India Desperate for New Oil and Gas Fields

India Desperate for New Oil and Gas Fields

Before 2015 concluded its first quarter, state-owned oil and gas companies were suffering from a subsidy burden that forced them to share a proportion of oil marketing firms’ revenue losses that stemmed from selling petroleum products at subsidised rates. Though private companies were exempt from this obligation, the falling crude oil price has been taxing, with a handful of firms ready for disinvestment.

But the good news is that the oil ministry announced that they would alleviate the burden shouldered by Oil and Natural Gas Corporation (ONGC) and Oil India by relinquishing their liability to cover losses, should the crude oil price fall below $60 per barrel. This sets the two oil companies for better profit margins.

Despite the subsidy relief, the industry hasn’t done nearly enough to rally against the volatility of oil. Unlike other nations like Saudi Arabia and Iraq that have sustained oil operations and are in the process of repairing compressor stations in the midst of a commodoties crisis, India heavily relies on its imports to power the country. The nation currently imports 77 percent of its oil and Prime Minister Narendra Modi has set a target for the industry to cut them down by 10 percent before 2022, though easier said than done as speculations indicate that extraction at Bombay High–the country’s largest oil field–could be ending soon. In addition to that, no major oil discoveries have been made in the last decade.

In response to the depleting oil reserves, the government has loosened its regulations on exploration projects, first by adding a policy that increases flexibility in ending or extending exploration and development. The second policy put in place dictates that firms have the choice to develop discoveries at their own risk or conduct the prescribed tests. Prior to the new regulations, explorative efforts from ONGC and others haven’t reached development stages due to the previous standards in testing commercial viability.

However, without the approval of the Directorate General of Hydrocarbons (DGH), discoveries will not be acknowledged by the government. Reliance Industry Ltd. found a few oil fields back in 2007 and declared them commercially viable in 2010, but they are yet to be tested by DGH.

3 Comments

  1. If DGH has been sitting on the approval request from Reliance for 5 years, then one can only hope that India does not run of oil and will have to import all the oil it needs. Corruption has played a role in everything from a simple phone line installation to major licenses and approvals. It has not changed in 50 years – any surprise?

    Just lean from the Americans – a country that is now and oil and gas exporter though it is the world’s largest consumer of oil and gas! India needs to allow the private companies to explore, drill, refine and sell oil – get rid of the government owned companies – they are a major source of corruption, inefficiency, bureaucracy, high costs, and a burden on the tax payers!

  2. Fully agree with B.Dinesha (with multiple degrees from London, I must add) on this topic. We all need to learn from Doddanna on these areas. In fact, Israel has done even better when it comes to energy and resource management. Our corrupt mindset and lack of respect for laws are at the center of almost all the issues we face in India.

  3. Dear readers,

    Krishna-Godavari Basin is the place where, according to the Comptroller and Auditor General, the Gujarat exchequer had to suffer a loss of more than Rs 5,000 crore because the Gujarat government “extended benefits” to the then chief minister Modi’s “favoured few” industrialists. The losses were compounded also because of poor management and faulty agreements on the exploration of oil and gas in the basin.

    10 things you should know about the Reliance KG-D6 gas deal

    http://www.business-standard.com/article/companies/10-things-you-should-know-about-the-reliance-kg-d6-gas-deal-114021200357_1.html

    The Office of the Comptroller and Auditor General has pointed out irregularities by Shri Murli Deora and others then in the Oil Ministry for favoring Mukesh Ambani in escalating the cost of Development of KG Basin field by 4 times without relevant support documents. The CAG report said Reliance revised the KG basin development cost almost four-fold between 2004 and 2006 from $2.4 billion to $8.8 billion, “without the company offering a single comprehensive development plan as required under the contract.

    If the investigation has been done properly this will mother of all ‘G’ scams. Despite International crude oil plunge Modi govt is yet selling at the price of Congress at the time when the oil peaked to $140/barrel. Rather than developing the natural resources the respective governments found importing oil is more lucrative for their own coffers.

    While neighbouring China more aggressively expanding in to the exploration bidding ,Modi sarkar has surrendered to Ambani’s oil lobby does fixing the prices according to the companies benefit.

    While Americans cracking the Hydrocarbons more profitably to credit its economy, Modi ‘development’ in this field is largely pocketing big corporate giant which his party get sponsores. Does impacting Indian’s savings.

    Jai HInd

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