In the next five years, the government proposes to auction 88% of its gas reserves of 28-32 billion tonnes spread over 3.14 million sq. km and 26 basins. So far, it has only carved out 1.09 sq. km.
“The increase in the number of exploration licences in the country will accelerate the exploration in the country and also put to test resources such as funds, technology and logistics,” said a petroleum and natural gas ministry official, who did not wish to be named.
Most Indian companies neither have the technology nor the expertise to develop the deep-water blocks in the country. Hence, they will have to tie up with the foreign majors.
On the equipment front, there is a worldwide shortage of rigs and the exploration costs of the Indian companies have increased due to the increase in rig rental costs.
However, analysts attached more importance to the post- award activities. Said Deepak Mahurkar, associate director, oil and gas industry practice at PricewaterhouseCoopers: “The critical exploration success factors will be sourcing manpower skills, technology and services and most importantly, decreasing investor risks on asset monitization.”
Energy security is a key to sustaining 8%-plus economic growth.
Increase in the hydrocarbon exploration in the country, say analysts, will also decrease the outgo of precious foreign exchange, especially in the light of the unprecedented rise in prices of crude oil and an almost stagnant domestic crude oil production.
India’s consumption of petroleum products is around 114 million tonnes (mt) per annum and is expected to touch the 142mt per annum mark by 2012.
The number of exploration licences are expected to increase with the government introducing the open acreage licensing in 2008, which will allow investors a continuous window of exploration opportunities under which they would have the flexibility to choose the areas where they intend to carry out exploration, as first reported in Mint on 7 May.
Though the government is serious about increasing the hydrocarbon exploration in the country, the next round of the government’s ambitious seventh exploration licensing policy—part of the New Exploration Licensing Policy, or Nelp—due to be announced in April, is being delayed on account of pending clearances from the ministry of environment and forest, as well as the ministries of coal and defence.