Report ONGC Videsh in Africa 15th February, 2011 SIS, JNU Mr.

Ajay Kumar gave an overview of the ONGC Videsh activities in Africa. He started his presentation by talking about the global and Indian economy. In 2009 itself the world output contracted by 0.6% as advanced economies like Russia, Japan, Germany, UK (in ascending order) declined by 3.2%. On the other hand there is developing Asia that registered 6.6% growth in 2009, with China and India at 8.7% and 5.7% respectively. Indias GDP grew by 7.4% in 2010 and is expected to grow by 8.5% in 2011. India sustained growth even in the face of weak recovery in advanced economies. The key drivers to sustain growth are Public and Private consumption. Indias consumption of Hydrocarbon products also increased at CAGR of 5.1% from the financial year 2006 to 2010. Consumption of all products has increased during this period except for Naphtha and Fuel oil, partially substituted by new gas supplies. He said that India is currently known to have only 0.44% of worlds crude oil while the rest of the world has 22.35% and OPEC has 77.21%. The natural gas reserves of India is estimated at 0.58% while the rest of the world has 15.21%, Iran at 15.79%, Qatar at 13.53%, Russia at 23.67% and the largest is with FSU at 31.22%. Besides if we look at the energy consumption of India by fuel type in 2009, it is 52% coal, 10% natural gas, 32% oil, 5% hydroelectric and 1% nuclear which is a large share of the consumption of the world by fuel type in 2009- 29% coal, 24% natural gas, 35% oil, 7% hydroelectric and 5% nuclear. By looking at the world energy consumption by fuel type, it is seen that hydrocarbons (gas, oil and coal) have stayed dominant and are going to stay dominant till 2030 at least. After giving this information he talked about OVLs growth trend. It has 34 oil and gas projects in 15 countries all over the world including Africa, Latin America, and South East Asia. The OVL has its own interests in investing into Africa. Africa is the fourth largest hydrocarbon province in the world at 127.7 after Middle East at 754.2, South and Central America at 198.9, Europe and Eurasia at 136.9. The company has in total five exploration projects in Africa- one in Libya, two in Nigeria, one in Egypt and one in JDZ: NigeriaSTP. There are also two producing projects which are in Sudan (one of them is the Greater Nile project). The main countries that the company is interested and where there is discovery of oil are Angola, Nigeria, Equatorial Guinea, Ghana, Sierra Leone. There also has been discovery gas in Gulf of Guinea that the company would be interested in. Mr Kumar also pointed at the number of misses in Africa by the company in various projects in different countries like Akpo in Nigeria and Block 32 Marathon in Angola which they lost to the Chinese company CNOOC. In addition to this they also missed some projects in Angola, Equatorial Guinea and Gabon. Chinese companies are investing hugely in many African countries which can also be seen here as a competition to India. He then talked about OVLs Africa experience in Sudan, Libya, Nigeria and Egypt. OVLs CSR activities in Africa also are in Health and Education & Sports. In Sudan, the company

has opened two clinics with four doctors and fifteen staff. 114, 382 approx. is the total number of patients treated during 2006-2009. Apart from free medical camps, Jaipur Foot Limb camp has been organised regularly through the rotary club Khartoum. OVLs experience in Africa also includes aid and assistance- donation of clinical equipment to hospitals, financial support to Hope Sudan organisation, donation to schools medicines donated to Darfur flood victims. In the field of education there has been distribution of school kits to 29 schools, 12 in Khartoum, 1 in Port Sudan and 16 in concession area from 2005-07. Black boards and other class room material has also been distributed to Khartoum University, which has been totally destroyed during the war. During 2003-05, the agricultural aid was given in the form of planting, ploughing and seeds benefiting 1600 poor families with an expenditure of US $ 100,000. As for the future focus of ONGC in Africa, Mr. Kumar said that there would be focus on deepwater discoveries in West Africa. The coastal countries from Sierra Leone to Ghana (mostly Anglophone countries) are extremely important because these countries are good democracies; they have regular elections and have stable governments. In East Africa, there would be focus on Mozambique, Uganda which has a big oil discovery and Tanzania is also one area which is potential. Mr. Kumar also listed a number of challenges that are faced while working in Africa. These include growing resource nationalism, high cost of acquisition, technology intensive resource, logistically different areas, experienced human resources, unstable fiscal regime, political risk and environmental stringency/ costs. These have to be taken care of while working in these countries some of which are really difficult to get into and work in. In the end he concluded by saying that the observations show that hydrocarbons is to be a dominant province in the energy basket in the future and asset/ country specific choice is to govern its presence in future.