India seeks stake in Sakhalin-3 oil field

After Sakhalin-I and Imperial Energy, India is seeking more oil and gas fields in Russia, with Oil Minister Murli Deora pitching for properties in East Siberia, along with Russian Prime Minister Vladmir Putin.

Energy-hungry New Delhi is keen on sourcing one million barrels per day of oil and oil-equivalent gas from Russia, and has identified Sakhalin-3, fields in East Siberia, and Trebs and Titov oilfields in Timan Pechora region for the purpose.

Deora, on a two-day visit to Moscow to further energy ties with a nation that has the largest oil and gas reserves after Saudi Arabia, met Energy Minister Sergy Shemato on Tuesday and Putin on Wednesday.

Officials said he wanted 10-20 percent stake for ONGC Videsh Ltd, the overseas arm of state-run Oil and Natural Gas Corp (ONGC), in the giant Sakhalin-3 oil and gas field in Far East Russia.

Besides, the minister made a case for OVL joining hands with Russian firm Rosneft for exploration and development of some fields in East Siberia.



Joint bidding for Trebs and Titov oilfields in Timan Pechora region and Vankor oilfield were also raised, they said.

Inviting Russian companies to invest in new refinery and petrochemical projects in India, Deora also flagged with Putin the approval awaited for OVL's USD 2.59-billion acquisition of UK-listed Imperial Energy Plc.

Putin heads the Government Commission on Monitoring Foreign Investment in the Russian Federation, which along with Federal Anti-Monopoly Service, is to vet OVL application.

The deal is contingent upon Kremlin's approval as Imperial has assets in Tomsk region of western Siberia. OVL already has 20 percent stake in Sakhalin-I oil and gas field in Far East Russia.



Deora's interaction with Putin focussed on increasing India's presence in Russia beyond Sakhalin-1 oil and gas field in Far East Russia, in which OVL has 20 percent stake.

Officials said OVL was eyeing oil fields in East Siberia, which is estimated to hold some 20 billion barrels of reserves.



It is also looking at participating in Russian continental shelf that may contain oil and gas in 4 million sq km of its total area of 6.5 million sq km (largest in the world).

OVL has 20 percent stake in ExxonMobil-operated Sakhalin-I project, which pumps 210,000 barrel oil per day.

If Kremlin approves, Imperial would be the biggest overseas acquisition of OVL. It had paid USD 1.7 billion to buy a stake in ExxonMobil Corporation's Sakhalin-I field in Russia and USD 785 million for a stake in the Greater Nile project in Sudan, both in 2003.

Imperial produced about 10,000 barrel oil per day in December 2007 and is targeting to raise this to 80,000 barrels per day (four million tonnes a year) by the end of 2011, all of which can be shipped to India.

Oil prices up on export cut talks

The price of Brent crude has risen from its earlier 20-month low after reports suggested Saudi Arabia had already cut production to support world prices.

Brent crude rose $5.43 to $65.91 a barrel after falling as low as $58.38 during the session in London.

US light, sweet crude traded at $69.88 having peaked at $71.77.

Reports said Saudi Arabia had reduced its exports of oil by 900,000 barrels a day from their peak in August, with other oil producers following suit.

Saudi Arabia is the biggest oil exporter in the world.

Tim Evans at City Futures Perspective says the market is driven now by "a trio of supportive factors; a weaker US dollar, a push to the upside in global equity markets and market talk that Saudi Arabia may have already cut crude oil production."

Members of the Opec oil producers' cartel agreed in October to cut crude supplies by 1.5m barrels a day to boost prices, but investors had been waiting to see when the cuts would be implemented.

Growth worries

Earlier on Tuesday Brent crude fell to its lowest level since February 2007 amid concerns about the state of the US economy.

Oil prices have slumped since hitting a record of $147 a barrel in July, as consumers have cut their spending and the chances of a global recession have grown.

Credit Suisse has also cut its forecast for China's energy demand, predicting that it will remain unchanged in 2009.

Recent figures showed China's economic growth rate fell for the third quarter in a row, prompting fears of a wider downturn.

Growth slowed to an annual pace of 9% in the three months to September - down from 10.1% over the previous quarter.

There had been hopes that growth in developing nations such as China and India would help offset the slump in demand in US.

Asian stocks up on Obama victory

Asian stocks have risen following the election of Democrat Senator Barack Obama as the next US president.

Japan's Nikkei 225 index closed 4.4% up, Hong Kong's Hang Seng rose 3.2% and Singapore's benchmark index added 2.6%.

The climbs came after the US Dow Jones index had risen 3.3% on hopes a new leadership would help the US economy as it faces the threat of a recession.

There are expectations the Democrats will speed up economic measures to boost the world's largest economy.

The dollar also strengthened on the news. One euro was worth $1.2873, whereas earlier it had been worth $1.2975. The pound fell to $1.5866 after earlier trading at $1.5997.

And Australia's main stock index ended up 2.9%.

However, not all markets rose. India's Sensex index fell about 5%, and in Europe, where shares had risen strongly on Tuesday, the markets were also down. Both the FTSE 100 in London and the Cac 40 index in Paris were down by about 3%.

Change

Shares in New York rose on Tuesday as people in the US went to the polls for the presidential election. The Dow Jones Industrial Average closed up 305.5 points at 9,625.3.

Doug Kass, founder and president of hedge fund Seabreeze Partners Management, said the Wall Street rally was an "Obama bounce, not an Obama rally".

"It's growing clear that the recession is going to have a shelf life unlike the last recessions in both scope and duration," he added.

Rob Henderson, head of market economics with National Australia Bank in Sydney, said: "Well, it can't be negative for markets. It's a vote for change and has to inject a degree of optimism that America can again reinvent itself."

However, other analysts were less optimistic.

Kircy Daley, senior strategist of Newedge Group in Hong Kong said: "The knee-jerk complacency rally in Asia to an Obama win is likely creating an opportunity to sell.

He said economic fundamentals in the US were "deteriorating faster than the market can keep up with. And there is very little an Obama administration can do to shield Asia from the effects of this downturn."

As the US economy has slowed, Asian exporting firms - a mainstay of the region's economies - have been hard hit.

Fall in eurozone retail sales

Retail spending across the 15 nations of the eurozone fell in September, official EU figures have shown.

Hit by slowing consumer spending and the threat of a painful recession, retail sales fell 0.2% from August, and by 1.6% compared to September 2007.

The biggest annual fall came in Spain, where spending has fallen 7.1% in the last twelve months.

The European Central Bank (ECB) is expected to cut interest rates on Thursday to boost consumer spending.

Figures also announced on Wednesday showed that eurozone service sector activity in October fell to a record low.

Negative territory

The fall in retail spending is less than many economists had expected
"There is a slightly less-than-expected fall, but a fall nonetheless. Eurozone growth and retail sales are well into negative territory," said Matthew Sharratt at Bank of America.

He added that the figures should "virtually guarantee" a 0.5% interest rate cut from the ECB.

Spending on food, drinks and tobacco remained unchanged, while spending on non-food products fell by 0.3% from August.

The fall on the previous month across all 27 countries in the EU was 0.1%, and 0.4% from September last year.

Of the 15 eurozone economies, Germany suffered the biggest drop in retail trade from August, falling 2.3%. Compared with September last year, Spain suffered the biggest drop, with trade falling 7.1%.

Belgium experienced the biggest growth in retail sales, with a 1.4% increase over August and a 4.2% increase over September 2007.

Service sector

Meanwhile, the Markit Eurozone Purchasing Managers' Index for the services sector has revealed that activity in the sector in October fell to its lowest level since the index was introduced 10 years ago.

The index slumped to 45.8, below both economists' forecasts and September's score of 48.4. Any score below 50 represents a contraction in the services sector.

On Monday, Markit announced that the purchasing index for the manufacturing sector fell to 41.1, also a record low.

"The surveys continue to show record pessimism," said Guillaume Meneut at Merrill Lynch.

The European Commission announced on Tuesday that the eurozone economy contracted by 0.2% in the second quarter, and that the EU economy would "grind to a standstill" in 2009.