India Aims To Offset Production Declines, Slash Energy Imports

Abstract

Country Profile With 17% of the global population, India faces a huge challenge to meet its growing domestic energy consumption, especially as it holds only 0.35% of oil reserves and 0.6% of natural gas reserves in the world. As a result of dynamic economic growth, the country’s oil consumption is expected to increase from 3.7 million BOPD in 2013 to approximately 4.4 million BOPD by 2018. According to the BP Statistical Review of World Energy 2014, India’s proved oil reserves stand at 5.7 billion bbl with a production of 894,000 BOPD. Ranked as the fourth largest oil consumer after China, United States, and Russia, the country imports 82% of oil and 25% of natural gas to meet its demand. Approximately 56% of India’s reserves are offshore and 44% onshore. The majority of the reserves is located in the western offshore region, near Gujarat and Rajasthan. The Assam-Arakan basin in the northeastern region holds 23% of reserves and 12% of the production in the country. Although the country has enormous production potential, exploration efforts have not yet tapped the Indian sedimentary basin. Data from the Directorate General of Hydrocarbons (DGH) showed that India has a sedimentary area of 3.14 million km2 consisting of 26 basins, of which 1.39 million km2 is onshore, 0.4 million km2 is located in shallow water, and 1.35 million km2 is located in deep water. Deepwater oil production began in September 2008 when Reliance Industries (RIL), India’s largest private sector company, started production in the KG-D6 block of the Krishna-Godavari basin in the eastern offshore region. According to the state-controlled Oil and Natural Gas Corp. (ONGC), only 22% of the sedimentary area is well explored, 44% has had exploration initiated, 12% is poorly explored, and 22% is unexplored. Of the 26 basins, only seven are currently producing. To boost investment in the upstream sector, Indian exploration and production (E&P) companies want the government to provide incentives to local players. “The core policy initiative of the government of India’s ‘Make in India’ can gain necessary momentum and direction if supplemented by ‘Discover in India’ initiative, the latter aimed at discovering, developing, and producing energy resources in India,” said Manish Maheshwari, chief executive officer of Essar Oil E&P. Maheshwari said that policies with a clarity of intent and richness in content are needed to attract the much needed capital in the upstream E&P sector. “We expect the Ministry of Petroleum and Natural Gas to usher in the next wave of reforms in the E&P sector through various policy initiatives. For instance, exploration focus through open acreage licensing policy, execution driven through simultaneous exploration and production of reserves across conventional and unconventional plays, and ensuring fiscal certainty,” he said.