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India turns attention to East Africa's oil and gas blocks

India could help to satisfy its growing demand for oil and gas by turning its attention to East Africa - one of the new global energy hotbeds.

Over the past decade, several East African countries have placed an emphasis on expanding their oil industries, with Kenya, Tanzania, Uganda, Rwanda, Burundi, Ethiopia, Somalia and Mozambique all benefitting from the rollout of new technology intending to make discovery and distribution simpler.

Vast reserves

In Kenya alone, it is estimated that the country's crude oil reserves now stand at at one billion barrels - something that has been attributed to the subdivision of sedimentary basins into smaller units, and helped by Kenya increasing the number of oil blocks from 37 to 46.

Now, several countries are eyeing the blocks in both Kenya and its neighbouring countries, with India one of the most significant potential investors.

As well as acquiring stakes in oil and gas blocks, Indian state-run companies are also aiming to form new joint ventures and also supply all-natural gas to help meet increasing fuel demand.

According to S. Jaipal Reddy, India’s oil minister, 21.5 per cent of India’s crude oil imports are from Africa, but in the coming years the Asian country will be seeking far more crude oil and liquefied organic gas from there, particularly East Africa.

Plugging the deficit

India is currently faced with a significant energy deficit, importing around 80 per cent of its crude oil needs, and is now scouting for hydrocarbon assets that can help to boost its energy safety in the long term.

In East Africa, the likes of Full Tensor Gradionometry (FTG) and 3D seismic surveys have increased the precision with which subsurface structures that trap hydrocarbons can be targeted, which is turning the region into a real hydrocarbon production hotspot - something India is hoping to tap into.

Furthermore, Mr Reddy noted that some Indian firms are interested in farm-in possibilities in creating blocks, with companies such as GAIL (India) Ltd, Petronet LNG and Indian Oil Corporation (IOC) all keen to source all-natural gas on a long-term basis from Africa.

"There is no ceiling on imports from Africa. We are attempting to maximise our oil sources in Africa," he explained, without specifying exactly which projects Indian oil providers had been targeting, or the extent of the investment.

Nevertheless, it appears that several new relationships between East African nations and India are on the cards, with seemingly unlimited potential for oil and gas deals.

"With Africa's economic development picking up momentum and its power demands increasing, India is keen to develop into a reliable supplier of petroleum merchandise to Africa," Mr Reddy noted.

With East Africa now viewed as the world's top hydrocarbon exploration area and over 250,000 square kilometers of land mass currently unexploited, the upward swing is likely to continue in the years ahead as India and other nations create new, long-lasting relationships with the area.

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