Australian-based oil and gas company Otto Energy reports the award of Area 8 Service Contract 69 offshore Philippines to the company’s wholly owned subsidiary NorAsian Energy Limited (NorAsian) for a 7 year exploration period.

NorAsian, in partnership with Filipino partner TransAsia Oil & Energy Development Corporation, were selected from a competitive bid process for this prospective offshore exploration area.

SC69 is situated between the Islands of Cebu, Bohol and Leyte, and covers the eastern Visayan Basin over an area of 7,040km2. The block lies between the two sub blocks of SC51, where Otto already has an 80% working interest.

China and India dominate sector leadership positions

When the redoubtable Mani Shankar Aiyar donned the cap of the petroleum minister, he didn't quite anticipate he'd have to pull out his discarded diplomat's hat. But it appears Aiyar has had to draw on his Foreign Service experience to help India's multi-billion dollar quest for equity oil acreages abroad. As the cash-rich ONGC subsidiary, ONGC Videsh Ltd. (OVL), vigorously scouts for oil properties across the globe, Aiyar's modest Shastri Bhavan office has become the second port of call, after South Block, for many a diplomat and visiting foreign dignitary.

Today, oil diplomacy is at the cornerstone of India's foreign policy interface, in large tracks of Africa, Latin America, East Europe and West & South East Asia. The phlegmatic, clich-ridden diplomatic dialogue of the past has now given way to hard, behind-the-scene maneuvering -- with

governments in countries as far-flung as Ecuador, Cuba, Sudan, Angola, Russia, Kazakhstan, Libya, Iran and Ivory Coast.The minister, no doubt, faces formidable challenges in his quest: Not just in identifying the right oil block to acquire but, increasingly, in keeping the competition -- particularly the belligerent Chinese -- at bay while negotiating and clinching a deal. Aiyar has fit into the role of India's petroleum minister with natural ease, particularly when he deals with governments around the world. Just last month in Vienna, he delivered a keynote address at an exclusive OPEC summit, where he rubbed shoulders with 13 key OPEC ministers. The visit culminated in a dinner hosted in his honour by the Saudi crown prince Abdullah who, incidentally, is learnt to have graciously shared a vegetarian meal with the Tam Bhram.



Aiyar is now busy hammering together a buyer's cartel -- to be comprised of Asian heavyweights such as China, Korea and Japan. The intent of this cartel will be to pressurise the West Asian oil suppliers to remove what is dubbed as an "Asian Premium" on crude prices. This week, the minister is in Russia frenetically lobbying with the Kremlin, to buy up cash-strapped Russian oil and gas companies and oil fields. However, Aiyar's intense diplomatic footwork in the past few months is yet to show concrete results; there has been not a single equity oil deal struck so far.

His efforts may be valiant, but his speeches still reflect traces of a third-world naivet: At the inaugural address at the Fourth All-Russia Oil and Gas Week on Tuesday, he dismissed the oil price hike rather simplistically as "a speculative bubble which will burst one day" -- any observer would acknowledge that the movement of oil prices is governed by a far more complex mechanism. Besides, it often takes more that just diplomacy, and rhetoric, to cut ice with the cynical, hard-nosed equity oil seller -- diplomacy, at best, can be a tool towards a more complicated end, and not an end in itself.

Not quite a master in the subject as yet, Aiyar appears to be very much on the learning curve. And this results in him being misled on occasion: Recently, the Angolan petroleum minister promised to approve an OVL bid to buy 50% of an Angolan deepwater block, only to return home and wrap up the deal with a Chinese company.

Aiyar may have distinguished himself at a job he knows well -- diplomacy. He now needs to get savvy and excel in the undiplomatic business of sharp negotiation and, ultimately, pocketing that all-elusive oil deal. That, as petroleum minister, will be his Big Deal!

It was the proverbial last hurrah. As India, despite its appendage of being the world's largest democracy, finds itself being increasingly left behind in the tumultuous economic battlefield that is Asia today, it was a valiant attempt at taking the lead and making itself relevant once again. Without doubt, petroleum minister Mani Shankar Aiyar's efforts at hosting a first-of-its-kind ministerial conference that has brought together the oil producers of the Middle East and the big four Asian oil consumers -- China, Japan, Korea and India -- deserves kudos.

Aiyar, despite his penchant for the acerbic, can be the epitome of charm itself when he puts his mind to it. And the ministerial conference bore testimony to this. Coupled with the celebrated hospitality of New Delhi's Maurya Sheraton, the visiting dignitaries -- which included the powerful Saudi oil minister Ali I Al-Naimi, Iranian oil minister Bijan Zangeneh,

UAE's minister of energy Mohammed Bin Dhaen Al-Hamli, Qatari minister Abdulla Bin Hamad Al-Attiyah and Malaysian minister Mustapa Mohamed -- were clearly impressed. The top rankers from the buyers' side, however, were conspicuous by their absence. China and Korea were represented by the lower-rung of deputy ministers, while the co-host of the multilateral conference -- Kuwaiti minister Sheikh Ahmed Fahad Al Sabah -- could not make it to New Delhi. This is not to suggest that the meeting today was any less significant; on the contrary. It raised issues which were relevant for both sides -- the buyers as well as the sellers. Aiyar, however, astutely side-stepped the issue of the so-called "Asian Premium" which was ostensibly the raison d'tre of this conference when it was first proposed by him in September.

As it happens, the "Asian Premium" has now metamorphosed into the great "Asian Discount" since Asian prices are currently pegged lower than those charged by the Middle East for customers in the West. Be that as it may, Aiyar's clarion call for a "just and remunerative oil order" in Asia struck a responsive chord across the board. That's because even though 70% of Middle East oil exports are expected to be sold to Asian consumers in 2005, the Asian crude market continues to remain fragmented. Aiyar's plea for the creation of a strong Asian marker for crude and the forging of a mutual interdependence through cross-investments in each other's countries also found an enthusiastic audience. The meet witnessed a free and frank exchange of ideas: The Qatari minister, for instance, admitted that the Middle East was under increasing pressure to invest money in raising the standard of living of its people, rather than building additional crude output capacities.

Citing the glut of the 1980s when heavy investments had led to excess capacities -- resulting in abysmally low crude prices -- he said this was a major disincentive for investing in spare capacities today. Chinese deputy minister Zhang Xiaoqiang, in turn, pooh-poohed charges that an excessive Chinese demand had led to a rise in crude prices, claiming that China accounted for only 6% of global trade, and the share of imported oil in its consumption mix was less than 40%. Instead, he blamed speculative forces for the surge.

Korean minister Hwwan Eik Cho, on his part, rooted for a joint holding of strategic reserves -- with counties which already had the wherewithal to stockpile such reserves -- as a solution for those countries which will find building such facilities prohibitively expensive. The Iranian minister, on the other hand, called for the formation of an Asian Bank for Energy Development to back up investments in the energy sector --- estimated at a staggering $1580 billion over the next 25 years, in Asia alone. Indeed, the gargantuan dimension of the business is evident from the distinct possibility that China alone may end up importing 8 million barrels per day in the coming two decades.

The centrestage was, predictably, reserved for the Saudis, who -- in keeping with their big-brother status of being the largest producers of oil in the world -- sought to soothe fears of supply dislocations by claiming that they were consistently producing about 9.5 million barrels per day and were capable of raising production significantly should the need arise. Some of the technical presentations made during the course of the meeting warned of serious upheavals unless investments were stepped up to raise output. Others derided the lack of authentic data from Asian countries, the accuracy of which would help in matching supply with demand variations in order to arrest excessive volatility. The archlights may have been on the Saudis but, without doubt, the standing ovation and encore went to Aiyar.

In a carefully calibrated concluding declaration, he -- statesmanlike -- called on the need for larger cooperation amongst Asian buyers and sellers. Pertinently, he was successful in institutionalising the roundtables: the next three conclaves are to be hosted in Saudi Arabia, Japan and Kuwait respectively. Most importantly, Aiyar's triumph lay in firmly catapulting India from the peripheries into the centre of action in Asia as far as the business of oil is concerned, no mean achievement in itself. It was, in many ways, a significant day for India. And, in all fairness, the day ultimately belonged to Maestro Mani Shankar Aiyar. Bravo!