Page 38 - The Indian EYE 031822

BUSINESS EYE MARCH 18, 2022 | The Indian Eye 38

oiL iS not WeLL:

india faces challenge as prices surge

amid war in ukraine and uS sanctions

Cairn Oil & Gas, a unit of Vedanta, to spend as much

as $4 billion over the next three years to more than triple its production, as

high prices make investments attractive

India’s biggest non-state pro-
OuR BuREAu
ducer, controlled by billionaire Anil
New York/Mumbai Agarwal, plans to drill more wells
to explore new oil and gas reserves
lobal oil prices, as indicated across its 51 blocks in the country,
by the London-traded bench-
gmark Brent, are expected Prachur Sah, deputy chief executive
officer of Cairn, said in an interview
to average $117 per barrel by end- to Bloomberg TV on Friday. “Our
March or 30% more than the forecast target is to reach half a million pro-
for last month, the US Energy Infor- duction in a very short time by doing
mation Administration (EIA) said these investments,” he said.
on Tuesday as Western sanctions on “This investment is not just a
Russia boosted prices.
number, but we have projects in line.
“We expect the brent price will We are looking at exploration heav-
ily over the next few years to get to
average $117/b in march... these levels.”
Cairn’s plan stands out com-
and $102/b in the second half pared to producers around the world,
of 2022,” the eia said. it had India is an importer of oil and the increase in energy prices is going to have most of whom are staying away from
a negative impact on the economy
previously forecast $90 per committing investments in oil and
gas and which is leading to a sharp
barrel for february. have a negative impact on its econ- Georgieva said, “Clearly the increase in prices as rebounding de-
omy, said Kristalina Georgieva, the most significant channel of impact on mand outstrips supply.
The United States and its allies managing director of the Interna- the Indian economy is energy prices.” That’s impacting import-depen-
have imposed comprehensive sanc- tional Monetary Fund. During a me- India is an importer and the dent nations such as India, which
tions against Russia in response to its dia roundtable on Thursday on the increase in energy prices is going meets 85% of its oil needs through
special military operation in Ukraine. Russian invasion of Ukraine and its to have a negative impact, she said, overseas purchases, and prompting
The sanctions have slowed but not global impact, Gita Gopinath, who adding, “India has been very good in the government to push explorers to
entirely eliminated the ability of Rus- is the first deputy managing director managing its finances.” expand their oil hunt.
sian exporters of oil and gas to trans- of the IMF, observed that the war She stressed that there are some The company produces a quarter
act deals that require world financial has posed a challenge to economies fiscal spaces to be able to respond of India’s overall oil production and
networks and especially dollars. around the world, including India. to the challenge. “Our advice to our aims to raise the contribution to 50%
The United States also an- “India relies heavily on energy members is first and foremost make of the country’s total output, accord-
nounced on Tuesday that it was uni- imports and the price is going up. sure that you protect the most vul- ing to its website. Cairn’s average
laterally banning imports of Russian That has implications on the pur- nerable populations from the shot production was at 159,000 barrels of
oil, with President Joe Biden ac- chasing power of Indian households. up of prices, not only energy but also oil equivalent during three months
knowledging that Europe may not “If you’re looking at headline in- foot food prices for countries where that ended December 31.
be ready yet to join America in this flation numbers, inflation in India is this is going to be a significant factor,” The company has invested
direction due to the bloc’s heavy reli- close to around six per cent, which is the IMF managing director said. about $2.5 billion in the past three
ance on Russian gas supplies. the upper end of the inflation band Meanwhile, Cairn Oil & Gas, a years when big producers around
It is having an impact on India for the Reserve Bank of India,” Go- unit of Vedanta, will spend as much the world withheld spendings after
too. pinath said. This has implications on as $4 billion over the next three years oil prices fell. Cairn has made a few
India has been very good at the monetary policy in the country to more than triple its production, as oil and gas discoveries recently, and
managing its finances but the surge and it is a challenge in many parts of high prices make investments attrac- expects to strike more as it steps up
in global energy prices is going to the world, not just India, she said. tive. exploration.

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