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Online Stock Market Trading Two energy companies recently found big natural gas fields off this country's southeastern coast, discoveries that could affect energy markets and perhaps even the military and political balance of power in southern Asia.

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Stock Investing Course Reliance Industries, which is based in Bombay and is one of India's largest companies, said that each of its first five exploration wells had struck natural gas in the Krishna Godavari basin, off Andhra Pradesh. It said it had found recoverable reserves equal to more than five trillion cubic feet of natural gas, one of the world's biggest discoveries this year.

Stock Market Game Cairn Energy, based in Edinburgh, said that it had found an additional 800 billion cubic feet of gas while drilling in an adjacent block of the sea floor.

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Stock Investing Game Both companies plan more drilling and predicted that more gas would be found.

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Journal Prime Rate Street Wall The companies discovered the gas while drilling in water up to 3,300 feet deep, a depth that will pose technical obstacles to production and require greater investment. American companies have produced gas from even deeper waters in the Gulf of Mexico, but southeastern India lacks a comparable support network of drilling and production companies and pipelines. On the plus side, though, the Indian deepwater reserves are just 30 miles offshore, making them more accessible than the gulf gas.

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Stock Market News Cairn Energy has also found two gas fields in shallow waters even closer to shore, one on the shore side of the newly discovered deepwater reserves off Andhra Pradesh and the other off the western state of Gujarat, with reserves totaling 850 billion cubic feet, and has put both of them quickly into production. Another company, Niko Resources of Canada, has a 10 percent stake in Reliance's deepwater field and has made onshore and offshore discoveries of natural gas in Gujarat near Cairn's finds. Niko declined to estimate the reserves it has found.

Stock Investing Basics Altogether, the new reserves are not large enough to turn India into a net exporter of energy, much less make India rich. And regulatory obstacles as well as technical hurdles must be overcome before commercial production can begin.

Stock Investing Software Still, Pierre Audinet, an expert on South Asia at the International Energy Agency in Paris, said that Reliance's discovery alone was significant. "It's eight years of Indian demand that's huge," he said. "You seldom hit on discoveries that yield that kind of quantities."

Stock Market Trading A few reserves found in recent years in the Mideast and the Canadian Arctic have been 10 times that size or more, but they have been far from major markets. And much of the delay and cost in developing gas reserves lies in the pipelines or liquefying plants needed so the gas can be transported.

Stock Investing For Dummy In India, gas accounts for just 4.3 percent of total energy consumption. Beyond that, the country relies heavily on cheap domestically mined coal, which contributes to severe air pollution in big cities.

Stock Market Crash If the new deepwater gas can be brought to market at an affordable price, it could reduce India's need to proceed with current negotiations to buy gas from fields that Exxon Mobil is helping to develop in Qatar and that Unocal is developing in Bangladesh, Mr. Audinet said. By disclosing the success of its initial exploration wells, Reliance may discourage bankers from lending money for the construction of pipelines and liquefied natural gas terminals to receive gas from other countries, he said.

Stock Investing Tip Besides being bad news for Qatar and Bangladesh, the latest discoveries could affect India's strategic posture. The Indian Navy is starting to see the offshore energy discoveries, and the need to defend them, as a way to press for more money and new vessels, according to Brahma Chellaney, a professor of strategic studies at the Center for Policy Research in New Delhi.

Stock Market Chart India's military budgets have long favored the army and, to a lesser extent, the air force, which defend against China to the north and Pakistan to the west. But China has begun building an oceangoing navy, which would approach India from the east, and it has been setting up listening posts in southern Burma to monitor military activity along India's eastern seaboard.

Online Stock Investing Indian governments "have sort of neglected the navy in the last decade," Mr. Chellaney said, "and they need to get on with modernization."

Stock Market Crash Of Charles Lucas-Clements, a natural gas specialist in the Houston office of the IHS Energy Group, one of the world's biggest energy consulting firms, said that Reliance's claim to have found a field with such extensive reserves appeared credible. Reliance's discovery is likely to be the first of many in the area, he said, because India's southeastern coastal waters are just beginning to be explored seriously and because natural gas fields are almost invariably found in clusters.

Stock Investing For Beginner "If you find a really big field, you'll find a lot of midsize fields" nearby, Mr. Lucas-Clements said, predicting that at least 10 trillion cubic feet of reserves would be found altogether by Reliance, Cairn and other companies that may buy exploration rights in the vicinity in future auctions by the Indian government.

Finance Journal Personal India is one of the few large energy markets with coastal waters that have not had much energy exploration. For many years, offshore exploration was a monopoly of the state-owned Oil and Natural Gas Company, which was not very aggressive. Only in the mid-1990's did India begin allowing private companies to search offshore for oil and gas.

Stock Market Report Yet in addition to being deep underwater, Reliance's gas is also far from the country's biggest users of natural gas power plants in Bombay and a huge fertilizer industry in Gujarat state and a pipeline would need to be built.

Finance Investing Stock Market Michael Watts, the exploration director at Cairn Energy, said that Andhra Pradesh itself could use only the natural gas from one trillion cubic feet of reserves. The state is heavily agricultural beyond the computer-programming industry here in the state capital, Hyderabad.

Wall Street Journal Com He estimated that it would cost $300 million to $500 million to develop Reliance's deepwater gas fields and build a pipeline to shore, plus $500 million or more to build a pipeline to Bombay or perhaps New Delhi, where power plants would have to be converted to run on gas.

Stock Market Investing Advice Reliance declined to make executives available for comment.

Street Trader Wall Even more formidable than the technical challenges are India's labyrinthine rules for foreign investments and its tangled electricity policies, other energy experts said. Cairn and even Reliance are likely to need big international partners with a lot of experience in offshore gas production before developing the fields off Andhra Pradesh, energy experts say. Natural gas projects are built on trust because nearly all of the cost is incurred at the beginning and the revenues come only over the next couple of decades, usually from long-term contracts signed with gas users before construction begins.

Indian Stock Market Foreign investors became especially wary of India's energy market after Enron built the first phase and part of the second phase of a $2.9 billion gas-fired power plant near Bombay, only to find that the state-owned electricity distribution authority was unwilling to pay the price for electricity that Enron thought had been agreed on.

Stock Investing Advice Reliance is one of the most politically powerful conglomerates in India so it may have the extra muscle needed to sign enforceable long-term contracts with gas customers; Cairn may choose Indian partners to help develop its finds.

Free Journal Street Wall Mr. Lucas-Clements, the consultant, said that "Indians within the country may have more leverage than foreign investors" to make sure that contracts were binding.

Stock Market Information By Keith Bradsher
New York Times - 12/13/2002

Topic: Petroleum Industry

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