The government is trying to expedite domestic exploration as the country’s dependence on imported oil and gas goes up. However, a perception has emerged that regulatory and policy uncertainty is fast returning to haunt the sector and could turn off investors from the industry which has attracted over $14 billion in investments since 1999. While the refining sector is beset by excess capacity, retailing is unable to attract private investment because of the prevailing subsidy regime. Gas producers are disappointed over what they call denial of tax holiday on a par with oil producers. But GE-Oil and Gas, a major equipment supply and installation player in the sector, remains positive about the resilience of the domestic oil and gas industry. Mrinal Vohra, CEO of GE-Oil and Gas for India Region, discusses his company’s business plans with FE’s Noor Mohammad. Excerpts:
What is your growth outlook on the Indian oil and gas industry?
As India continues to take the global stage as one the fastest growing economies, the demand for energy is expected to increase manifold and would make India the third largest energy consumer globally by 2020. Steps in the right direction have been taken, including the NELP rounds and the 100% FDI investment approvals, by the government of India. Despite all these efforts, only half of the country’s potential basins have been explored, and large blocks offshore remain untested, especially in deep water. We believe that this presented a huge growth potential for the oil & gas companies in India to play across the value chain.
With the current oil production level of around 815,000 barrels per day, on estimated reserves of 1.2 bmt (billion metric tonne), the reserves-to-production ratio is 25 years. And the on the gas side, the current production level is around 40 bcm (billion cubic metres) per year on an estimated reserves base of around 1,500 bcm, translating to a reserves-to-production ratio of more than 30 years.
The nine rounds of NELPs have seen 247 blocks being awarded, but only 16 of those have been developed so far and only one out of the 83 deep-water blocks have been