Pradhan pushes for increased Indo-African synergy

Pradhan said the government is keen to move towards a geographically diversified energy basket, and this has resulted in India’s greater focus on Africa as a vital region for sourcing petroleum products in coming years.

Pradhan pushes for increased Indo-African synergy

Minister of state for petroleum and natural gas, Dharmendra Pradhan on Thursday—during the 2-day 4th India Africa Hydrocarbons Conference that began in New Delhi on January 21st—made a strong pitch for collaborative between India and Africa.

In his inaugural address, Pradhan said the government is keen to move towards a geographically diversified energy basket, and this has resulted in India’s greater focus on Africa as a vital region for sourcing petroleum products in coming years. The minister expressed the hope that India, apart from being an attractive market for crude oil and gas, would be an able partner for African nations across the industry value chain.

“I am indeed overwhelmed to see you all in Delhi. On this wintry morning in Delhi, your presence brings so much warmth. Africa has always been close to our hearts. Our relations are multi-dimensional. Our civilization linkages have been reinforced by decades of close engagement at the level of our political leadership as well as our peoples. We are both a vibrant mix of cultures, religions and languages. Having similar populations of over a billion each, we together account for one-third of humanity. We both have young populations – with two-thirds of our populations being below thirty five years of age. We therefore, share the same dreams, the same aspirations.”

The theme of this 2-day 4th India Africa Hydrocarbons Conference is “Energizing the bottom of the pyramid – Together towards tomorrow”.

It is pertinent to note here that India and African nations have always enjoyed strong historical, political and cultural ties.  India is importing close to 78 percent of its crude oil requirements while several African nations are rich in hydrocarbon resources.  This serves as the catalyst to encourage proper cooperation beyond the hydrocarbon energy sector where investment capital from India can be secured in allied projects for development needs of African countries.

India’s Prime Minister Narendra Modi has already announced his government’s intentions to work closely with African nations and enhance co-operation between the two sides thereby moving together on the road to progress and prosperity. Less than three months back, Modi had hosted the largest and most successful ever India-Africa Forum Summit which saw the presence of 41 African Heads of States and Governments.

The Summit raised India-Africa engagement to new heights. Prime Minister remarked at the Inaugural Ceremony of the Summit – “African energy helps run the engine of the Indian economy and its resources are powering our industries.” We are indeed grateful to Africa for that.

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In line with Modi’s agenda, Pradhan said, “The 4thIndia Africa Hydrocarbons Conference will help align and initiate further collaboration between India and Africa.”

This Conference will provide a platform to discuss specific opportunities in the hydrocarbon space. Commenting on the theme of the conference, Pradhan said the theme draws inspiration from PM’s words at the Forum Summit –“When the sun sets, tens of thousands of homes in India and Africa become dark. We want to light up lives of our people and power their future.”

This two day meet on Jan 21st-22nd is aimed at exploring opportunities, bridge boundaries and boost bilateral trade across the hydrocarbons value chain. This being the fourth meeting between India and Africa is a continuation of the discussion revolving around synergies between India and Africa and will strengthen the ties between the two.  The partnership would enable India to enhance its energy security while nurturing Africa’s Hydrocarbon’s sector growth on several fronts like capacity building, environmental sustainability, human resource development and employment generation.

In this Conference, 22 African nations are participating of which nine are being represented by their Ministers.  These countries are Algeria, Morocco, Mauritius, Liberia, Sudan, South Sudan, Tunisia, Senegal and Equatorial Guinea.

The 4th India Africa Hydrocarbon Conference (IAHC) aims to explore opportunities, bridge boundaries and boost bilateral trade between India and Africa.  The Conference will provide a global forum for Energy Ministers and Delegates of African Countries to share their vision and chart out the road map for extended energy cooperation in the coming days.  The Conference will bring together leaders in the worlds of energy to network with other influential peers, gaining new perspective by hearing distinguished CEOs from India and abroad, exchange expert insights, and develop strategies for the next big steps towards enhanced energy cooperation.

The third Indo-African Summit was held in New Delhi in October, 2015, the key areas were outlined in which India and Africa will work together.  Energy security stands as one of the major focus area of the bilateral ties.  Africa with its huge hydrocarbon resources and India with its rapidly rising demand of huge human resource, experience, technology and ability to invest capital are natural partners, poised for future growth.  African imports play a significant role in meeting the demands of India to an extent that Nigeria stood as the second largest supplier of oil to India in June, 2015.  Owing to rich natural resources in Africa, there are opportunities at various levels to be partners in growth with India which is also visible in Indian Government Policies, with a push to the Indian National Oil Companies to enhance their partnerships with African nations.

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Ind0-African Co-operation Over the past two decades

The African hydrocarbon sector has been expanding rapidly as also the interests of Indian oil companies in the continent. It is clear from our crude import figures that Africa has played an important role in India’s energy security. We imported 32 Million Metric Tonnes of crude in 2014 from Africa, including 3 Million Metric Tonnes from North Africa and 29 Million Metric Tonnes from West Africa, mainly from Nigeria and Angola. This constitutes approximately 16% of our consumption. This is going to increase in the coming years.

As a matter of policy, the present government is keen to move towards a geographically diversified energy basket. This has resulted in India’s greater focus on Africa as a vital region for sourcing petroleum products in coming years.

There are several reasons to believe that Africa will be the perfect partner for India in the hydrocarbon space. India’s scarcity of domestic energy resources can be offset by Africa’s surplus energy reserves – which accounts for about 15% of current proved accessible global oil reserves.

Over the past two decades, the African hydrocarbon sector has seen rapid growth. The new discoveries in Africa have seen oil reserves grow by over 100% and gas reserves grow by over 55%. We believe that this will greatly improve Africa’s position as an exporter of not only oil but also gas.

On the other hand, India has emerged as the fastest growing major economy in the world today with over 7% GDP growth. As per estimates by World Bank, IMF and others, this growth trend is expected to continue. Accordingly, India’s energy consumption has been constantly increasing. The Compound Annual Growth Rate (CAGR) of Indian primary energy consumption in the last 15 years has been about 7.3% as compared to a global CAGR of 3%.

According to the International Energy Agency’s (IEA) World Energy Outlook 2015, India will contribute around 25% of the growth in global energy demand and would thus be the single largest contributor to energy growth globally.

India import nearly 78% of its crude oil& 35% of its natural gas requirements. However, while being deficient in natural hydrocarbon resources, India has built significant capacities and capabilities in products and processing of hydrocarbons.

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Despite being a net importer of crude oil, India, with 23 refineries, has become a net exporter of petroleum products by investing in refineries designed for export. India has emerged as a refining hub with the fourth largest refining capacity in the world with 4.5% of world share.

Indian refineries have the highest complexity and can refine almost 180 kinds of crude. In 2014-15, India exported 63 Million Metric Tonnes of petroleum products to more than 55 countries around the world. Apart from its strong presence in the downstream sector, India has seen sizeable development in the midstream sector. We have ambitious plans to develop a National Gas Grid and expand pipelines for petroleum products.

Indian upstream companies have been active in Africa’s hydrocarbon sector. In Mozambique, Sudan and South Sudan, Indian companies have major presence in exploration and production segments with total investments of nearly US$ 7-8 billion now. Indian companies also hold interest in key oil and gas projects in Gabon, Libya and Egypt.

“We are confident that India, apart from being an attractive market for crude oil and gas, would be an able partner for African nations across the industry value chain. One area of clear promise is the downstream sector, where our core capabilities, downstream technology, would be attractive as we have firmly established ourselves as a strong player in refining and petrochemicals,” Pradhan said during the inaugural address.

During India Africa Forum Summit in October 2015, Modi has also announced 50,000 scholarships for African students and research scholars. This includes scholarships in petroleum sector specific R&D and training. India has also offered a concessional credit of US$ 10 billion over next 5 years for African countries. We have good scope to tap into this line of credit for oil and gas projects in Africa.