,000 crore in the 11th Plan for the acquisition of oil and gas assets. According to Butola, this entitles him to Rs 9,000 crore annually; however, a lot also would depend on the opportunity and India’s ability to leverage it. Led by Butola, OVL carried out India’s biggest energy acquisition-the London Stock Exchange-listed Imperial Energy for an estimated cost of $1.4 billion. The acquisition, says Butola, will give OVL access to around 80,000 barrels per day by the end of 2011, from the current 7,000 barrels per day (bpd) of oil. “Imperial has in place reserves of about 3.4 billion barrels of oil equivalent and this takeover would enhance ONGC’s reserves by around 20 per cent,” says the OVL chief.

”Acquisition of exploration and oil producing properties overseas is a key strategy to reduce our dependence on world’s oil reserves” – Murli Deora, Petroleum Minister

Butola, however, agrees that India has made a late entry. “All the national big players in various countries have taken the good acreages in the oil rich regions of the world.” According to Vivek Pandit, director, energy, at FICCI, China has tactfully used its offer of technological assistance and infrastructure-building capability to strengthen its presenc

e in Africa. “Their plan was simple. Give us oil and we wi

ll build your roads, highways, refineries and power projects. The value proposition clicked,” says Pandit. So while China was grabbing the best assets in Africa, OVL’s role remained limited in those crucial years to delivering a few services, with no power to buy property in foreign shores. The power to acquire came only in 1977, with the Navratna tag, but by then India had lost the edge and over the years, China has outpaced India i

n the global quest for energy resources. Armed with a $300-billion sovereign fund, Chinese companies spent a record $32 billion on oil, coal and metals assets abroad. The result: India lost vital deals to the dragon as in the case of a Canadian company with oil fields in central Asia preferring a $4.2-billion takeover bid by China National Petroleum Corp to a

$3.6-billion offer by OVL.

The Government, of course, is quick to explain these losses as a matter of fixing priorities. “We are making efforts to diversify our basket of crude oil imports,” says Sunil Jain, joint secretary (international cooperation), Ministry of Petroleum. “It is not that we lack a strategy or foresight. Each country has its own priorities. Our priority is to ensure that India gets sufficient crude to run its refineries.”

Source: http://indiatoday.intoday.in/site/Story/114809/FROM%20THE%20MAGAZINE/india-hunts-for-oil.html