The Indian government is looking to buy BP's stake in Vietnam's largest gas project as the company plans to sell several of its assets to meet the rising cleanup costs of the Gulf of Mexico oil spill.

The Indian petroleum minister and several high-ranking officials of oil & gas companies have already had meetings with the Vietnamese Prime Minister to stake claim at BP's stake. India is keen to buy this particular stake because it was originally offered to them during the 1990s but due to lack of adequate foreign exchange they had to forgo their claim on the stake. China's CNOOC and Sinopec are also likely to bid for the stake.

India has been on an international hunt for energy resources for quite sometime now. Though coal remains the backbone of the Indian power sector, India is looking to acquire some gas reserves in order to keep a tab on its rising carbon emissions. For this purpose, a separate company – ONGC Videsh – was carved out from the largest oil & natural gas company, the Oil and Natural Gas Corporation.

India's Hunt for Energy

ONGC Videsh looks for valuable oil and gas reserves in developing and under-developed markets such as Latin America and Africa. The company is an answer to China's blitzkrieg to acquire oil & gas assets overseas through strategic and economic alliances which hav worked very well in Africa.

India has, so far, failed to match China in the hunt for energy assets abroad owing to the huge difference in the two countries foreign exchange reserves. The Indian government is pulling all stops to win as many oil & gas field contracts as possible. All diplomatic and economic tools are being used to persuade governments of oil-rich nations to awards exploration contracts to Indian state-owned companies.

For this purpose the Indian petroleum minister Murli Deora visited half a dozen oil-rich nations to strike deals for oil & gas reserves. India has also restarted talks with Iran for an underwater gas pipeline. Such a comprehensive diplomatic push was launched after India lost about $12.5 billion worth of oil & gas deals to China in 2009.

While BP's loss could very well prove to be India's gain but there are serious concerns about India's growing dependence on foreign oil & gas. India's annual oil import bill went up to $85.47 billion or seven percent of its GDP in 2009-10. And even though massive renewable energy projects are in pipeline, like the National Solar Mission, the economics still largely favors the use of conventional energy resources.

In the absence of significant technological advances that could make renewable energy technologies more affordable or an international treaty which could provide substantial financial support, it seems highly unlikely that India's thirst for fossil fuels would reduce any time soon.

Hat tip: Business Standard
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The views presented in the above article are author’s personal views and do not represent those of TERI/TERI University where the author is currently pursuing a Master’s degree.