The Hindu Business Line : KG basin: Promising big business for energy players

As the chopper coasts over 2,000 ft above the sea level traversing the scenic lush green Konaseema region and the Krishna-Godavari basin, and gradually descends on to an isolated unmanned oil exploration platform in the serene sea waters, little would one realise that this is a region that could play a significant role in the country's energy story.

Projections and recent announcements indicate that the entire region has a huge untapped potential and the Black gold is awaiting to be tapped. Even as established players such as ONGC, Cairn Energy, and lately Gujarat State Petroleum Corporation Ltd and Reliance get struck into the region with exploratory rigs, this has potential to recast the country's oil story.

Oil story

As the chopper touches the exploration platform, there is a small dingy boat with four fishermen scouting for sea fish with their net cast wide, and also fishing rods. It is believed that fish often come around the oil platforms to eat the planktons that accumulate nearby, thereby falling prey to fishermen. All this means, there is a huge chain of dependents centred around the oil story in the KG basin, with opportunity for both upstream and downstream businesses across the entire value chain.

Would this be a reality or not? Ask a Cairn Energy official. Pat comes the reply. Just throw a box of pins in a room and try to pick them up. It would be difficult for one to do so. And more the players, better it would be to tap the crude.

The Cairns consortium has thus far extracted oil and gas worth Rs 25,000 crore from eight platforms. Its annual output from Ravva fields account for about seven per cent of the total produce in India now. It predicts that there is about four to five billion worth oil and gas in the region even at a conservative estimate of about $40 a barrel.

The Cairn Energy consortium, which has about eight platforms in and around Ravva oil fields, is planning to step up its exploration work in the region including mining some of the sub surface areas in the existing oil fields. It is poised to pump in some $90 million for exploration related works this year.

The Head-Petroleum Engineering and Product Technology, Cairn Energy India, Mr Santosh Chandra, and the Head-Strategy, Mr P. Elango, shared the company's experience about how they built a plant at Surasiyanam, a fishing town. They have succeeded in turning it as one of the low-cost crude producers in the world with an average production of about $1 a barrel.

As the Cairns' story unfolds and the company is gearing up for an initial public offer, which is set to hit the market in December, it plans to explore new regions and has spotted the Barmer region, Rajasthan, as the next major field with huge potential that could effectively transform the region and the State in particular.

As fields like Ravva or diamond or small spark get explored, the KG basin holds both hope and huge prospect for oil value chain.