News Release Details
Swap deals sought in hydrocarbon sector
New Delhi 20-Aug-2007
India and Japan are looking to use the visit of Prime Minister Shinzo Abe as a launch pad to clinch a slew of alliances in the hydrocarbon sector, including swapping of gas supplies, joint bids in overseas projects and developing strategic crude oil reserves. "Foremost on our wish list is to impress upon Japan to consider the possibility of swapping or selling gas from ONGC Videsh Ltd's blocks in Sakhalin-I in return for gas that the island nation sources from West Asia. This could be done through direct purchase by Japan or through a swap deal," said a petroleum-and natural gas ministry official who did not wish to be identified. If the proposal, first reported by Mint on 4<sup>th</sup> May, does hap-.pen, then the two countries could reduce transportation costs of gas; Japan is closer to the Sakhalin Islands and, in turn, India is closer to West Asia, from where Japan sources its gas. ONGC Videsh has a 20% stake in Sakhalin, where Exxon Neftegas Ltd is the operator. The other partners in the consortium include Exxon Mobil Corp. and Sakhalin Oil & Gas Development Co., or So deco; of Japan with a 30% interest each, RN-Astra of Russia with a 8.5% stake, and Sakha-linmorneftegas-Shelf of Russia with 11.5% stake. Energy security is a vital issue for both countries as Japan is the world's third-largest oil consumer after the US and China, while India is the world's fifth largest. OVL and Japan Oil and Gas Metal National Corp. (Jogmec) already have a MoU in place, which official’s hope can be converted into an alliance for making joint bids in overseas hydrocarbon projects. "Both India and Japan are heavily dependent on energy imports," says Ravi Mahajan, partner at accounting firm Ernst & Young. "Both countries can achieve economies of scale by partnering together for acquiring oil and gas equities overseas." Similarly, India is hoping that they will be able to convert the MoU with Jogmec into an alliance in the field of strategic crude oil reserves, whereby India can tap Japanese technological expertise. To safeguard against short term supply disruptions, the government has already approved setting up of 5 million metric tonnes (mt) strategic storage, which will be distributed between Vizag (1 mt), Mangalore (1.5 mt) and Padur (2.5 mt). "The other area of interest is in the field of gas hydrates where Directorate General of Hydrocarbons (DGH) and Jogmec may sign an MoU for the same," the official added.
New Delhi 20-Aug-2007
India and Japan are looking to use the visit of Prime Minister Shinzo Abe as a launch pad to clinch a slew of alliances in the hydrocarbon sector, including swapping of gas supplies, joint bids in overseas projects and developing strategic crude oil reserves. "Foremost on our wish list is to impress upon Japan to consider the possibility of swapping or selling gas from ONGC Videsh Ltd's blocks in Sakhalin-I in return for gas that the island nation sources from West Asia. This could be done through direct purchase by Japan or through a swap deal," said a petroleum-and natural gas ministry official who did not wish to be identified. If the proposal, first reported by Mint on 4<sup>th</sup> May, does hap-.pen, then the two countries could reduce transportation costs of gas; Japan is closer to the Sakhalin Islands and, in turn, India is closer to West Asia, from where Japan sources its gas. ONGC Videsh has a 20% stake in Sakhalin, where Exxon Neftegas Ltd is the operator. The other partners in the consortium include Exxon Mobil Corp. and Sakhalin Oil & Gas Development Co., or So deco; of Japan with a 30% interest each, RN-Astra of Russia with a 8.5% stake, and Sakha-linmorneftegas-Shelf of Russia with 11.5% stake. Energy security is a vital issue for both countries as Japan is the world's third-largest oil consumer after the US and China, while India is the world's fifth largest. OVL and Japan Oil and Gas Metal National Corp. (Jogmec) already have a MoU in place, which official’s hope can be converted into an alliance for making joint bids in overseas hydrocarbon projects. "Both India and Japan are heavily dependent on energy imports," says Ravi Mahajan, partner at accounting firm Ernst & Young. "Both countries can achieve economies of scale by partnering together for acquiring oil and gas equities overseas." Similarly, India is hoping that they will be able to convert the MoU with Jogmec into an alliance in the field of strategic crude oil reserves, whereby India can tap Japanese technological expertise. To safeguard against short term supply disruptions, the government has already approved setting up of 5 million metric tonnes (mt) strategic storage, which will be distributed between Vizag (1 mt), Mangalore (1.5 mt) and Padur (2.5 mt). "The other area of interest is in the field of gas hydrates where Directorate General of Hydrocarbons (DGH) and Jogmec may sign an MoU for the same," the official added.