However, with the country forecast to become the fifth largest consumer in the next 20 years, analysts are positive that the percentage of deals in the country will increase substantially.
"In its tryst for energy security, India has made a mark while competing in the global market. India's cautious bids and conservative valuations have been well received," said NN Gupta, leader Oil and Gas practice, PricewaterhouseCoopers (PwC), which has compiled the report on the mergers and acquisitions in the global oil and gas market.
The new gas and oil discoveries in the country are fuelling investor interest. Recent discoveries in the Krishna-Godavari basin, dubbed "India's North Sea", and the Mahanadi basin off the coast of Orissa are already attracting global oil majors.
Deals in the global oil and gas sector in 2006 rose over 16 per cent to $291 billion from $250 billion in 2005, the PwC report said.
Gas deals dominated the list of the largest transactions in 2006, with six out of the top 10 upstream deals being in the gas segment. This was in contrast to the previous year when only two deals in the top 10 of all deals and four of the top ten of upstream deals were gas dominated.
Unlike in the past years, it is not the oil majors that are fuelling the deal momentum. Deals in the mid-size segment, which is seeing consolidation, accounted for half of the total increase in total deal value. In 2006 there was a 59 per cent leap in mid-size deals and a 61 per cent in mid-size deal values, which jumped from $36.3 billion in 2005 to $58.3 billion in 2006.
The PwC report also says that large companies are cutting out risks by acquiring stakes in proven and producing oil and gas assets, a trend that is being noticed in India as well. "Large oil and gas companies are cutting risks as the really huge hydrocarbon reserves are a thing of the past. However, there is the constant pressure to replace existing reserves," another analyst at PwC told Business Standard.
Large exploration companies such as US-based Chevron, Dutch company Shell, Italian company ENI, Brazil's Petrobras and UK-based British Petroleum did not participate in the last round of auction of virgin exploration blocks in India. However, all of these companies are keen on picking up stakes in discovered oil and gas fields in India.
ENI has already signed an agreement with Oil and Natural Gas Corporation (ONGC) for a 35 per cent stake in the its proven gas field in the Mahanadi basin off the Orissa coast.
The country's largest oil and gas explorer is also reported to be in talks with Petrobras for a stake in the gas-bearing block in deepwater Krishna-Godavari basin. Shell too has an agreement with ONGC for technical collaboration in exploration, through which the Dutch company is keen on picking up equity stake in ONGC's hydrocarbon blocks.
Chevron, on the other hand, already owns 5 per cent stake in Reliance Petroleum's refinery at Jamnagar, and is reported to be in talks with Reliance Industries for a possible stake in the 12 trillion cubic feet gas-bearing block in the K-G basin.
A boom in oil services sector also witnessed a huge spurt. "This is primarily due to a worldwide shortages of personnel and equipment is spurring deal activity in the services sector," said a PwC analyst.
In 2006, there were six $1 billion plus deals in this services sector, compared to just two in 2005. Total service company deal values leapt 132 per cent from $5.6 billion in 2005 to $12 billion in 2006.
"India has become a major destination for upstream services and refining technology absorption. The growing market would entice entry of Indian companies into service sector. Eventually, the growth will encourage deals in service segment due to consolidation in the years to come," Gupta said.
