India has 26 sedimentary basins (see Indian Sedimentary Basin). Only 30% are under commercial production; most of these fall under the ageing category. About 23% of the reserves are discovered, but no commercial production has started there, while 47% are yet to be discovered. Exploration has been limited to Category I basins\u2014Mumbai offshore, Assam, Rajasthan and Krishna Godavari. The Category II and III basins, including Mahanadi, Andaman Sea Bengal, and Kerala-Konkan, are largely unexplored. These have 22 billion barrels of hydrocarbon potential, says S&P Global Commodity Insights.<\/p>
The costs\u2014of not drilling enough\u2014can pile up fast. India imports nearly 4.9 million barrels of oil per day. At $100 per barrel, this comes to $490 million per day. Clearly, not sustainable. If crude oil touches $150 a barrel, or even $200 a barrel, due to the war in West Asia, as some experts are predicting, it will be devastating for India\u2019s current account deficit, the rupee and, of course, households. It\u2019s a ticking time bomb.<\/p>
But what is holding India back from tapping its oil and gas resources? One factor, say experts, is geological complexities, which increase cost. The biggest is poorly designed policies. Several attempts to attract private capital\u2014right from the late 1990s to the present day\u2014have had minimal success. The efforts have been mired in corporate rivalries and court cases, some involving the government, running for decades.<\/p>
\u201cThis sector is among a few that have no government protection or incentive like PLI. To unlock India\u2019s full potential, we need more exploration. Today, there are hardly 200 active licences in India when there should be 2,000,\u201d says Vedanta Ltd Founder and Chairman Anil Agarwal, who has been a vocal critic of India\u2019s mineral policies. Vedanta is a leading global producer of metals, critical minerals, oil & gas, power and technology.<\/p>
With the war in West Asia hitting energy supply chains\u2014the choked Strait of Hormuz accounts for half of India\u2019s crude oil imports\u2014the government has woken up to the need for more atmanirbharta in oil and gas. It has taken some steps recently to attract private capital in exploration and production (E&P) such as uniform licensing and lower royalty rates. While launching the XIth exploration round for 21 blocks recently, it also assured investors that it will not nationalise oil fields or dilute the rights of operators without giving them a fair compensation. These assurances will also apply for the Xth round, launched last year. Can these work, considering India\u2019s past failures to attract capital in oil and gas exploration?<\/p> The Exploration Journey<\/strong><\/p> India depends on imports for 88% of its crude oil, up from 65% in the 1980s\u2014and it\u2019s not for want of trying. In fact, post-Independence, India\u2019s first Industrial Policy Statement of 1948 called for giving top priority to hydrocarbon exploration. Until 1955, exploration was mostly carried out by private companies such as Assam Oil Ltd, Oil India Ltd (then, a 50:50 JV between the government and Burmah Oil Company) and Indo-Stanvac (owned by the government and Standard Vacuum Oil of the US). Then came the nationalisation wave of the 1970s that saw the creation of giant oil PSUs, followed by India\u2019s biggest hydrocarbon discovery to date, Bombay High (in 1974) which, at its peak in the late \u201980s, accounted for 68% of India\u2019s crude oil production. There has been no big oil discovery since then.<\/p> After the 1991 reforms, the government realised the need to attract private capital into the country\u2019s oil & gas sector. A series of decisions led to the New Licensing and Exploration Policy (NELP) in the later part of the decade. One of its notable successes was the Krishna Godavari-D6 block. In 2000, the government awarded India\u2019s first major deepwater gas project to a consortium led by Reliance Industries Ltd (RIL) that also included BP and Canada\u2019s Niko Resources. But the excitement was overshadowed by bitter litigation. First, the government disallowed a part of the costs incurred by RIL on developing the field and claimed an additional $247 million as its share of profits. Then, state-owned ONGC alleged that RIL\u2019s drilling in the D6 block led to migration of gas from its adjacent fields and claimed compensation. Successive NELP rounds had even less to show. To meet the needs of a growing economy, consecutive governments prioritised imports over E&P.<\/p> India\u2019s upstream sector is dominated by PSUs. Oil and Natural Gas Corporation (ONGC) is the biggest player with a share of 71% in oil and 84% in natural gas. The biggest private player is Cairn, a division of Vedanta that operates India\u2019s largest onshore oil project in Barmer, Rajasthan. Cairn accounts for more than 23% of India\u2019s crude oil production.<\/p> Vedanta\u2019s Agarwal says India\u2019s potential can be unlocked by accelerating oil exploration, incentive schemes and doubling down on issuing operating licences to more private players.<\/p> At present, international players account for less than 10% of India\u2019s oil and gas production, according to CreditSights, a research firm. Their concerns include bureaucratic red tape, inconsistent enforcement across states and preference for domestic players. Big overseas players such as British Petroleum, Shell, ENI, ExxonMobil, Petrobras and TotalEnergies have till now preferred to work with PSUs in brownfield re-development projects.<\/p> Policy reforms over the years, from production sharing under NELP to revenue sharing under the 2017 Hydrocarbon Exploration Policy (HELP), have failed to attract foreign players. The private sector has focused primarily on refining and marketing. National oil output fell from 36 million tonnes in FY17 to 28.7 million tonnes in FY25 as the first generation of offshore platforms near the end of their life. There have also been delays in monetising existing discoveries and scarcity of new finds. Even in natural gas, production, which has increased in the last decade, is expected to remain flat till 2030, forcing an increase in imports, say experts.<\/p> Policy Initiatives<\/strong><\/p> The government is taking steps to address the gaps. In 2025, it amended the Oilfields Act, 1948, to address the long-standing concerns of exploration companies and foster a more investor-friendly environment. The new Petroleum and Natural Gas Rules, 2025, under the Act allow one unified petroleum lease for all upstream activities, replacing the previous scattered permits. The rules also set clear procedures for settling disputes, managing data, and sharing production and processing facilities.<\/p> Will these end the long funding winter for India\u2019s E&P sector? DK Sarraf, former CMD, ONGC, says the production sharing regime earlier provided some capital security to companies as they were able to recover the exploration cost once successful. This is missing now. \u201cThe HELP did not interfere with operations of oil and gas companies but demanded that the revenue be shared. The overseas companies feel this is not the best option,\u201d says Sarraf, brushing off the disputes under NELP. No foreign player has ventured into a greenfield oil and gas project since HELP was unveiled in 2017.<\/p> Another deterrent for global energy companies has been sudden policy changes. Cairn Energy\u2019s retrospective tax dispute with the government is often cited as a turning point for investor confidence in India\u2019s policy regime.<\/p> In 2012, India amended its tax laws retrospectively (going back to 1962) to target transactions involving indirect transfer of Indian assets. The government claimed that London-listed Cairn Energy owed Rs 10,247 crore in taxes related to its 2006 corporate restructuring under which Cairn UK transferred shares of Cairn India Holdings to its Indian counterpart, Cairn India. The company initiated international arbitration in 2015. In 2020, a permanent court of arbitration at the Hague ruled\u00a0in favour of Cairn, asking India to pay $1.2 billion plus interest and costs as damages. The government initially refused to honour the award, but in August 2021, brought a law to scrap all retrospective tax demands and refund the money collected but without interest or penalty. This was initiated after Cairn started a legal process for seizure of the Indian government\u2019s overseas assets, ranging from flats used by its diplomatic staff in Paris to Air India planes in the US. Finally, the government refunded Rs 7,900 crore to the company after it withdrew all cases. Kirit Parikh, an energy expert and former Member of the Planning Commission, says \u201cpolicies have not been conducive to attracting foreign explorers, who are not fully trusting us because of a couple of incidents of retrospective policy changes.\u201d<\/p> \u201cIt takes years to build trust and minutes to lose it. The kind of bureaucratic permissions and other clearances required are time-consuming,\u201d Parikh tells BT. According to the government, the approval process for E&P has now been simplified and involves just 18 approvals, down from 37, of which nine are self-certifications.<\/p> Market research firm Mordor Intelligence says forest clearances can extend beyond 900 days for upstream locations that intersect wildlife corridors. It says parallel land acquisition legislation mandates extensive community consultation, leading to compensation packages that can add 8\u201312% to project budgets. \u201cThe long timelines deter foreign independents from frontier plays and skew capital towards brownfield re-development due to already existing statutory paperwork,\u201d Mordor Intelligence says.<\/p> There have been calls for deregulating the oil and gas sector and instituting a market-based pricing mechanism. The government, though, introduced some pricing reforms in the gas sector in 2023, capping the price of domestic administered price mechanism gas at 10% of the monthly average Indian crude basket. Vedanta\u2019s Agarwal says there is a need to liberalise the heavily regulated oil and gas sector and rationalise rules in the crude oil E&P space. He says two decades ago, the US was heavily dependent on imports for hydrocarbons. \u201cDeregulation transformed this by allowing small entrepreneurs to drill backyards and farms through tax incentives, streamlined permissions, and strong private land rights that fuelled the shale fracking revolution, propelling America to net energy exporter status by 2019,\u201d he says.<\/p> Untapped Potential<\/strong><\/p> There is also a question mark over the quality of India\u2019s reserves and their potential. Parikh says large exploration companies feel India\u2019s potential is poor compared to West Asia, Iran and Indonesia.<\/p> For instance, reservoir heterogeneity in Rajasthan\u2019s Barmer-Hill and Assam\u2019s fractured carbonates requires multi-stage hydraulic fracturing and high-density vertical logging, which doubles drilling costs compared to vintage wells. The Directorate General of Hydrocarbons lists more than 60 prospects as tight oil, requiring advanced techniques to be tapped. Last year, the government confirmed a major gas discovery in the Andaman basin, marking a milestone in deepwater exploration. For the first time, drilling operations are targeting depths of up to 5,000 metres. According to analysts, commercial drilling and production may take 10-15 years and further drilling is needed to confirm the size and viability of the find. The Kutch-Saurashtra basin is another focus area with studies indicating that it is a major gas hub.<\/p> Sarraf, also former chairperson of the Petroleum and Natural Gas Regulatory Board, says oil wells managed by PSUs are drying up and they are investing further in the field to produce more. New exploration is risky and involves huge capital, which remains a deterrent for both private and PSU players. In the Andaman deep-sea exploration, the government is investing from the consolidated fund of India.<\/p> Mordor Intelligence says ONGC has dominant acreage but is grappling with natural decline and capital expenditure inflation. Its 2024\u201327 strategy allocates $6.5 billion for EOR (enhanced oil recovery) pilots, subsea tie-backs, and digital twins of 34 offshore platforms. Tie-backs connect new subsea oil and gas wells to existing, distant production platforms via pipelines and umbilicals.<\/p> Oil India is pursuing a \u201cbrownfield to greenfield\u201d road map and has earmarked 30% of its capital expenditure for new tight-oil prospects in Assam and Rajasthan. Vedanta\u2019s Cairn Oil & Gas has committed $4 billion till 2030 to increase output from existing fields.<\/p> Vivek Jain, Director, India Ratings, says the government will have to share some risk to encourage exploration. \u201cYou require large capital. If things don\u2019t work out, your balance sheet should be strong enough to handle the losses,\u201d Jain tells BT. He draws a comparison with the coal sector. \u201cRoughly 70-80% incremental coal mining is done by the private sector as the government has allowed pricing freedom,\u201d he says, adding that pricing freedom and sharing of risk capital burden by the government can boost private sector participation in oil and gas.<\/p> India has also ventured into overseas E&P through arms of PSUs such as ONGC Videsh, but its last major acquisition was almost a decade ago. ONGC Videsh operates 32 oil and gas projects in 15 countries, including Russia, Vietnam, Brazil, Colombia, Sudan, and Venezuela. It produced 10.278 million tonnes of oil equivalent (MTOE) of oil & gas in FY25, which is 25.3% and 15.9%, respectively, of India\u2019s domestic production.<\/p> ONGC, GAIL, and other PSUs in the sector are exploring alternative energy sources, including renewables. ONGC Green, a subsidiary of ONGC, has set a target of 10 GW renewable capacity by 2030 through solutions in green hydrogen, compressed biogas, solar, and wind.<\/p> Technology Dependence<\/strong><\/p> India\u2019s upstream players rely heavily on foreign companies and oil majors for cutting-edge technology. ONGC and OIL have been collaborating with BP, ExxonMobil, Petrobras, Schlumberger, Halliburton, and Baker Hughes to overcome deepwater, seismic, and recovery challenges.<\/p> MK Sharma, former Director (Exploration & Development) of Oil India, says near-field exploration in petroleum mining lease areas for deeper horizons, as well as surrounding areas in Category-I basins, is the low-hanging fruit waiting to be plucked. \u201cDeep-water and ultra-deep-water exploration require advanced technologies, necessitating collaboration with international agencies,\u201d he says. Indian IT firms HCLTech, Infosys, Wipro, TCS, and niche firms such as Questlabs and Nexevo are providing digital solutions. According to ONGC\u2019s digital road map submitted to the Oil Industry Safety Directorate, Infosys and Tata Consultancy Services now bundle data analytics suites, IoT sensor grids, and edge-computing gateways into off-the-shelf \u201cplatforms for petroleum,\u201d slashing implementation costs by up to 40% compared with global service companies. Still, the oil majors are heavily dependent on foreign oilfield service firms for hardware integration.<\/p> Another hurdle is availability of rigs. Indian PSUs hire rigs for short-term contracts of up to two years, leading to shortages when demand increases. ONGC and Oil India have some rigs that are ageing. Indian explorers are finding it difficult to source rigs, especially jack-up, with a jump in exploration activity globally following the Russia-Ukraine war. ONGC has issued a $20 billion tender for hiring rigs for five years as part of the government\u2019s Samudra Manthan Mission. The tender, floated earlier this February, sets an 80-day mobilisation timeline, an indication of the urgency to scale exploration.<\/p> The Ecosystem Approach<\/strong><\/p> The West Asia conflict has brought to the fore the need to follow an ecosystem approach to ensure energy security. The current worries relate to not just delayed crude oil and gas supplies but also availability of strategic reserves, Indian tankers and marine insurance.<\/p> B Ashok, ex-Chairman, India Oil Ltd, says if India is looking at 2-2.5X GDP increase in the next 15 years, it will have to focus on energy security. \u201cWe may be short of crude but our refining capacities are ahead of time. When we are facing an LPG crisis, the government has been able to push some refiners to produce more LPG. We should continue to focus on increasing our refining capacity. That will give us flexibility because crude is a far deeper market. Downstream industries are dependent on a lot on petrochemical products,\u201d he says.<\/p> Ashok says India also needs to expand strategic oil and gas reserves. India\u2019s strategic oil reserve can last 74 days against 90 days recommended by the IEA. \u201cWe will have to find the money for these projects. It is not only the crude that is important but also critical products like LPG. Japan and South Korea have huge strategic storage of LPG. Caverns for LPG storage in Visakhapatnam and Mangaluru are small compared to demand,\u201d he says.<\/p> The conflict has also brought focus on Indian flagged tankers and marine insurance as war risk premiums are up 300%; many insurers are even cancelling policies for vessels passing through Iranian waters. India is exploring a dedicated Rs 1,000 crore fund to back insurers offering war-risk cover for ships.<\/p> Experts say there is a lot to learn from China, which has built a multi-layered energy architecture. \u201cTo become self-dependent in oil and gas, India must accelerate investments in supply diversification, oil and gas reserves, shipbuilding and tanker capacity, marine insurance and logistics infrastructure, and accelerate energy transition,\u201d says Sukla Mistry, ex-Director (Refineries), Indian Oil Corporation.<\/p> The Gulf conflict has given enough reasons to advance the country\u2019s energy security through a balanced approach of increasing domestic oil and gas production while continuing to transition towards cleaner energy sources.<\/p> \u00a0<\/p> @richajourno<\/p> \u00a0<\/p> <\/div> India energy security, India oil imports, India oil production, crude oil demand India, hydrocarbon exploration India, oil and gas sector India, energy self-reliance India, atmanirbhar energy India, oil exploration policy India, NELP India, HELP policy India, sedimentary basins India, domestic oil production India,#explains #Indias #Energy #Insecurity1776001585<\/p> ","protected":false},"excerpt":{"rendered":" Barely eight years after Edwin L. Drake drilled the world\u2019s first oil well in 1859 at Titusville, Pennsylvania, USA, in 1867, India discovered oil in Digboi, Assam. The find was serendipitous\u2014workers noted that elephants put to work by the London-registered Assam Railways and Trading Company had their feet covered with oil. The men followed the […]<\/p>\n","protected":false},"author":1,"featured_media":6342,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[37],"tags":[23710,23707,23715,2069,23709,211,23713,23708,6119,13861,23706,444,23716,23712,12920,23711,23714],"class_list":["post-6341","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-content-marketing","tag-atmanirbhar-energy-india","tag-crude-oil-demand-india","tag-domestic-oil-production-india","tag-energy","tag-energy-self-reliance-india","tag-explains","tag-help-policy-india","tag-hydrocarbon-exploration-india","tag-india-energy-security","tag-india-oil-imports","tag-india-oil-production","tag-indias","tag-insecurity","tag-nelp-india","tag-oil-and-gas-sector-india","tag-oil-exploration-policy-india","tag-sedimentary-basins-india"],"acf":[],"_links":{"self":[{"href":"http:\/\/longzhuplatform.com\/index.php?rest_route=\/wp\/v2\/posts\/6341","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/longzhuplatform.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/longzhuplatform.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/longzhuplatform.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/longzhuplatform.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=6341"}],"version-history":[{"count":0,"href":"http:\/\/longzhuplatform.com\/index.php?rest_route=\/wp\/v2\/posts\/6341\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/longzhuplatform.com\/index.php?rest_route=\/wp\/v2\/media\/6342"}],"wp:attachment":[{"href":"http:\/\/longzhuplatform.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=6341"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/longzhuplatform.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=6341"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/longzhuplatform.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=6341"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}