Indians
in Africa have a long history spreading over centuries and
Indian entrepreneurs have been establishing industries and
trading units right from South Africa to Togo. After
centuries of colonisation the continent is now grappling
with the rule of oppressive dictators. The continent has not
achieved anything significant economically in the
post-colonial era. With living conditions being difficult,
the intelligentsia have been migrating at a faster pace to
the West.
Despite
its reservoir of natural resources, Africa has not emerged
as an economic powerhouse and has only managed to be a
cluster of least developed nations. In addition to the
neglect by the colonial masters, the sanctions imposed by
the West time and again on dictators/coup leaders have only
added to the misery of the already suffering common man in
the continent.India says it has begun focusing on oil-rich
African nations to meet its growing demand for oil and gas.
In
a political vacuum created by a policy of neglect by the
West, China, in its search for minerals and oil, is trying
to fill the void by helping any regime, be it good or bad,
that would suit its economic and political agenda. As an
emerging market and a leading developing nation India can
ill-afford to be a passive observer of this region.
With
an eye on meeting its soaring energy demands and decreasing
its dependence on Gulf oil, India is wooing Africa with a
vengeance. India imports over 70% of its crude oil needs
and, according to World Energy Outlook, published by the
Paris-based International Energy Agency, its dependence on
oil imports will grow to 91.6% by 2020. Sixty-five percent
of India’s oil requirement is met by the Gulf. Worried
about its excessive dependence on the Middle East - a region
of perennial turmoil - India has been scouting for oil
outside this region. It is in this context that Africa is
emerging as an attractive partner. The continent holds about
10% of global oil reserves; six countries - Angola, Algeria,
Egypt, Libya, Nigeria and Sudan accounting for 95% of that
reserve. Besides, it accounts for 7% of global natural gas
production.
With
10 percent of the total global reserves, Africa can emerge
as an important source of oil and natural gas for India, a
Petroleum and Natural Gas Ministry official said. Six
African countries — Libya, Nigeria, Algeria, Angola, Sudan
and Egypt — hold 95 percent of Africa’s reserves. Indian
companies are all set to buy stakes in upstream and
downstream sectors in these countries. India and Egypt have
agreed that Indian Oil Corp. and Egyptian General Petroleum
Corp. will jointly set up a new refinery in Egypt, along
with the preferential allotment of oil blocks.
Africa’s
estimated oil reserves are small compared with those in the
Gulf, but the quality of its crude - the kind found in the
Gulf of Guinea is light and sweet, ie viscous and low in
sulfur - makes it an attractive option as it is easier and
cheaper to refine than Middle Eastern oil. Moreover, most of
it is located offshore, which means decreased transport
costs and reduced risk of political violence.
As
John Ghazvinian points out - the Scramble for Africa’s
Oil, in Africa "existing sea-lanes can be used for
quick, cheap delivery, so there is no need to worry about
the Suez Canal, for instance, or to build expensive
pipelines through unpredictable countries". African oil
"is simply loaded onto a tanker at the point of
production and begins its smooth, unmolested journey on the
high seas, arriving just days later in Shreveport,
Southampton, or Le Havre."
In
a nutshell, Africa’s oil "is cheaper, safer and more
accessible than its competitors, and there seems to be more
of it every day". Africa meets 16% of India’s oil
needs. "In the next two to three years, India’s
imports from African countries are expected to touch 20-21%,
around 24-25 million tonnes," M S Srinivasan,
secretary, India’s Ministry of Petroleum and Natural Gas,
said. India is keen to acquire more oil and gas fields as
well as bag other energy projects, such as refineries,
petrochemical plants and pipelines in Africa. Besides oil,
India is also interested in importing liquefied natural gas
(LNG) from Nigeria, Algeria and Egypt.
Srinivasan
also drew attention to the growing importance of Africa in
India’s investment plans. "For the 12th five-year
plan [2012-2017], ONGC Videsh Ltd [OVL - the overseas arm of
the state-run Oil and Natural Gas Corporation] alone has set
a target of over $12 billion for investment abroad,"
Srinivasan said, adding that "a significant part of
that will go to Africa". India has strong historical
and cultural links with Africa. Besides, its campaign in
global forums to end apartheid in South Africa and secure
the decolonization of African countries is well known.
Consequently, it has enjoyed immense goodwill in the
continent.
However,
with India giving priority to ties with the US and Europe as
well as East Asia, Africa was relegated to the sidelines in
India’s foreign-policy interests. And in the process,
India ceded its influential role in Africa to another Asian
giant - China. China currently sources 30% of its oil
imports from Africa, which amounts to about 37 million
tonnes (India gets about 18 million tonnes from Africa).
Today, as India seeks to regain lost ground in Africa, it is
China that it is bumping into across the continent. And it
is competition from China that India is having to fight off
in the course of its African oil safari.
India
has indicated that its strategy for building partnerships
with Africa in the energy field is similar to the one
adopted by China. China has wooed Africa with soft loans,
development aid, arms transfers and political support to bag
lucrative oil projects. India has indicated that it, too, is
open to an aid-for-oil strategy and will back this up by
extending credit too. Soft loans at the rate of 0.5-1.75%
interest for a period of 15 to 20 years are in the pipeline.
The money can be used for infrastructure as well as for oil
sector projects.
China
is involved in a big way in infrastructural development in
Africa, where it is building roads, railways, harbors,
hospitals, stadiums and petrochemical installations. It has
offered African governments attractive lines of credit. At a
meeting of the African Development Bank in Shanghai in June,
China pledged $20 billion in infrastructure and trade
financing to Africa over the next three years. It has
promised to double development assistance to Africa by 2009.
Having already written off debts of almost $1.5 billion in
the continent, it has promised to write off a similar amount
again.
Indian
officials point out that India has already tried the
aid-for-oil strategy in Africa. In 2005, Mittal Steel and
ONGC announced an investment of $6 billion to establish a
refinery, power plant and railway lines in Nigeria through a
joint-venture company, ONGC-Mittal Energy Ltd (OMEL). Under
the mega-deal between ONGC and the Nigerian government, OMEL
would create the infrastructure, while Nigeria would give it
oil blocks.
ONGC
has pumped $2 billion into eight countries in Africa,
including Sudan, Libya, Egypt and Nigeria. The consortium of
Indian Oil Corporation (India’s biggest state-run refiner)
and Oil India has invested $125 million in Libya, Nigeria
and Gabon. It has two blocks in Libya, and one block each in
Nigeria and Gabon. GAIL (India) Limited has entered into a
joint venture for a gas distribution project in Egypt and
has signed up for pipeline and city gas projects in Libya.
OVL,
which is present in three blocks in Sudan and on its way to
joining a fourth, has applied for two more blocks in the
country, Sudanese energy minister Awad Ahmed al-Jaz
announced in Delhi. OVL wants to buy a 30% stake from
Petronas of Malaysia in the massive Block 8 in the Blue Nile
Basin, northeast of Sudan’s Melut Basin. Petronas Carigali
Overseas has a 77% interest in the block, while the
remaining equity is shared between Sudan’s national oil
company Sudapet (15%) and High Tech Group (8%). OVL managing
director R S Butola said the company is also keen on taking
the unallocated 32.5% stake in Block B.
GAIL
announced it is looking for a stake in a LNG plant in
Nigeria and is interested in setting up a gas-based
petrochemical plant in this country. It has announced that
it will supply gas from Nigeria to Darfur. Last month, India’s
Prime Minister Manmohan Singh visited Nigeria, the first
Indian premier to do so in 45 years. The two countries
signed an array of agreements and took steps to deepen their
energy and economic partnership that would include new oil
exploration blocks and infrastructure deals.
Recently
IOC has announced plans to raise its annual Nigerian crude
imports from the current 2 million tonnes to 3 million.
"We are in talks with Nigeria and some other African
countries for exploration and production blocks," IOC’s
business development director B M Bansal was quoted as
saying. IOC is keen on buying stakes in refineries in
Africa, but only if the refinery comes as part of a package
that includes an oil or gas block. IOC has also offered to
invest in a gas-based petrochemicals plant and to set up a
LNG facility in Mozambique.
India
has signaled that it was interested not just in buying
Africa’s oil but in participating in all phases of its
production, refining, storage and transport. Moreover, it
clarified that while gaining from Africa’s oil, it would
give back, and it would contribute to capacity building.
India stands ready to share its experience with its African
partners in the hydrocarbon sector, from exploration to
distribution through refining, storage and transportation.
Over a period of time, investment in this sector will
directly assist in the building up of a trained and skilled
workforce capable of efficiently running the assets."
In
its competition with China for Africa’s oil, India finds
itself at a disadvantage. It lacks China’s deep pockets,
which have proved crucial in swinging deals in Beijing’s
favor. In Angola, for instance, India had almost clinched a
deal with Anglo-Dutch energy giant Shell to purchase a 50%
share in an oil-exploration project. It had offered $200
million in aid. But China offered Angola $2.3 billion. The
deal went to China.
