Acquisition Opportunities for Indian Oil and Gas Companies in North Sea
- February 1, 2024
- Posted by: OptimizeIAS Team
- Category: DPN Topics
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Acquisition Opportunities for Indian Oil and Gas Companies in North Sea
Subject: Geography
Section: Eco geography
- Region Exploration:
- Indian oil and gas firms should explore hydrocarbon assets in regions like the North Sea (UK) and East Mediterranean.
- Potential for creating long-term value is a crucial consideration.
- Expansion Mindset:
- Companies need to expand their horizons and not solely focus on short-term bargains.
- Deals are happening globally, emphasizing the need to look beyond current market conditions.
- Value Over Price:
- Emphasis on analyzing the long-term value an asset can generate rather than solely focusing on current market prices.
- Recent examples like Harbour Energy’s $9 billion deal in the North Sea highlight the importance of looking at value over price.
- Consideration of Stable Regions:
- Regions like the North Sea offer high-quality and mature assets.
- Stable political environment, tax structures, and government relations are key factors.
- Diversification Beyond Relationships:
- While maintaining good relationships is important, companies should also diversify beyond familiar partnerships.
- Past challenges in regions like Venezuela and Sakhalin-I (Russia) highlight the need for a broader perspective.
- Geographical Examples:
- Alaska: Presents opportunities but is challenging due to weather conditions.
- Eastern Mediterranean: Significant gas province with stable relationships with India (Egypt, Cyprus, Israel).
International Legislation:
1958 Geneva Convention on the Continental Shelf establishes rights of countries over continental shelves. Paved the way for exploration in the North Sea.
Evolution of North Sea Drilling:
- 1958 Geneva Convention: First international legislation establishing countries’ rights over continental shelves.
- 1964 Continental Shelf Act: Solidified the U.K.’s jurisdiction over oil and gas resources.
- BP’s Exploration: Secured the first license in 1964, leading to the discovery of natural gas in 1965.
- Commercial Oil Discovery: Forties Field, east of Aberdeen, Scotland in 1970.
- Increased Exploration: Various companies engaged in exploration in the following decades.
Oil and Gas in Eastern Mediterranean Sea
- Over the past decade, the Eastern Mediterranean has witnessed the discovery of a number of gas fields in the Exclusive Economic Zones (EEZs) of regional countries while further exploration and drilling activities are going on. According to estimates included in two reports from the United States Geological Survey released in 2010, vast energy reserves are deposited in both the Nile Delta and the Levant basins in the Eastern Mediterranean.
- Further deposits are estimated in the Aegean and Ionian Seas. Among the regional countries, Egypt and Israel have made a head start with commercial drilling and supplies through pipeline. Israel has invested in Mari-B, Noa, Tamar and Leviathan gas fields, while Egypt has invested in the Zohr and Noor gas fields. Moreover, after the Israel–Lebanon maritime delimitation deal, Israel is expected to start production at the Karish gas field, while Lebanon is likely to accelerate drilling at the Qana field.
- The success of Egypt and Israel in finding commercial quantities and starting production from onshore gas fields has encouraged others, including Greece, Cyprus and Northern Cyprus, Turkey, Lebanon, Libya and Syria, to seriously undertake exploration activities.
- Simultaneously, the possibility of the Eastern Mediterranean region emerging as a new gas production hub has led to efforts at reconciliation and joint exploration. For example, an informal bloc among Egypt, Israel, Greece and Cyprus took formal shape as the Eastern Mediterranean Gas Forum (EMGF) in 2019 The EMGF, based in Cairo, aims to develop a cooperative mechanism among member countries for exploration, infrastructure development and to supply gas to European and Asian markets. Likewise, the possible economic benefits of gas production and exports encouraged Israel and Lebanon, that otherwise do not share formal ties, to sign a US-mediated maritime demarcation agreement in October 2022.
North Sea:
- Geographically, the North Sea lies between England and Scotland on its west, the Netherlands, Belgium, and France on its south, and Norway, Denmark, and Germany on its west.
- An epeiric sea (an inland sea either completely surrounded by dry land or connected to an ocean by a river, strait or “arm of the sea”) on the European continental shelf.
- It connects to the Atlantic Ocean through the English Channel in the south and the Norwegian Sea in the north.
- It hosts key north European shipping lanes and is a major fishery. The coast is a popular destination for recreation and tourism in bordering countries, and a rich source of energy resources, including wind and wave power.