From Big Dog's BB:
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Jon Harding, Financial Post
Published: Thursday, February 02, 2006
CALGARY - For the past four days, a high-powered delegation of Indian energy officials, including the second-in-command of India's petroleum and natural gas ministry, has been in Calgary trying to drum up bidders for a massive round of on-shore gas exploration rights India will put up for grabs next month.
But high on their to-do list here are also potential investments, possibly as high as $4 billion, in Alberta's vast oilsands that could help fuel India's growing thirst for oil, which is in short supply in that country.
India's interest in Alberta's energy, mirroring that of China and Japan, is another sign that the world's fastest-growing economies view the oilsands as a key source to satisfy soaring energy needs.
But as the scramble for secure sources of oil heats up globally, India, the largest democracy in the world, is not interested in taking small steps similar to those taken into Canada last year by China and more recently by Japan, said Shri Srinivasan, India's secretary, ministry of petroleum and natural gas. India is growing too quickly and the stakes are too high.
"Energy efficiency should not become an impediment in our accelerating GDP growth," said Mr. Srinivasan. "We aren't moving in small measures and we are moving quickly. Current commitments made on the world stage by Indian state-owned companies are worth $6-billion."
Mr. Srinivasan said one or more of India's four largest state-controlled oil companies -- Oil and Natural Gas Corp. Ltd., Indian Oil Corp., Oil India Ltd., and Hindustan Petroleum Corporation Ltd. -- will attempt in the coming months to lock up a sizeable oilsands position, either by partnering with an existing player or through an out-and-out takeover.
The government of India is pushing for it and would back an investment that could run as high as US$4-billion, said Mr. Srinivasan, the politician that government-appointed board members with all four energy firms report to.
"One company could invest $1-billion, or it could be two together," said Mr. Srinivasan. "It's a distinct possibility that if all four say they want in, the sum could go to $4-billion."
Greater attention on Alberta is to be expected with world oil supplies tightening, demand from emerging countries rising and prices supporting the higher costs of producing oil from the sticky, oil-soaked sands found in northeastern Alberta.
State-owned Chinese companies made three relatively small oilsands investments last year in separate deals with producers MEG Energy Corp. and Synenco Energy Inc. and with oil pipeline company Enbridge Inc.
Japan -- the world's third largest importer of oil -- sent a delegation of government officials and executives from the country's refining industry to Calgary early last month. The group quietly met with oil producers to see how to best become a customer for Canadian crude, and was not yet looking to make a specific investment in Canada.
But for India, landing a piece of the action may be no easy feat.
Quality mining leases are already taken up by large companies that don't need partners. As for the surrounding thermal projects that exploit reserves buried too deep to mine, $1-billion may buy a smaller in-situ project capable of pumping 50,000 barrels a day, according to Wilf Gobert, vice chairman of Peters & Co. in Calgary.
That's a relatively small bite beside a company such as mining giant Suncor Energy Inc., with daily production heading towards 350,000 barrels.
India and China are forging closer ties when comes to energy and recently signed a memorandum of understanding to prevent bidding up oil and gas assets worldwide.
An investment in or takeover of publicly traded Synenco, which teamed up with Chinese-owned Sinopec last year to develop the Northern Lights mining project, could therefore be one alternative being considered by an Indian firm, Mr. Gobert said.
Another potential target, Mr. Gobert suggested, is oilsands startup UTS Energy Corp., which is partnered with Petro-Canada and Teck Cominco Ltd. in a $5-billion project called Fort Hills, due to start producing 100,000 barrels of oil a day by 2010-2011.
Last September, Teck bought its 15% stake in Fort Hills, one of the last undeveloped oilsands mining projects, for $475-million. Petro-Canada ended up with 55%, Teck Cominco 15% and and UTS owned 30%.
"As for partnering, the one thing that's certain is all the big, known players with announced projects -- the Imperial Oils, Totals and Canadian Natural Resources up there -- don't need partners," Mr. Gobert said.
R.S. Butola, managing director and chief executive officer of ONGC Videsh Ltd., which is the international arm of Oil and Natural Gas Corp. Ltd., said attaining a stake in the oilsands only recently became a goal within the company's strategy to diversify its reserve base.
"The way to proceed, ideally, is we would like to have a partner and bring complementary abilities, but if we can't find one we'll keep all options open," he said. "We bring our operational skills, financial skills and engineering manpower. And Canada, you know, has a manpower shortage |
