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Absence of top international oil companies from India’s exploration and production (E&P) sector could be due to lacklustre discoveries in the last 23 years even as the government has undertaken several fiscal and licensing reforms.
The International Energy Agency (IEA) in a report said while the recent fiscal and licensing reforms have increased India’s relative competitiveness vis-à-vis other fiscal regimes and bid processes, international participation remains sparse.
“In part, the absence of international companies may be due to lacklustre discoveries since the turn of the century. Over the last 23 years, 2,000 million barrels (mb) of commercial liquid resources have been discovered in India, with close to half associated with the onshore Rajasthan RJ-ON-90/1 project,” the IEA said in a report on India’s oil and gas sector, which was launched during the recently concluded India Energy Week.
By comparison, IEA pointed out that Angola, Norway and Guyana have all seen around 10,000 mb of oil resources discovered over the same time period, while explorers in Brazil have found a massive 40,000 mb.
“Against the backdrop of capital discipline, major players may be waiting on the sidelines for a world-class find before establishing operations and cost centres in the country. In addition, international oil companies’ exploration capital is shrinking as a per cent of total outlays, having slipped from 21 per cent in 2000 to 9 per cent last year. Larger exploration finds may help prioritise Indian exploration among international players,” the IEA said.
E&P sector trails
Last month, Wood Mackenzie (WoodMac) said that India is expected to conclude the Open Acreage Licensing Programme (OALP) IX bidding round and open the OALP X round in 2024 calendar year to boost domestic production.
“In 2024, India will conclude OALP IX and kick off its OALP X offering. These two rounds offer large concessions in offshore that were previously no-go areas for oil and gas exploration. The majors have shown lots of interest, but we remain sceptical this will turn into big acreage acquisitions,” WoodMac said in its latest report on the Asia Pacific upstream sector.
Sweetening the deal
S&P Global Commodity Insights said that India should explore making its terms offered to foreign E&P companies more attractive.
In January, S&P Global Commodity Insights Senior Vice-President and Chief Energy Strategist Atul Arya told businessline: “I think if one has to still see how to attract more investment, we should see our fiscal terms from the perspective of being a net importer.”
S&P Global Commodity Insights ED Energy Transition & Cleantech Consulting Gauri Johar said for a net importing country, the fiscal terms have to be even more attractive.
“I think it may be worth having one more loop of conversation with the investors that are looking for more. I think the question to always ask is what will it take?,” she emphasised.
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