New Delhi: India aims to auction its remaining 1 million square kilometres of potential exploration areas in the next two to three years, buoyed by recent oil and gas discoveries, the upstream regulator said on Thursday.
It recently launched its biggest-ever exploration round, offering 70 blocks as it expects companies to seize the opportunity to strike good bargains because of the economic slowdown.
The discoveries, and their development, will prove useful as India imports over 70% of the crude it consumes and demand is expected to rise further as the economy recovers.
The country has so far allotted 68% of its 3.14 million sq km of area for exploration to various companies.
Foreign oil firms including Anadarko Petroleum, South Korea’s Samsung and Noble Energy had indicated interest in the latest round of the New Exploration Licensing Policy (NELP), director general (Hydrocarbons) VK Sibal told the Reuters Energy Summit in New Delhi.
“For big firms, the credit squeeze and downturn is not a problem, rather this is the best time to avail prospective acreage at cheaper rates,” he said.
Out of the country’s 26 sedimentary basins, exploration works have been initiated in just 15 basins.
“Our country holds about 205 billion barrels of hydrocarbon resources. Of this, 138 billion barrels are yet to be found, and the remaining has been established on the basis of drilling work done,” Sibal said.
However, he said the numbers are based on limited exploration work done in the country.
“These numbers are based on the scanty data, based on scanty wells that we have drilled, because in some places exploration activity is yet to begin and in many places it is very low,” he said.
“In the east coast alone, our drilling density is 0.6-0.7 well per thousand square kilometres.”
Only 20% of India’s sedimentary area is well explored, 15% are poorly explored and exploration work has been initiated in 44% of the area.
India’s east coast, where Reliance Industries has found huge gas reserves, alone holds as much as 200 trillion cubic feet (tcf) of gas resources, Sibal said.
“These are very early numbers as India’s east coast was opened for exploration in the first round of NELP,” he added.
Reliance began gas production from its deepwater east coast block in the Krishna Godavari basin from April and the fields are likely to produce 80 million cubic metres a day of gas by December.
“There is a huge gap between resources and established reserves, so it provides a big opportunity to E&P companies,” he said. “Around 21-21 tcf of reserves have been established in the east coast based on drilling by Reliance, ONGC and GSPC,” he said, referring to Oil and Natural Gas Corp and Gujarat State Petroleum Corp.
Discoveries in previous licensing rounds, which will double India’s natural gas output to 160 million cubic metres a day and raise crude oil output by at least 25%, should help in attracting bids for the latest round, Sibal said.
India’s latest licensing round is launched at a time when a number of such announcements had also been made in other countries, though the overall activity outside India had not been as busy this year compared with previous years.
“Competition will be there as more and more countries are launching their exploration rounds,” Sibal said.