Even as we enter the 50th year since the first oil discovery in Independent India, lack of new big discoveries is a bother. The NDA Government hopes that its policy push will make a difference, and reduce import dependency. Richa Mishra writes

Parasmal Ghanchi was 22 when Scottish company Cairn Energy started exploring the deserts of his home town Barmer, in Rajasthan, for oil. In no time, he landed a job in the company (now part of Anil Agarwal’s Vedanta). “I had seen oil only in drums, and here I was drilling an oil well. Many thoughts crossed my mind – what will it look like, how will it smell, how will it flow?” recounts Ghanchi. And now, 16 years later, Ghanchi is an experienced oil explorer who travels all over the world. But he is quick to point out the risk involved, “It’s like a gamble. You may or may not succeed.”

Ghanchi is right. Who would have thought underneath the sand dunes in the middle of a desert will be oil and gas. But that’s what happened in Barmer, when Cairn Energy struck black gold in 2004. Sadly, to prove Ghanchi’s point, that remains one of the last big discoveries that India’s oil industry can boast of.

Many in the industry believe that there are still unexplored areas. Then why is exploration not happening? Why is India still dependent (over 80 per cent) on imports?

Says a former Director-General of Hydrocarbons, “Politics cannot resolve geological problems and there has to be consistency in policy. There is no room for flip-flops as stakes are high. There has to be a certainty in policy implementation.” For instance, while coming out with the new exploration licensing policy, NELP, in 1997, the Government promised that companies would be allowed market-based pricing. But that was hardly the case.

It’s not surprising that Reliance Industries Ltd hasn’t made any fresh investments in the exploration and production business for almost six years. Instead, it has been focussing on its gas-producing asset.

Politics too has taken a toll. Take the case of the Neduvasal mining lease in Tamil Nadu, where protests against exploration is said to be fuelled by political parties.

But the NDA Government wants to change the tide. Dharmendra Pradhan, Minister for Petroleum and Natural Gas, believes it is possible to attain the target Prime Minister Narendra Modi had set two years ago — to bring down India’s import dependence on oil and gas by at least 10 per cent by 2022.

Really? Is it possible?

Post-Independence

Before 1947, the Assam Oil Company in the North-Eastern and Attock Oil Company in the North-Western part of undivided India were the only companies producing oil in the country.

The major part of Indian sedimentary basins was deemed to be unfit for development of oil and gas resources. To put the focus on exploration, the Industrial Policy Statement of 1948 considered the development of the hydrocarbon industry in the country to be of utmost necessity.

The first oil discovery in Independent India happened in 1958, and in 1974, oil well was found in Bombay High.

After years of no-show, the 1997 policy, which gave private companies equal footing with public sector oil companies when it came to exploration, was hoped will be a game-changer. While the results have been mixed, last year’s Hydrocarbon Exploration Licensing Policy (HELP) is seen as a better offering, as it lets companies carve out their areas of interest to explore through open acreage licensing.

New hope

“Since 2014, we have initiated more reforms for the upstream sector than those undertaken in the past 25 years,” says Pradhan.

Driving the reform agenda is the HELP, through which the Government wants to ensure a market-driven price for the explorer. “The Government has no business to look into the day-to-day matter of upstream companies; so we brought in the HELP,” says the minister.

While the policy fillip will help, industry watchers also caution against undermining discoveries of small oil fields. “Bombay High has become a generic term. It is just a field, but it has become synonymous with Western offshore,” says former ONGC Chairman , D K Sarraf.

“But there are other discoveries. There is the Bassein gas field, which is a significant asset, in the western offshore. Today the production is being sustained from new discoveries.”

Says P Elango, Managing Director, Hindustan Oil Exploration Company, “Whenever you open up a new basin it is a major discovery in itself….there are continuous discoveries in the same basin. But, what matters is how fast you can develop.

“Frontier basin is different, where exploration is much more risky and results are uncertain. Larger companies such as ONGC should focus on opening up such basins. You lay the road and smaller players will follow it.”

But Saurabh Chandra, former Secretary, Petroleum, and the man who had questioned ONGC’s track record in exploration, believes that the thirst for hunting oil has to be revived. “The drive, motivation, and spirit which was earlier there, seem to be missing. There are tales of historic work done by ONGCians. Where are those tales now? Need to get the spirit of exploration back,” he adds.

Somebody has to step out and explore. But who is the question.

(This article was published on October 9, 2017)

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