India’s $100 billion oil exploration opportunity

two weeks ago I reported that a lengthy exploration effort has led to the discovery of massive oil and gas reserves in Pakistan’s territorial waters, a deposit so large it is said to be capable of changing the economic trajectory of the beleaguered country. Although Pakistan’s hydrocarbon resources have yet to be quantified, some estimates suggest that this discovery constitutes the fourth largest oil and gas reserves in the world. However, the oil majors appear unimpressed: In July, the country’s oil minister, Musadik Malik, told a parliamentary committee that no international companies were interested in exploring for oil and gas offshore Pakistan, and those in the country were considering the exit door. . It comes down to security and risk versus reward Malik explained committee that the cost of security is a major deal-breaker because “in areas where companies search for oil and gas, they must spend a significant amount to maintain the security of their employees and assets.“

Fortunately for Pakistan’s neighbor, India has no such baggage. Indian Oil Minister Hardeep Singh Puri has called on oil companies to step up oil and gas exploration in the country to help reduce India’s dependence on imports and make the fuel affordable, sustainable.

“E&P offers $100 billion worth of investment opportunities by 2030“, he said at a conference in Urja Varta.

Currently, only 10% of India’s 3.36 million sq km sedimentary basin is being explored. Yet the country is rich in fossil fuels: In July, S&P Global Commodity Insights revealed that four largely unexplored sedimentary basins in India could hold up to 22 billion barrels of oil. In fact, the lesser-known Category II and III basins, namely the Mahanadi, Andaman Sea, Bengal and Kerala-Konkan, contain more oil than the Permian Basin, which has already produced 14 billion barrels of its 34 billion. recoverable oil reserves.

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Rahul Chauhan, an upstream analyst at Commodity Insights, highlighted the potential of India’s untapped oil and gas sector, ”ONGC and Oil India hold acreage in Andaman waters under the Open Surface Licensing Program (OALP) and have several significant projects planned. However, India is still awaiting the entry of an international oil company with expertise in deep and ultra-deep water exploration to participate in the current and future OALP bidding rounds and to explore these frontier regions.s”, he declared.

Big Oil kicks off exploration in India

India boasts significant discoveries in the Krishna-Godavari, Barmer and Assam basins, but exploration in other areas has developed more slowly. Of India’s 3.14 million square kilometers of sedimentary basins, 1.3 million square km are in deep water. India had its first foray into deepwater exploration in the Bay of Bengal earlier this year in the Krishna-Godavari basin, courtesy of state-owned Oil and Natural Gas Corporation (ONGC). ONGC said it plans to spend more than $10 billion to develop several deepwater projects in its KG-DWN-98/2 block in that basin.

Meanwhile, upstream state company Oil India Ltd is looking to start exploration activities in Nagaland

“We have a total of 30 blocks under OALP. We have already drilled all the wells under the awarded OALP blocks except in Nagaland. We are following the ministry and they have set up a high powered committee involving OIL, ONGCgovernment officials, to discuss the matter with the Nagaland government and resume exploration,” said the official.

Unlike Pakistan, India is likely to have little trouble attracting oil and gas majors. Indeed, the British energy giant BP Plc (NYSE:BP) is holding a board meeting in India this week hunters for more opportunities in the country. BP created a joint venture with an Indian multinational conglomerate Reliance Industries to operate 1,900 retail fuel stations in India and to produce oil and gas from a deepwater block in the Krishna-Godavari Basin. The JV teamed up with ONGC to bid for the exploration rights for an offshore block in India.

National oil companies (NOCs) hold 58% of global reserves and 56% of production. However, international oil companies (IOCs) also play a major role in the energy sector, contributing to the overall economic and social development of the host country. Indeed, the IOCs are obliged by the production sharing agreement to pay royalty fees to the host country.

Analysts have predicted that India will become the key driver of global oil demand growth, surpassing China.

“China’s role as a driver of global oil demand is fading fast,” Emma Richards, senior analyst at London-based Fitch Solutions Ltd, told The Times of India. According to the analyst, over the next decade, China’s share of emerging market oil demand growth will drop from nearly 50% to just 15%, while India’s share will double to 24%.

A rapidly growing population, which has probably surpassed that of China, is expected to be the main driver of consumption trends in India. Meanwhile, the country’s transition away from traditional gasoline and diesel-powered transportation is expected to lag behind other regions, in stark contrast to China’s skyrocketing adoption of electric vehicles and clean energy in general.

“India was always going to overtake China in a matter of time to be the driver of global demand growth, mainly due to demographic factors like population growth,” said Parsley Ong, head of Asia energy and chemical research at JPMorgan Chase & Co. from Hong Kong, for Bloomberg.

By Alex Kimani for Oilprice.com

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