Though India has achieved some success on this front however it urgently requires a value added strategic and competitive roadmap towards acquisition of overseas energy assets and in this background a CII study on “Energy Assets Acquisition: A Comparative Analysis of India and China Policy”, was released and discussed at this Round Table Session.

While releasing the CII Study, Dr. Kirit Parikh, Chairman, IRADe highlighted some of the key risks – these included supply side risks, price risks and technical risks. However, these risks as well as resource nationalism can be minimized to a large extent by owning resources in different countries. There should be an integrated approach for Energy Security, he emphasised.

Mr. Vivek Kumar, Joint Secretary, Ministry of Petroleum & Natural Gas; and, Mr. Prabhat Kumar, Joint Secretary, Ministry of External Affairs, also addressed the Roundtable and highlighted issues like demand & supply gaps of energy resources, strengthening competitiveness of Indian companies, sovereign fund, improvement in energy mix, etc.

Mr. G C Saxena, ED, ONGC Videsh Ltd. emphasized on world energy demand that is expected to expand by 45% between now and 2030 with an average rate of increase by 1.6%. He emphasized on building a national strategy for company acquisition, venture into unconventional assets and frontiers unexplored areas.

The CII Study has highlighted that the Chinese companies spent a record US $ 32 billion in 2009-10 for acquiring energy assets overseas versus India’s single US $ 2.1 billion investment by ONGC for the same period. India produced 8.8 million tonnes of oil and gas from its overseas assets in comparison to China’s production of 800 million barrels of oil and gas from its overseas assets for the same period. India is also facing an uneven contest to close the gap with China, which is dipping into US $ 2.5 trillion of foreign currency reserves to buy stakes in oil and natural gas fields, compared with India’s US $ 250 billion in for in foreign exchange reserves.

The CII Study therefore recommends that India needs to engage energy rich countries in a very strategic manner backed by its energy diplomacy and foreign policy for ensuring continuous availability of commercial energy at competitive prices to support economic growth. To enhance the success rate of Indian companies for overseas energy acquisition the CII study has come out with some comprehensive recommendations which can be reference point for policy makers.

Key recommendations of the study are: (i) Greater autonomy to Indian PSUs – creation of a core team and a well defined strategy for timely decision and fund allocation to acquire energy assets overseas, (ii) Sovereign energy fund for financial support to Indian companies – providing much needed confidence to compete in the global oil and gas asset market, (iii) Domestic Joint Venture for overseas investments to create financial leverages required to successfully bid for overseas investments, (iv) Promotion of private companies to enhance energy acquisition to expand India’s competitiveness in international arena, (v) Capacity building in resource rich countries by creation of a sound oil and gas infrastructure, and (vi) Energy diplomacy through deepening political exchanges as well as economic & commercial linkages with energy surplus countries.

Other recommendations are – Joint ventures with international majors; Acquiring Assets in energy rich neighbouring countries; Two imports and one export strategy; Leveraging concessional line of credit & technical assistance; and need to build a comprehensive research set up for timely and positive beneficial decision. (IPA)