Far East: India

FAR EAST

India

The principal upstream operator in India is state-owned Oil and Natural Gas Commission (ONGC). The smaller Oil India Ltd. (OIL) operates mainly onshore. ONGC supplies more than 80% of the domestic output and operates most E&P activities, including offshore operations. The India Oil Corp. (IOC) controls downstream refining and distribution. ONGC and IOC restructured in early 1999, swapping 10% of their shares. U.S. sanctions against India following May 1998 nuclear weapons tests have curtailed funding from U.S. / international banks, but some sanction waivers were imposed and expanded in 1999.

Licensing/exploration. India has had programs to entice foreign upstream participation for several years, including 6th, 7th and 8th exploration rounds, the 1995 JV round, and 1st and 2nd Field Development Rounds for small (1st) and small / medium (2nd) fields. Several licenses are still open, or award negotiations are still underway under these programs. The largest new program is the New Exploration Licensing Policy (NELP) launched by the government in January 1999, with the active marketing of 48 onshore / offshore blocks. Of these, 25 were awarded in January 2000 from 27 bids submitted; a second bidding round was scheduled for June.

A Reliance-Niko combine picked up 12 of the 23 offshore blocks, three in deep water. ONGC got seven offshore blocks, three in deep water, plus one onshore block. Cairn picked up one deepwater block; HOEC-Mosbacher-Energy Equity, OIL and GazProm-GAIL got one shallow water block each; and the Geoenpro-Enpro-Geopetrol group got one onshore block.

In other licensing activity, Tullow increased its onshore / offshore acreage significantly through deals with Larsen and Taubro, Okland Oil Co. and the Essar / Hindustan Oil Exploration Co. (HOEC). Cairn agreed with Shell to increase Cairn’s equity in RJ-ON-90/1, where a second exploration well was drilled. Unocal took over as operator of AAP-ON-94/1 in the Assam basin; Enron farmed in to CB-OS/1 offshore Gujarat; Cairn increased its equity in offshore Gujarat CB-OS/2; and equity positions of consortium members in Phase II CY-OS/2 work could change. Essar relinquished RJ-ON-90/4 after exploration work; it keeps adjoining RJ-ON-90/5. Jehan Energy acquired Hardy E&P, increasing its equity in offshore Cauvery basin CY-OS/2 and CY-OS-90/1.

Exploration drilling by foreign operators has been minimal, and no information is available on ONGC/OIL drilling. Shell (Cairn) discovered oil with onshore wells Guda 1 and 2 in western India’s onshore Rajasthan basin; Cairn will assume block operatorship. ONGC tested oil / gas in the deepwater Krishna Godavari basin with well G-1AA, NE of the Andhra Pradesh coast. In early 2000, Cairn announced a significant gas discovery in CB-OS/2 offshore Gujarat in western India, and additional drilling is planned; Cairn says the prospects have a 2-Tcf reserve potential. In March, WM says Essar was planning wells on offshore blocks RJ-ON-90/5 and BB-OS/5. And Tullow was to drill its first well on offshore GK-OSI/1.

Development. Oil accounts for about 30% of India’s total energy use. It imports a net 1.2 MMbpd. Bombay High is the largest producer at 200,000 bpd (1999). ONGC is actively working to enhance the field’s output through water injection, logging, extended reach drilling, etc. Redevelopment could involve drilling several hundred in-fill / injection wells. Two other large fields, Neelam and Hira, in the western offshore, produce 30,000 and 50,000 bpd, respectively. Neelam is being actively enhanced by a multidisciplinary team. A new field, B-173-A (1998) is contributing 6,000 bpd, according to a report in Offshore. ONGC is serious about its deepwater exploration; it has upgraded the Sagar Vijay drillship to advance the search.

The big push in India is for increased gas. Usage is expected to increase from 0.6 Tcf in 1995, to 1.2 Tcf in 2000 and 1.9 Tcf in 2005, primarily for power generation. Gas reserves in the 16-Tcf range at year-end 1999, give a large development target. New plants are being built in coastal areas, where they can access imported LNG.

Four large, foreign-financed projects are underway to facilitate LNG imports, including import terminals and supply pipelines. Two major gas pipeline projects are still being studied. One would supply India from Iran’s huge South Pars field via a subsea line. Another would link Bangladesh reserves into the Indian gas grid. Enron is proceeding with the 740-MW Dabhol LNG-fired power plant; Phase II will add another 1,440 MW of capacity. And IOC, as part of a reported $14-billion major move to increase its size over seven years, has signed with Mitsubishi to build a 500-MW power plant in Gujarat.