INDIA THE SILENT REVOLUTION – Part 2
Release Date: 2011-12-21 00:00:00
In its search to solve the question of India’s energy security, the Indian state government has been pushing to promote exploration activities in the country, and efforts of both public and private sector enterprises have recently been concentrating on the offshore exploration. With shallow water expertise steady in place, India’s shores are witnessing a new round of development as deepwater explorations attract high levels of both domestic and foreign engineering and manufacturing.Nonetheless, the dominance of state-owned players, strong price awareness, and modest foreign investment might throw grit in the machine of India’s offshore oil and gas sector.
Focus Reports presents you with an insight look from Mumbai, India’s offshore epicenter.
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New Horizons Offshore
The story of India’s offshore started with the discovery of the Bombay High oilfield 160 kilometers off the coast of Mumbai,. “The Oil and Gas (O&G) discovery in Bombay High took the country by surprise,” explained Satpal Singh, managing director and CEO of Dolphin Offshore, one of the first Indian offshore support companies. “There was no expectation that India had offshore oil resources. We had historic findings in Assam and Gujarat, which had been found during the days of the British presence in India. The entire production was oil - hardly any gas was restricted to that source. There was no development of O&G technology; there was no trading institution over here, although after a period of time, ONGC started to develop certain institutions.”
“It actually all started with a lot of foreign companies, considering there was no Indian company that had sufficient expertise,” Amit Biswas, CEO of Ambico, explained the initial development of India’s offshore industry. Biswas’ company is a service bound offshore agency with Joint Ventures (JV) with Malaysian offshore engineer IEV, British Found Ocean and a partnership with the Australian offshore project contractor Tamboritha. “Over the last fifteen years, a lot of Indian companies have come in, for exploration and production (E&P) of offshore oil and gas,” Biswas continued.
“The crews of the vessels, along with the companies mastering the supply vessels, were foreigners,” Biswas continues. “It took us some time to train local people and qualify them (…) My partner was, in fact, the first ever Indian master to handle an offshore vessel. Slowly, Indian companies came in. Now we see some JV or full-fledged Indian companies taking lump sum turnkey jobs. Before, only foreign companies were doing it, and Indian companies were providing a bit of support.”
“The country’s offshore sector”, said Singh, “possesses such levels of homegrown expertise nowadays that it could do without foreign expertise. The growth and development of the Bombay High field provided tremendous opportunities for Indian companies to start new ventures and over the next 2 decades the country grew towards self reliance in being able to meet the requirements of the Oil & Gas industry.”
Beyond Bombay High
While the output of the Bombay High field run by state-owned Oil & Natural Gas Corporation (ONGC), decreased from a 20 million ton peak in 1989 9 million tons now, India’s offshore industry received a next boost in 2002, when Reliance Industries, India’s largest private player in the petroleum sector, discovered the biggest natural gas reserves in India. This was in the D6 block in Krishna Godavari (KG) basin, 37 miles off the Indian east coast in the Bay of Bengal. The field has proven plus probable reserves of 11.3 Tcf. Similar to what happened in the Bombay High field, the development of the operations at the east coast has seen India’s domestic industry, with the support of foreign companies, working hard to close the knowledge gap .
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Reliance Industries’ operations in the KG basin were quickly recognized as India’s most important offshore activity and even one of the most important in the world; the field was the world’s largest gas discovery in 2001. Indeed, as P.M.S. Prasad, Reliance Industries’ executive director, told Focus Reports, “our drilling partner, Transocean, says that our operations at a water depth of 10,194 feet are the deepest that have ever been done [worldwide]”; this project has also seen the participation of the Houston-based oilfield service company, Oceaneering, with an all Indian team.“We had to start from scratch, so having created an organization, trained a lot of people and acquired some competencies and infrastructure, we are now looking at opportunities outside India,” continues Prasad. “We have a very good safety, exploration, development and project management record, and now we are looking to capitalize on these competencies outside the country.”
Full of achievements, including 125 deepwater wells drilled and a strong track record, Reliance Industries signed another milestone in its international strategy by signing a joint venture with BP last February through which the American supermajor committed to invest 7.2 billion USD (30 per cent stake) in 21 of Reliance’s oil and gas blocks.
In a press conference following the signing of the deal, Reliance Industries chairman Mukesh Ambani said that “These guys are the best (in exploration). If you want to climb the Mount Everest, make sure you have the best Sherpa with you.”
Reliance’s successful deal was followed last August by news that ONGC was holding talks with international oil companies already present in India including Shell, Eni and BG to sell stakes in its deepwater wells off the country’s resource-rich eastern shore. At the same time, ONGC has also been carrying out a Rs. 9,000 crore (approximately 2 billion USD) redevelopment investment to increase oil and gas output of its Bombay High field.
Indeed: “In India we are endowed with around 138 billion barrels of oil and oil equivalent, but most of them lie in frontier locations/deep water and ultra deep water. In order to search for these resources our country needs advanced technology,” explains Ashley Jerome D'sa, CEO of Oil Field Instrumentations (OFI), a company delivering mud logging services.
D’sa praises the New Exploration Licensing Policy (NELP) introduced in the early 1990’s to further liberalize participation at E&P tenders, as: “the general impact of such policies is the increasing entry of foreign investment and private companies in the Indian upstream market. Obviously, this has also given more opportunities for growth in the sector that we are in. We have been working on almost every project; with ONGC for instance, we have been working with them in all the assets and basins – onshore as well as offshore. We have also been working with private and MNC’s like Cairn, Reliance, GSPC, British Gas, Shell, Gazprom, NIKO, Hardy Petroleum and many others. If the exploration industry continues to grow we hope to see growth in OFI’s business as well.”
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