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, ostensibly a move to create an entity that can compete with major international firms.

While domestic oil production is over 500,000 bpd, the country consumes 2 MMbpd, requiring net imports of 1.5 MMbpd. Natural gas usage, primarily for power generation, is projected to double by 2005, from about 0.8 Tcf in 1999. Several LNG import projects are underway, along with proposals for import pipelines.

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. The largest new program is the New Exploration Licensing Policy (NELP) launched in January 1999, with active marketing of 48 onshore / offshore blocks. Of these, 25 were placed in negotiation in January 2000 from 27 bids submitted; 24 had been awarded by early 2001.

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. Cairn picked up one deepwater block; HOEC-Mosbacher-Energy Equity, OIL and GazProm-GAIL got one shallow water block each. The Geoenpro-Enpro-Geopetrol group’s one onshore block was the last awaiting final signing.

The second, NELP II, closed for bidding March 31, 2001, inviting bids for 25 exploration blocks – 16 offshore, with eight in deep water and nine onshore. Twenty-three blocks received bids, with international majors conspicuously absent. ONGC reportedly bid on 17 blocks, alone and with four different consortia. A Reliance / HEPI JV was the other major player, bidding on 15 blocks.

In other licensing, in April 2000, two onshore blocks from the 6th Round (CB-ON/2 and ON/7 in Gujarat, Cambay basin) were finally awarded to GSPCL / HOEC with seismic and drilling commitments. And SR-OS-9411 offshore Gujarat, from the 7th Round, was awarded to Reliance Oil India. In February 2001, after a six-year delay, nine onshore PSCs from the 2nd Field Round were finally signed. The Heramec / GSPC / HOEC consortium signed for six field developments in Cambay basin, including: Allora, Dholasan, Kanawara, North Balol, North Kathana and Unawa. Also in Cambay, Interlink Petroleum and Hydrocarbon Resources picked up Modhera and Sanganpur fields, respectively. Joshi / Assam Oil signed for Amguri development in the Assam-Arakan basin.

Exploration drilling by foreign operators has been minimal, as reported by Wood Mac’s "significant completions" between May 2000 and May 2001. Cairn Energy, operating for itself, TATA Petrodyne and ONGC, drilled six wells in Block CB-OS/2 in Cambay basin offshore Gujarat in 40 to 200-ft water using JT Angel, Kedarnath and Chuck Syring jackups. CB-A-1 and 2 found Lakshimi field between North Tapti and Hazira. CB-B-1 wildcat found Gauri gas field, 4 mi SE of Lakshmi, on trend with Hazira. CB-C-1 found Ambe structure NW of North Tapti in deeper water in the center of Cambay Gulf. CB-E-1, 16 mi north of Lakshmi, was P&A’d with gas shows. But CB-G-1, between the dry hole and Lakshmi, found the Parvati structure. The combined discoveries on CB-OS/2 likely total close to 1 Tcf gas and 50-250 MMbbl oil. Seismic evaluation is continuing.

On the East Coast, Cairn completed its deepwater N-1 gas discovery in 1,970-ft water in Krishna Godavari basin using the Energy Searcher drillship. The permit is one of the NELP I blocks. In early 2001, the drillship moved to Cairn’s KG-OS/6 block to drill KG-A-1, the first of two wells. The ambitious company also plans onshore drilling in 2001, in Rajasthan’s RJ-ON-90/1 block.

In late 2000, Enron P&A’d its Moon-1 wildcat as a dry hole off the Mid-Tapti structure farther southwest in the Cambay Gulf using the Vicksberg jackup. In first-quarter 2000, Essar drilled the onshore Nanuwala 1 wildcat in Rajasthan basin in the far NW; and Niko drilled Hazira A1 appraisal in Gujarat near the coast. Two other wells planned for 2001 are Essar’s probe in BB-OS/5, Saurashtra basin, and Tullow’s wildcat in GK-OSJ/1, Gujarat Kutch basin.

Development. No major new finds have been made recently; the main hope is offshore, particularly deep water. Bombay High field is the leading producer with its 200,000 bpd output, nearly 40% of the country’s total. One major goal is to boost reservoir recoveries beyond typical 30% levels – here foreign technology investment is vital. ONGC has been prompted to improve recoveries in 14 major fields by stages; eight of these are in Phase 1: Kalol, North Kadi, Sanand, Santhal, Balol, Gandhar, Neelam and Heera. These are in addition to a program for Mumbai High field. ONGC is also launching Phase II of Bombay High redevelopment, covering the southern area. The $1 billion program was to start in mid-2001. It will boost recovery 5% to 31%. Elimination of wasteful gas flaring is a major objective.

Increasing natural gas use is a priority, starting with more supplies for power generation. Either by tanker or pipeline, most gas needs will be imported; 70% of present reserves are found in the Bombay High basin. Twelve prospective LNG import terminal projects have been approved, but not all will be built on schedule.

Pipelines are still being considered from Iran’s South Pars field, and from Bangladesh into the Indian gas grid. More power plants are needed and the government is encouraging "mega projects," i.e., more than 1,000 MW. Enron’s Dabhol plant is the only such project under construction.