The Telegraph
Since 1st March, 1999
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Aiyar oils wheels

Washington, Jan. 30: India's first significant engagement of America as President George W. Bush gets into his second term will be initiated not as usual by the ministry of external affairs, but by the ministry of petroleum on Monday.

And it will not be in Washington, but in America's oil capital of Houston.

When petroleum minister Mani Shankar Aiyar launches a roadshow in Houston, seeking investment from America's oil giants in 20 exploration blocks offered in the fifth round of a New Exploration Licensing Policy, it will be a far cry from what happened four years ago.

Aiyar's predecessor in the previous government, Ram Naik, was also in Houston in January 2001. But he arrived during the week the then governor of Texas, George W. Bush, was being sworn in here as America's 43rd president. Any Texan who mattered was away in Washington and Naik had to cool his heels in a hotel.

In marked contrast, major oil companies are lining up for Monday's event, which has been bolstered by daily reports in the business press here about Delhi's emerging oil diplomacy.

The latest in Aiyar's recently launched drive to attain energy security for India that is attracting attention here is the creation of a joint working group between India and Ecuador to launch hydrocarbon projects and for ONGC Videsh to drill in Ecuador.

Washington considers Latin America its backyard.

India's negotiations with Russia's state-owned Rosneft Oil Company to buy 15 per cent of the discredited energy conglomerate, Yukos, have made Americans sit up. The cost being mentioned for this deal is $6 billion. Aiyar has said that 'we are working out a debt and equity proposal for buying a stake in the Russian company'. If it materialises, the part acquisition will be India's biggest investment abroad ever.

India has already committed $2.14 billion in investments by ONGC Videsh in Russia's oil-rich Sakhalin.

America's oil majors are also watching if and when a proposal mooted by Aiyar to merge India's state-owned oil and gas companies into one or two entities will come to fruition.

The mergers would rival China National Petroleum, Beijing's largest oil producer, to which India recently lost out exploration bids in Indonesia and Sudan.

The idea, however, is not to take on China. This is obvious from GAIL's negotiations to buy a 10 per cent stake in a Hong Kong-listed Chinese gas distribution company.

There is strong interest in world capitals to see if India's 'pipeline diplomacy', which is part of Aiyar's new initiatives, will move South Asia towards peace.

By winning over Dhaka's prickly leadership this month to provide a transit for a $1-billion pipeline to transport natural gas from Myanmar to Bengal, Delhi achieved what Washington has been attempting for more than a decade.

A $40-billion agreement this month under which Tehran will supply 7.5 million tonnes of liquefied natural gas annually to India for 25 years from 2009 has also drawn attention in view of the war drums being beaten here over Iran. Aiyar has also negotiated a stake for India in Iran's Yadarevan oil field.

The deals with Iran and Myanmar will be frowned upon in Washington. This makes Aiyar's meetings in Houston doubly significant in view of the influence oil giants exercise over the Bush administration.

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