India Oil and Natural Gas Corp. is preparing to plow billions of dollars into deep and ultra-deepwater exploration, ramping up spending in a push that could help one of the world’s top oil-importing nations reduce dependence on overseas supplies .
“On land we have more or less drilled, evaluated or acquired data in most of the basins,” Sushma Rawat, the state-owned giant’s director of exploration, said in an interview. “But there are still large areas offshore where we have very little data, where almost no wells have been drilled.”
India, with a growing appetite for crude, is eager to reduce its fuel import bill and strengthen energy security, and has encouraged companies such as state-controlled ONGC to do more to tap domestic oil reserves and gas It’s a bet that, if successful, would reward producers and a government that wants to reduce its dependence on foreign countries.
Rawat said ONGC plans to bid aggressively in the upcoming government auctions to increase its exploration acreage to 500,000 square kilometers (193,050 square miles) by March 2026 from about 163,000 square kilometers today. Annual spending will increase to 110 billion rupees ($1.3 billion) from 70 billion to 80 billion rupees annually.
For ONGC, the exploration push is also about countering a decline in production. In the decade to the end of March last year, oil output fell 17.5% to 19.6 million tonnes, while gas fell just over 10% to 20,900 million cubic meters, a decline that has left India vulnerable to rising import costs.
ONGC accounts for 66% of India’s oil production and 58% of its gas. This is partly offshore, but in shallow water. The only producing deepwater project is Block KG-DWN-98/2 in the Krishna Godavari Basin. Crude production there will begin in May, well beyond the original target of 2019.
Prime Minister Narendra Modi’s government had set a target of cutting imports by 10% by 2022 and halving them by 2030, but fell short of the first target, and dependence on imports increased . No new targets have been publicly announced, but India last year released nearly a million square kilometers of land previously closed to exploration for military, environmental and other reasons.
Rawat and ONGC officials want to seize the opportunity, trying to accelerate efforts by establishing a series of partnerships with Exxon Mobil Corp., Chevron Corp. and TotalEnergies SE. ONGC owns a little over half of the country’s leased exploration acreage, making it an attractive partner.
Now, ONGC’s challenge is to turn broad agreements into tangible exploration alliances, said Angus Rodger, Asia Pacific upstream research director at Wood Mackenzie: “The Indian government wants to see new partnerships emerge between the players Indians and the best international explorers.”
The world’s oil majors, wary of the risks associated with India’s offshore potential, are pushing for better terms from the Indian government, Rawat said, including the addition of arbitration clauses, reassurance about the stability of the fiscal regime and on criminal responsibility.
