Starting from its exploration and production (E&P) operations at Digboi, Assam in the 19th century, India has a very long history of successful operation in all the factors of the hydrocarbon sector. During its long and arduous journey, the captains in the E&P sector have in between changed hats from its nascent stage of managing by private sector players to mainly by the public sector players. Since 1990s, the Government has taken a number of significant steps in order to encourage wider participation of various [layers-both public and private sector – in the country’s E&P activities.

STATUS

Today, about 43 percent of the primary energy needs of the country are met from oil and gas. To meet this demand, India imports about 70 percent of its requirement of oil and products. Over the years, the demand of petroleum products has risen at an annual average rate of about 6 per cent. The indigenous oil production, however, has almost stagnated at around 32 million metric tons (MMT) per annum. The current indigenous natural gas availability is about 65 million standard cubic meters per day (MMSCMD) as against the demanded of around 120 MMSCMD. With the country’s developing economy, the requirement of oil and natural gas will increase over the years and is projected to be of the order of 190 MMT and 300 MMSCMD, respectively over the next 10 years. In view of the projected gap between the country’s requirement and indigenous availibity, the Government has decided to follow a multipronged approach to ensure sufficient, reliable and economic fuel supplies to support economic and social development. In March, 2001, the Government evolved “India Hydrocarbon Vision – 2025” which lays down the policy framework for the hydrocarbon sector up to the year 2025.

EXPLORATION 

Considering the availability of vast unexploded or poorly explored areas with substantial yet-to-be established hydrocarbon resources, the efforts of ONGC and Oil India were increased by the Government by opening up the acreages for active exploration and production. It has been done with the help of private and joint venture companies and also by the government companies like IOC and GAIL. Since 1991, the Government has been offering blocks for exploration bidding almost on a regular basis. During 1991-95, a total of 270 blocks were offered for exploration by private and joint venture companies in six rounds. Of them Production Sharing Contracts (PSCs) for 23 blocks were signed. A renewed thrust for accelaration of E&P activities in the country however, came through a much improved “New Exploration Licensing Policy (NELP)” launched by the Government in the year 1999.

The fiscal package in NELP is considered to be one of the best in the world. A total of 47 PSCs under the two rounds of NELP, offered in January 1999 and December 2000, were signed in April 2000 and July 2001, respectively. Exploration blocks in deep water areas of India were offered for the first time in the first round of the NELP. With the operationalization of NELP, as on date, out of total of 0.86 million sq. km. Of acreage holding for E&P activities by various companies, about 30 percent of the acreage is held by the Government Companies on nomination basis while the balance 70 per cent Exploratory drilling taken up in the PSC blocks of new discoveries in the deep offshore Cambay basin and the onshore Rajasthan basin.

In March 2002, offers of another 27 exploration blocks under the third round of NELP have been made for international bidding, with the bid closing date as 28th August 2002. The exploration blocks in this round include 11 onland blocks, 7 shallow water blocks and 9 blocks in deep water areas.

PRODUCTION

While the efforts of the Government and the oil companies both in the public and private sectors, are on to expedite exploration activities in the country, an investment of about Rs. 12,000 crore has been planned towards implementation of various improved oil recovery and enhanced oil recovery schemes in 15 major ageing oilfields, including the giant Mumbai High Field in western offshore. In addition to few other projects, redevelopment of the Mumbai High field consisting of two projects, namely Redevelopment of Mumbai High North and Mumbai High South, began from January 2001 and October 2001, respectively. With an estimated cost of more than Rs. 8,000 crore, these two redevelopment projects are expected to entail an incremental oil gain of about 60 MMT by over the next 25 years. Oil India and joint venture companies are also implementing some schemes in select reservoirs in their areas of operation.

INITIATIVE

For exploration of alternative sources of energy, the Government has given a thrust for exploitation of Coal Bed Methane (CBM) by offering 7 CBM blocks in April 2001 in different parts of the country. Of these, 5 CBM blocks have been awarded to different public and private sector companies. The contracts were signed in July, 2002. For a country like India, with a resource potential of about 1000 billion cubic meters (BCM) of gas from coal deposits, offer of 7 blocks for international bidding could be just a beginning of development of yet another source of energy.

EQUIYU OIL ABROAD

As a part of the overall strategy for enhancing oil security of the country, equity oil and gas abroad provides direct access for meeting the country’s domestic requirement of hydrocarbons. The Government has been encouraging participation of India Companies for carrying E&P business in foreign acreages. Last year, the ONGC Videsh Limited (OVL) signed a long-term agreement with M/s. Roseneft for 20 per cent participating interest in the Sakhalin-I project in Russia, requiring an estimated investment of about 8,000 crore. About 5 MMT of oil per annum and about 8 million cubic meters per day of gas are expected to come to OVL from the project. The project, already declared commercially viable, is expected to go on production in 2005. The OVL has 45 per cent interest in an offshore gas field in Vietnam which is expected to go into production during the current year itself. The exploration  activities in two other blocks – one in Iraq and another in Myanmar, where OVL and OVL-GAIL have participating interests are in progress. OVL, GAIL, IOC and OIL are pursuing E&P opportunities available in other countries as well. 

On the gas side, to meet the gap between the demand and indigenous available, projects for import of gas in liquefied from are at an advance stage of implementation. Liquefied Natural Gas (LNG) from Qatar at Dahej in Gujarat is expected to be received by the end of next year, to be followed by imports at Kochi in Kerala a year later. The multi-national Shell is actively pursuing a project for importing LNG at Hazira on the west coast. Other companies, including the government oil companies, are pursuing projects for LNG imports on the east coast also.

With the multi-pronged enhanced efforts initiated by the Government over the past 2-3 years, it is expected to not only help in meeting the gap between the increasing domestic demand and the indigenous availability of oil and gas, but also add to the energy security of the country.

The author is Secretary, P & NG, Govt. of India.