The Hindu Business Line : Privatise old oil fields to accelerate exploration

With international crude prices flirting at over the $100 a barrel mark, the need to reduce incremental import dependence of the country’s energy requirements entails a number of measures including acceleration of oil and gas exploration.

To meet this requirement and reduce import dependence, the Economic Survey 2007-08 has suggested privatisation of old oil fields for application of improved/enhanced oil recovery techniques.

India imports about 72 per cent of its crude oil requirement to service the domestic demand for petroleum products, and international oil prices play an important role in domestic pricing. The Indian crude basket on Wednesday stood at $96 a barrel. The country has already spent $48.02 billion on crude imports in the first nine months of the current fiscal because of the surge in international oil prices.

NELP

While production from old fields is a concern, since operationalisation of the New Exploration Licensing Policy (NELP) since 1999, 46 oil and gas discoveries have been made by private/joint venture companies in 13 blocks, which have added more than 600 million tonnes of oil equivalent hydrocarbon reserves.

As on April 1, 2007, the investment made by Indian and foreign companies in NELP blocks was $3.887 billion, out of which 30 per cent was by the national oil companies, 61.1 per cent by the Indian private companies and the remaining 8.9 per cent by foreign companies.

At present, after concluding six rounds of NELP, 162 production sharing contracts have been signed and area under exploration has increased four times, which covers 44 per cent of the Indian sedimentary basin.

According to the Survey, the international price of crude oil and petroleum products has increased phenomenally in recent months. “This has a significant impact on the oil marketing companies as India imports about 72 per cent of the crude oil requirement,” the Survey said. The Government has tried to equitably distribute the burden of oil price hike among the various stakeholders — upstream companies, oil marketing companies, Government and consumers.

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