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Business News/ Industry / Energy/  India plans to map its hydrocarbon resources
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India plans to map its hydrocarbon resources

Move comes in wake of waning interest in the sector, with around 70% of basins remaining largely under-explored

The exercise comes in the backdrop of India offering 46 hydrocarbon blocks to investors under the 10th round of Nelp through a revenue-sharing regime that was recommended by a panel headed by C. Rangarajan.Premium
The exercise comes in the backdrop of India offering 46 hydrocarbon blocks to investors under the 10th round of Nelp through a revenue-sharing regime that was recommended by a panel headed by C. Rangarajan.

New Delhi: To boost oil and gas output, the government is assessing India’s hydrocarbon resources across all the 26 sedimentary basins, covering an area of 3.14 million sq. km. The last such exercise was carried around 20 years ago in 15 sedimentary basins.

The latest decision comes in the backdrop of waning interest in the Indian hydrocarbon sector, with around 70% of Indian basins remaining largely under-explored. The 30-month exercise will be undertaken by a team led by the Keshav Dev Malviya Institute of Petroleum Engineering and will be monitored by a national committee headed by the petroleum secretary.

“It may be recalled that during the course of implementation of pre-Nelp (New Exploration Licensing Policy) and Nelp rounds and other exploration and production activities, substantial geo-scientific data have been acquired and interpreted. New oil and gas fields have also been discovered by utilizing improved geological understanding and new technology. With the increase in exploration spread and quantum jump in availability of geo-scientific data generated under Nelp, there is a need to revisit the hydrocarbon resource assessment of India," the petroleum ministry said in a note on Monday.

Nelp was approved by the government in 1997—it kicked off in January 1999—in an effort to boost hydrocarbon exploration in the country. Under Nelp, the government allocates rights to explore hydrocarbon blocks through a bidding process and has done this in nine phases so far for 360 blocks, with an investment of around $21.3 billion.

“There is also an urgent need for the fresh estimation in the remaining 11 sedimentary basins as well, for which no hydrocarbon resources have been estimated so far," the ministry said.

India needs to develop its domestic resources for achieving a high growth rate. This was recently articulated by finance minister P. Chidambaram. Speaking at Petrotech 2014, a biennial conference, about the impact of high crude oil prices and their impact, Chidambaram said, “In 2008, oil prices rose to as much $147 per barrel. It robbed off every developing country for 1-2% growth rate. As long as the oil market is defined by asymmetry of oil consumers and oil producers, I am afraid, this volatility will remain."

Such a scenario will impact India, the world’s fourth largest energy consuming nation that imports 80% of its crude oil and 18% of its natural gas requirements. Emphasizing the need for resources, Chidambaram said, “We need to develop our own resources and secure supplies from abroad."

The exercise also comes in the backdrop of India offering 46 hydrocarbon blocks to investors under the 10th round of Nelp through a revenue-sharing regime that was recommended by a panel headed by C. Rangarajan, chairman of the economic advisory council to the Prime Minister. A panel led by former finance secretary Vijay Kelkar favours the continuation of the current production sharing contract framework, which allows for cost recovery by exploration and production companies before they pay the government its share. “We need to dig for oil and gas rather than making plans and keeping them on paper," petroleum secretary Vivek Rae said last week.

Investors have given a thumbs-down to the Indian hydrocarbons sector, as was seen in the exit of BHP Billiton Ltd, the world’s largest miner, from its blocks in India. Also, the ninth round of Nelp auctions turned out to be a low-key affair, with one block even failing to elicit a bid. Only 13 of the 33 blocks on offer could be awarded.

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ABOUT THE AUTHOR
Utpal Bhaskar
"Utpal Bhaskar leads Mint's policy and economy coverage. He is part of Mint’s launch team, which he joined as a staff writer in 2006. Widely cited by authors and think-tanks, he has reported extensively on the intersection of India’s policy, polity and corporate space.
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Published: 20 Jan 2014, 11:28 PM IST
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