Friday, January 27, 2006

India Changes Tune, Will Now Take $6 Billion Plunge Into Nigerian Waters

Reversing itself within just a month's time, the Indian government said Thursday it has approved a total of $6 billion in new investments in Nigeria's oil and gas industry, the generally reliable BusinessDay Online site reported.

The news must have been welcome to Nigerian President Olusegun Obasanjo, who is in Davos, Switzerland at the prestigiuous World Ecionomic Forum to make the case for his country as a safe haven for investments from Europeans, Asians and Americans despite a growing militancy among ethnic Ijaws in the Niger Delta, who have taken hostages and blown up pipelines and flow stations belonging to Royal Dutch Shell in recent weeks, and also robbed an Agip office of some $38,000 in cash three days ago. The militants have vowed to attack more oil facilities if demands for the release of the disgraced Bayelsa State governor and an Ijaw militia leader are not met.

For investors, the intiguing portion of a story on the matter was that Nigerian oil minister and OPEC President Dr. Edmund Daukoru is going to India in the first week of February for a three-day visit intended to "smooth things over" with the Indians, who balked at allowing its national ONGC oil company to invest $2.3 billion in an offshore concession owned by Nigeria's former defense minister.

While that deal is not back on track - a Chinese government-owned company seized the opportunity almost as soon as India pulled out - Indian money will apparently be building a refinery and other badly-needed infrastructure projects in Nigeria.

Shareholders of ERHC Energy may also wonder if Daukoru may support an Indian bid to take over ERHC during the visit.
ERHC has already teamed up with Essar Oil of India in one ill-fated project, and Essar or another Indian company could do so in a buy-out of ERHC's 30 percent interest in the entire Joint Development Zone.

January 27th, 2006
India to invest $6bn in Nigeria’s oil & gas sector

The Indian government may have relaxed its opposition towards Indian companies investing in Nigeria's oil and gas sector as the companies are now set to invest $6 billion (about N798 billion) into the sector.

Indian High Commissioner to Nigeria Subramaan Viswanathan disclosed this in Lagos yesterday during India’s 57th Republic Day anniversary celebration.

The Indian government had earlier turned down requests of some of its companies to invest between $1 billion and $2billion in the energy sector on the grounds that it did not consider the investment good enough.

The Oil and Natural Gas Company of India (ONGC) was to take up 45 percent equity stake in OPL 246, Akpo Field which belongs to South Atlantic Oil Company.

The ONGC last year bidded for some oil blocs in Nigeria and it is still showing keen interest in the sector.

Viswanathan who disclosed the new investment, said that a bigger body, the Oil and National Gas Company of India-Mittal Energy Limited (OMEL) was discussing with the Ministry of Petroleum in Nigeria to smoothen out rough edges prior to the planned investment.

He added that a memorandum of understanding (MoU) had been signed between the two countries concerning many areas of cooperation.

Following the development, the Minister of State for Petroleum, Edmund Daukoru, has concluded plans to visit India between February 2 and 5. The essence of the trip is to have some discussion with the Indian government with the aim of smoothening some gray areas.

He said the OMEL group, which includes Mittal, the biggest steel conglomerate in the world, would build a private refinery in the country, most probably in Port-Harcourt, and two power projects. Viswanathan said the details were being worked out between OMEL and the Nigerian Ministry of Petroleum.

The Indian high commissioner also spoke about the level of trade between Nigeria and his country. According to him, total trade between the two countries amounted to about US$3.0 billion, (about N399 billion) in 2005.

He said Nigeria's export, mostly crude oil to India during the period, was about $2.5 billion, (about N332.5 billion), while India's export to Nigeria was between $500-600 million, (about N66.5 to79.8 billion) in 2005.

Viswanathan predicts that trade between the two countries would increase by 10 percent this year.

He recalled that India opened up her economy sometime in 1991, getting more absorbed into the global system.

It will be recalled that the Austrian government is making a commitment of $5 billion, (about N665 billion) in the oil and gas sector of the economy.

The combination of both the private and public sectors from Austria’s plans to invest in the construction of a 2000 megawatt electricity plant with gas infrastructure, one million tons fertilizer plant, integrated Liquefied Petroleum Gas (LPG) or cooking gas bottling plant and two or three trains of LNG plants as well as investment in coal mining.

He however said that India's economy was predicted to become the third largest economy in the next 25 years.

According to him, India is one country which some years ago found it difficult to get enough grains to feed its people; but the situation is now reversed as the country has become a major exporter of food grain.

India, according to him is a business friendly country and she believes the whole world can work together.

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