India Asks Big Oil Companies “Where Do You Want To Drill?”
- Stephen Rassenfoss (JPT Emerging Technology Senior Editor)
- Document ID
- Society of Petroleum Engineers
- Journal of Petroleum Technology
- Publication Date
- May 2017
- Document Type
- Journal Paper
- 40 - 42
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India is putting its aggressive program to sharply reduce oil and gas imports over the next 5 years to the test with an upcoming bidding round aimed at winning back international oil companies with the skills and money to make major discoveries.
Last year’s discovered small fields auction by state oil firm ONGC attracted strong bidding from smaller Indian players, many new to the business. But “this is much more ambitious,” said Atanu Chakraborty, director general of India’s Directorate General of Hydrocarbons (DGH).
The country is trying to reach the goal set by India’s Prime Minister Narendra Modi to reduce oil and gas imports by 10% by 2022.
To increase the odds of getting bids, operators have been asked to choose the blocks they want included in the bid-ding round to be held later this year. The contracts are based on revamped energy policies designed to eliminate the regulation that limited international interest in the past.
“The government is not in the business of trying to micromanage production,” said Dharmendra Pradhan, the minister in charge of the Ministry of Petroleum and Natural Gas, India, during a presentation at the recent IHS Markit CERAWeek conference in Houston. At the conference, the government announced the bidding round at a meeting drawing top executives from international companies.
Indian energy officials need the exploration help as domestic production falls further behind the exploding level of demand. The percentage of imported oil has risen from nearly 77% about 3 years ago to 82% in the current fiscal year, Pradhan said, according to a recent report.
Given the time needed for large exploration and production (E&P) projects, a 10% reduction in 5 years is a stretch. Adding to the difficultly is rapid demand growth due to the 7%-plus annual increase in India’s gross domestic product.
“There is skyrocketing demand in almost every energy sector,” said Charles Ebinger, senior fellow at the global energy center of the Atlantic Council, during a panel session at the conference.
There is oil and gas potential there. DGH estimates it has produced only 3% of its proven natural gas reserves and around 5% of its proven oil reserves. While it is not a big oil and gas producer, the 115 drilling rigs working there in mid-February were just behind the 120 rigs drilling in Saudi Arabia, according to the Baker Hughes rig count.
E&P is dominated by the national oil company ONGC, with other government-owned companies and some local independents working as well. But in a country with more than 3 million km2 of sedimentary basins, where gas discoveries have been more common, it imports 50% of its gas.
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