Transcript: India’s belated oil rush

This is an audio transcript of the FT News Briefing podcast episode: ‘India’s belated oil rush’

Sonja Hutson
Good morning from the Financial Times. Today is Wednesday, October 9th, and this is your FT News Briefing.

[MUSIC PLAYING]

A Big Four firm has an idea to get more people into accounting. And the far right in Europe is uniting around Hungarian Prime Minister Viktor Orbán. Plus, India is telling big oil majors: we’re open for business. 

Malcolm Moore
The whole areas of the Indian Ocean where there could be a lot of oil, but nobody’s been able to look for it. 

Sonja Hutson
I’m Sonja Hutson, and here’s the news you need to start your day.

[MUSIC PLAYING]

The head of KPMG US wants to make it easier to become an accountant. The firm is worried that far fewer people are taking the exam to be a certified public accountant these days. Part of the problem is that in order to take that test, you need to complete an additional year of education, and that’s after getting an undergrad degree. Chief executive Paul Knopp told the FT that the industry should replace that fifth year of school with an apprenticeship programme. He is the first head of a Big Four firm to suggest that. Knopp called the falling number of accountants a quote, brewing crisis and he said the industry needs to fix it really quickly.

[MUSIC PLAYING]

The far right has been making slow but steady gains in Europe, and it’s coalesced around Hungary’s Prime Minister Viktor Orbán. The establishment in the European Union is not happy about this, and it’s been pushing back against Orbán, most recently with a lawsuit related to a new security law in Hungary. Here with me to discuss this fracturing in the bloc is the FT’s Valentina Pop. Hi, Val.

Valentina Pop
Hi. Good to be here. 

Sonja Hutson
Good to have you. So tell me a little bit about why the EU is suing Hungary. 

Valentina Pop
So the EU is suing Hungary because in February a law was passed that basically allows the states to pursue political opponents for having received funding from abroad. So it’s all about national sovereignty — as the Hungarian government puts it — but the EU and critics in Hungary say that this is basically just political targeting of opponents and in breach of citizens’ fundamental rights. 

Sonja Hutson
And how does this fit in with Hungary’s relationship with the EU? 

Valentina Pop
It is the latest in a long series of legal disputes over migration, over education, LGBTQ rights. So the EU is trying to stop what Viktor Orbán has called an illiberal regime that he’s trying to create. These tensions are also linked to Orbán’s proximity to the Russian president. He has consistently tried to delay or block sanctions against Russia or decisions to support Ukraine. So that is in total breach of what the rest of the EU is standing for, or at least a majority of countries because more recently, there have been other governments that are now starting to signal that they also are allies of Orbán. 

Sonja Hutson
Yeah. So I want to talk about the far right more broadly in Europe. You know, it is getting more popular there. Most recently, we saw the Freedom party in Austria win parliamentary elections. The AfD in Germany is gaining strength after state elections. How big of a role does Orbán play in the far right in Europe? 

Valentina Pop
So Orbán is the glue that holds together the third-largest group in the European parliament, which is a feat he achieved this year after European parliament elections in June. So he managed to coalesce the so-called Patriots for Europe, which is a formation that includes Marine Le Pen’s party in France, the League in Italy, as well as Czech and Slovak and the Austrian Freedom party. So it is a strong group. And what may be is worrying for the establishment in Europe is that they all represent Ukraine sceptic and pretty Russia-friendly positions. And this group has emerged as a strong force in the European parliament and a disruptive one because we see that mainstream parties have also moved more to the right because of that. 

Sonja Hutson
And what ultimately does this fracturing, this new group within the EU mean for the bloc overall? 

Valentina Pop
Well, it’s definitely another area where you don’t have a clear future for this unified position that the European Union has been able to have despite Hungary over the last two and a half years. But if we think of other conflicts like in the Middle East, countries are very divided. And it’s not a good look on the EU to be so fractured, especially in this case where it’s about a conflict right on its doorstep. And it also affects other policy decisions going forward. Or if you have a country that blocks all the time decisions that are made by unanimity, it just shows that the EU is impotent in the end. 

Sonja Hutson
Valentina Pop is the FT’s Europe news editor. Thanks, Val.

Valentina Pop
You’re welcome. Thank you. 

[MUSIC PLAYING]

Sonja Hutson
India is drastically loosening regulations in order to get more companies to drill for oil, and the country is in a bit of a rush to do it. The government wants to make this happen while there still high demand for crude. The FT’s Malcolm Moore has been following this and he joins me now. Hi, Malcolm. 

Malcolm Moore
Hi there. 

Sonja Hutson
So just to start off, how much oil does India have? 

Malcolm Moore
OK. So that’s a good question. And I think the answer is we don’t really know. But let me just set the scene for you. India is certainly using a lot of oil. It’s using 5mn barrels of oil a day. And that oil consumption is growing very rapidly as the country’s economy is growing. But at the moment, it’s only producing about 700,000 barrels of oil a day. So there’s a huge gap here. And the Indians really want to increase their oil production. And they think that the whole areas of the Indian Ocean and other parts where there could be a lot of oil, but nobody’s been able to look for it. 

Sonja Hutson
Well, Malcolm, why hasn’t anyone been able to look for it yet? 

Malcolm Moore
OK. Well, there are lots of problems. You know, there’s a lot of red tape in India. So the actual law that states what oil companies can and can’t do is quite prescriptive. And oil companies are nervous about all sorts of different things. So, for example, if they were to have a dispute with their partners, you know, can that dispute be arbitrated outside of India or does it have to be arbitrated inside of India? Also, these are long-term projects. Let’s say they go out there and they invest a lot of money and then suddenly, you know, the tax regime changes or they’re new taxes. They’re worried about those things. And they’re also worried. And the Indian oil minister said this, that they might make a lot of investment. And then actually, India says this oil belongs to us. You can’t have it. We’ll take it back. 

Sonja Hutson
So what sort of policy changes is India making to address these challenges in accessing the oil? 

Malcolm Moore
So the Indian oil minister said they’re doing three things. The first thing is lots of the Indian Ocean and other areas have basically been no-go areas for military reasons or other reasons. They’re starting to open those up. The second thing is they’re basically creating incentives for oil companies to go out there and explore without having to put a lot of investment upfront. And the third thing is that changing the Oilfields Act to give companies a bit more protection so they’ll be able to go overseas to arbitrate disputes and they will have the assurance that whatever deals they strike will last so that they won’t get hit with sudden tax changes. 

Sonja Hutson
And talk to me about the timing here. Why exactly is India making this pivot now? 

Malcolm Moore
OK. So they definitely want to reduce the amount of oil they’re importing, but they’re also worried. And the Indian oil minister talked about this at some length, that if they leave it there and they don’t rush to get it out, then the energy transition is going to happen and nobody’s going to want that oil. So he basically said, look, it’s like a race. These projects take a lot of time. You know, how many years is there going to be a big market for oil before other forms of energy come into play? He wants to get the oil out while there’s still a market for it. 

Sonja Hutson
But given the fact that we don’t know exactly how much oil is untapped, what kind of impact do you think this drilling could have on the global oil market? 

Malcolm Moore
That’s the million-dollar question. It’s gonna take a while. Big oil majors there have been really reluctant to go out there in India at the moment. These are not easy projects. You know, a lot of these are ultra-deepwater projects. Only some companies can do them. So it hasn’t been that attractive. And most of them are sitting on the sidelines waiting for someone to make a huge discovery. So I think until we’ve reached that moment, it’s going to be difficult to see India as a major player. But, you know, you can see the government is pulling out all the stops to try and make that happen. 

Sonja Hutson
Malcolm Moore is the FT’s energy editor. Thanks, Malcolm. 

Malcolm Moore
Thank you. 

[MUSIC PLAYING]

Sonja Hutson
You can read more on all these stories for free when you click the links in our show notes. This has been your daily FT News Briefing. Check back tomorrow for the latest business news.