India turns to Angola after losing in energy auctions

India, Asia's third-largest consumer of oil, will focus on obtaining energy assets in Angola after failing to secure supplies closer to home.

"Angola is the next country where we are going to concentrate," Petroleum Minister Murli Deora said in an interview in New Delhi.

The statement comes after India was beaten by China in auctions to secure energy assets in Kazakhstan and Myanmar over three years

"We lost because our bid wasn't good enough," the minister said. "We have learned from this," the minister said.

State-run explorers from India and China have submitted bids for oil blocks in Angola as the world's two most populous nations need imports to sustain economic growth. Angola is the Organisation of Petroleum Exporting Countries (OPEC's) fastest-growing member with reserves equivalent to 11 years of India's imports.

India's energy independence has been threatened because it hasn't been able to increase production at home, where output from three-decade-old fields is declining. India will also compete for oil in Nigeria, Africa's biggest producer, and Sudan.

"India has to acquire assets overseas. There is no other way," said Prashant Periwal, an analyst at B&K Securities in London. "China has slowly and steadily spread across most of Africa and is sitting on huge resources. For fuel security, you have to take control of supplies." India has offered to build ports and railways in Nigeria and Sudan, copying tactics used by China.

The South Asian nation hosted a two-day India-Africa conference in November to discuss oil cooperation, where Deora offered to build refineries and pipelines.

India sought stakes of as much as 32 per cent in two fields in Sudan, RS Butola, managing director, ONGC Videsh, said during the November conference in New Delhi. Petroliam Nasional Bhd, Malaysia's state oil company, and Total SA, Europe's third-largest oil company, controls the areas, he said.

India, the fastest-growing economy after China, estimates that the demand for oil will rise 62 per cent over the next five years to 241 million tonnes a year, or 4.8 million barrels a day.

Deora will travel to Venezuela next month to complete an agreement to acquire a stake in fields in the biggest crude-exporting nation in the Americas.

ONGC Videsh Ltd, the overseas exploration unit of Oil & Natural Gas Corporation, India's biggest producer, will invest up to $356 million in a venture with state-owned Petroleos de Venezuela SA, to operate the San Cristobal area.

ONGC Videsh and China Petroleum & Chemical Corporation, Asia's largest refiner, are among 43 companies that will bid to explore for oil in Angola, according to state-run Sonangol SA. The African nation is offering 11 licences for fields with a potential of 9.6 billion barrels of oil reserves, Sonangol said on its website.

The bidding has been delayed after Angola extended the deadline indefinitely. The offers originally had to be submitted by March 13, according to Sonangol.

The auction will take place after elections in September, Diario Economico reported on March 19, without saying where it got the information.

Angola, which became a member of the OPEC last year, was set a daily production target of 1.9 million barrels at the group's meeting in Abu Dhabi on December 5. Angolan output increased 18 per cent last year to 1.61 million barrels a day, according to the International Energy Agency.

Crude oil futures have risen 59 per cent from a year ago on concern of supply disruptions from major producers, including Nigeria and Iraq. Crude oil for May delivery fell as much as $1.28, or 1.2 per cent, to $104.34 a barrel on the New York Mercantile Exchange. It was at $105 a barrel at 12:21 pm in Singapore.

The South Asian nation expects a decision from the Russian authorities on another stake in an exploration area in Sakhalin Island 'soon', Deora said. ONGC Videsh is keen on acquiring a stake in the Sakhalin-3 area, RS Sharma, chairman of the parent company, said on October 12.

ONGC owns a 20 per cent stake in Sakhalin-1. US's Exxon Mobil Corporation owns 30 per cent of the venture, which began pumping oil in 2005. SODECO of Japan owns 30 per cent and OAO Rosneft has 20 per cent.

India plans to resume talks with Pakistan over a $7.4 billion pipeline to transport natural gas from Iran after more than a decade of delays, Deora said.