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AUG 26 2013

India seeks long-term contract for crude supply from Iraq

  • Economic Times, ET Bureau / Hyderabad
  • Created: Mon 26th AUG 2013

India has sought a 10-year contract to source crude oil from Iraq to meet the increased demand from new refineries, according to a joint statement issued on Friday after talks between Prime Minister Manmohan Singh and his Iraqi counterpart Nouri al-Maliki.

"The Iraqi side assured to meet the Indian demands. The Indian side requested better terms, including...increase in interest free credit period from 30 days to 60 days. The Iraqi side will consider after consulting authorities," the statement said.

The statement said that India welcomed Iraq's offer made during a joint commission meeting in Baghdad in July of three new oil blocks in the undeveloped Middle Furat Oil Field-Kifil, West Kifil and Merjan-on a nomination basis to Indian public sector oil companies. The Indian side "thanked the Iraqi side for prequalifying the Indian companies such as ONGC Videsh Ltd, MRPL and Reliance for participation in the Nasiriya Project Bid Round and for favourable consideration of Indian companies. At the request of the Indian side, the Iraqi side agreed to consider the pre-qualification of Indian Oil Corporation Ltd for downstream project," it said.

In the fertilizer sector, India and Iraq "agreed to actively explore the possibilities of establishing a urea plant and phosphate fertilizer units by utilizing natural gas resources from Iraq as joint ventures in Iraq," the statement said.

The two countries cemented their re-engagement by signing four pacts during the visit by the Iraqi Prime Minister, the first by a head of that nation in decades.The other pacts include one for regular diplomatic consultations on bilateral and international matters and another for cooperation on water resources management in a country that is emerging from nearly three decades of war and civil unrest.

Ties between the two countries, described as warm in the past, suffered neglect due to the 1980-88 Iran-Iraq war, the 1991 Gulf war and the 2003 US-led invasion of Iraq. Relations were brought back on track after the 2005 elections in Iraq and al Maliki becoming prime minister in 2006.

The pact on energy cooperation, which is being seen as the centrepiece of the al-Maliki visit, envisages "cooperation in upstream and downstream oil and gas activities and related infrastructure," a statement from the external affairs ministry said.

It provides for the conclusion of an exploration contract awarded to India's ONGC Videsh Ltd, offer of data in the Middle Furat group of fields for inspection, cooperation in natural gas, petroleum discoveries and training of personnel, the statement said without elaborating.

Iraq is India's second largest supplier of crude oil, after Saudi Arabia, with India now importing 12.9% of its requirements, or 21-22 million tonnes, from Iraq. As a supplier, the country has displaced Iran, targeted for Western sanctions because of its suspected nuclear weapons programme.

Iraq's deputy prime minister Hussain al Shahristani, in a speech last week in Mumbai, said Iraq's proven oil reserves were 143 billion barrels or about 11% of the world's total. A recent International Energy Agency assessment was that Iraq has around 232 billion barrels of ultimately recoverable reserves, of which only 35 billion barrels have been extracted, the Iraqi minister said. "Iraq can be counted upon as a dependable long-term supplier of crude oil" for India, he added.

Earlier in the day, senior Iraqi officials invited India to participate in the rebuilding of its post-war economy and infrastructure, listing oil and gas, housing, education, medicare, transportation, telecom and tourism as areas with huge investment potential.

The offer, coupled with a promise to provide the required security cover, was made by senior, including Prime Minister al-Maliki and Sami Raouf Taqi Al-Araji, chairman of the National Investment Commission.

"There are a lot of opportunities in Iraq for new investment," al-Maliki said in a speech. "We need reconstruction, we need sea ports... I repeat my invitation to enter this field for mutually beneficial partnership."

Al-Araji said Iraq is hoping to offer India in the "near future a treaty on protection and promotion of investment between the two countries".Baghdad will also look into complaints raised by Indian business representatives, including the need to trade in rupees and dinars and the requirement stipulated by Iraqi tenders that equipment for mega projects such as power generation plants should be sourced from the US, Europe or Japan.

Tags

Mangalore Refinery And Petrochemicals Limited Iraq Oil ONGC International Energy Agency Energy ONGC Videsh United States Saudi Arabia Prospecting Licence Mumbai Japan Iran Europe India

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