Ask anyone about India’s exploration story and Mumbai High (erstwhile Bombay High) will be the first to be mentioned. Last month, Mumbai High turned 50, and it still remains one of the prime assets in India’s upstream segment. This makes one wonder, why no other discovery has earned such repute — despite discoveries being announced by various players.

Today, data mining has been made easier, technology is more in use, and policy interventions have been done over the years, yet there is still something missing? Those within the industry and critics believe it is effective implementation of policies for the sector — from NELP to HELP. Then there are those who feel that the Finance Ministry is the party spoiler as it always treats exploration as a revenue generator, which is not the case as profit comes only after there is decisive production flow.

Stumbling blocks

According to Prashant Vasisht, Senior Vice-President and Co-Head - Corporate Ratings, ICRA Ltd, “Geology, poor data on prospectivity and no-go areas due to lack of clearance from Ministry of Defence, and lack of adequate fiscal regime have led to India’s strike rate being low.”

Approvals from the Defence Ministry can delay the whole exploration process. The taxes — service tax/VAT/GST — levied by the Finance Ministry can prove to be a deterrent — may be not for a giant like ONGC but for new players who are willing to take a risk. Financing of exploration projects is also not easy.

On Mumbai High celebrating its golden jubilee, the Minister of Petroleum and Natural Gas, Hardeep Singh Puri, on February 18, emphasised the offshore oilfield’s pivotal role as a beacon for future exploration, urging ONGC to embrace cutting-edge technologies like AI and data analytics for sustainability and reduced environmental impact.

He expressed satisfaction with ONGC’s efforts in bringing new discoveries into production, signalling a strategic path for further advancements to bolster the nation’s growth.

When Mumbai High was developed, the facilities available for an explorer now were not there. According to ONGC Director (Exploration), Sushma Rawat, Mumbai High is a large anticlinal structural — that is, an arch-like fold in the rock that has its oldest beds at its core — that was discovered as a lead from the initial discovery in Cambay Basin.

“Structural traps of hydrocarbon deposits were considered easy oil as these are easily interpreted from gravity data and are also visible on seismic sections. Such structural features have been discovered in other basins also, but the size has not been comparable to Mumbai High,” she said.

“In the deeper parts of the basins, stratigraphic traps are more likely to be present with significant hydrocarbon (oil + gas) deposits. However, these are difficult to identify on classical seismic interpretation as well as difficulty in drilling deeper wells with high temperature-high pressure conditions,” she explained.

Even Mumbai High when discovered was initially estimated to have around 500 MMToE (million metric tonne of oil equivalent) reserve (3P — proven, probable and possible — in-place), but with subsequent simultaneous exploration (with development), it has grown to a more than 2300 MMToE (3P in-place) field today.

Many discoveries

ONGC itself has made discoveries like the Bassein field, which is a giant field. Gandhar, Geleki, Neelam and KG DWN-98/2 are a few examples of major fields discovered by ONGC. The public sector giant has till date made more than 650 discoveries, and a lot of them are yet to be monetised.

“We have added a total reserve of 9163 MMToE (3P in-place) of hydrocarbon reserve to the nation’s kitty (2P — proven and probable in-place reserve: 8268 MMToE) as on March 1, 2023,” she said.

Recent discoveries in OALP blocks, especially in Mahanadi Deepwater, are an indication of potential Indian basins’ hold. Large gas fields in eastern India, if developed quickly, can help in energy transition and achieving net zero as gas is a relatively cleaner fuel with high recovery with minimum reservoir interventions.

When all this is happening, still the upstream segment is delivering far below what the country needs. Exploration in difficult areas should be incentivised, she said.

Why is the Finance Ministry considered to be the party spoiler? Exploration is high-risk and the costs involved are huge, and if it experiences a dry run the exploration company ends up losing money, said an industry insider.

According to Vasisht, “A long-standing demand of upstream explorers is removal of GST or making it nil. This is also because as crude oil and natural gas are outside the purview of GST, incidence on exploration results in stranded taxes.”

“Oil and gas exploration should be taken up as a strategically important activity for energy security,” Rawat said, adding: “Exploration is also adding value in terms of data generation which would be helpful in finding out other energy resources — geothermal resources, natural hydrogen deposits and for environmental sustainability projects such as CO2 storage and CO2 based Enhance Oil Recovery schemes.”

What the sector needs is synergy among the policymakers to facilitate higher exploration activities and reduce India’s dependence on imported fuel — the price at which Indian refiners bought their crude oil (Indian Basket) as on March 1, 2024, is $83/bbl — and thus lowering the burden on the country’s fisc.