An Indian delegation is in conversation with both the United Arab Emirates and Kuwait to form two individual joint ventures, in order to acquire oil and gas from other countries, according to India's Oil and Natural Gas Corporation.
Indian oil minister Dharmendra Pradhan led separate discussions with the energy ministers of both countries about the interest in forming an alliance within the oil and gas sector. According to Dinesh K Sarraf, chairman of ONGC, the UAE and Kuwait not only possess plenty of oil, but the countries have an excess of cash to use in an endeavor like this one.
If a deal does result, state-run firms in India would join separately with those in Kuwait and the UAE. This joint venture would be beneficial for India since the company imports almost 80 percent of the oil it consumes from West Asian countries, according to the Economic Times. The country hopes to increase its stagnated oil exports and has been looking for a partnership like this overseas. India hopes to acquire upstream assets from both Kuwait and the UAE.
Advantageous for all parties involved
India isn't the only country that will benefit, however. Kuwait and the UAE have long been the country's vital trading partners. These joint ventures will bring both profit, as well as understanding within the energy sector between the three countries. For Kuwait and the UAE, the interest in the union is due to the potential for future refineries, retailing options and petrochemicals.
This proposed joint ownership of oil and gas products is not uncommon. Energy partnerships usually occur due to the high-risk involved in individual gas and oil production. The long gestation and major capital requirements, as well as the geological uncertainties can result in unions between countries to split the investment risks.
Chances for acquisition are on the rise due to the fall in gas and crude prices within the past year. This decline delayed, or even shut down many projects in the works and cut back the cash flow for large oil producers. Countries, like Kuwait and the UAE, both large exporters of oil and gas, are looking for assets like India, in order to provide energy to their population.
The deal between India, the UAE and Kuwait has not been finalized yet. All countries are still in the discussion period.
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