ONGC builds war chest for Africa

ONGC builds war chest for Africa

ONGC Videsh, the overseas arm of state-owned Oil and Natural Gas Corporation, is planning to invest around $12 billion in Africa over the next three years.

The move follows a slump in global crude prices, which has opened up the opportunity to scout for foreign assets.

Besides, securing overseas assets is crucial to meet the country’s energy demand that is expected to grow at a faster pace with the economy poised to take off to a higher trajectory.

Oil prices have more than halved in 18 months and are almost at $40 per barrel now.

The International Energy Agency’s (IEA) World Economic Outlook 2015 projects that India will see the fastest growth in energy demand by 2040 as China effects structural changes to its economy such as a shift to services.

The IEA expects global energy demand to grow by a third from the current levels by 2040. India’s demand is expected to double even after energy-efficiency gains. The overall energy intensity of the economy is expected to reduce to 0.05 tonnes of oil equivalent (toe) per $1,000 of the gross domestic product (GDP) in 2040 from 0.11 toe per $1,000 of GDP in 2013.

Tonnes of oil equivalent means the amount of energy released by burning a tonne of crude oil.

The country’s energy uses will more than double to reach 1,900 million tonnes of oil equivalent (mtoe). Led by coal, the share of fossil fuels in energy mix will rise to 81 per cent by 2040 from 72 per cent in 2013.

ONGC is targeting oil and gas asset acquisition worth $10-$12 billion over the next three years.

OVL had recently bought a 15 per cent stake in a unit of Russia’s OAO Rosneft, the world’s largest publicly traded oil company, for $1.3 billion.

Last month, OVL managing director Narendra K. Verma had said the company was looking at investment opportunities in Angola, Algeria, Equatorial Guinea and South Africa.

“We hope to double our energy output from the investment made in the continent in the next 3-4 years,” he had said.

ONGC is also in talks with Indian Oil Corporation and Oil India to bid for assets.

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