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  1. Here is India’s oil story

Here is India’s oil story

The colonial era saw the first oilfield being developed by the Assam Oil Company, a private entity, in Digboi in Tinsukia district of Assam, where oil was discovered barely eight years after Edwin L Drake drilled the world’s first oil well in 1859 in Titusville, Pennsylvania, US.

By: | Published: May 3, 2018 2:53 AM
oil, oilfield, petroleum, digboi, tinsukia, assam, ONGC, indian oil Oil was simply bubbling out in the midst of dense and mosquito-infested jungles of this remote area of Assam. (Reuters)

The colonial era saw the first oilfield being developed by the Assam Oil Company, a private entity, in Digboi in Tinsukia district of Assam, where oil was discovered barely eight years after Edwin L Drake drilled the world’s first oil well in 1859 in Titusville, Pennsylvania, US. A group of Italian engineers contracted to build a railway line from Dibrugarh to Margherita, by the Assam Railways and Trading Company, accidentally discovered oil in Digboi in 1867. Oil was simply bubbling out in the midst of dense and mosquito-infested jungles of this remote area of Assam.

Digging started in 1889 and oil struck at just 54 metres, which, however, turned out to be a small pocket. Subsequent drilling found a very large deposit at 202 metres, and soon the company set up India’s very first refinery in 1901 in Digboi. Meanwhile, another private entity, the Attock Oil Company, in the North-Western part of undivided India, became active in Attock (now in Pakistan).

Major oil companies did not evince much interest in oil exploration in India as it was not yet a lucrative market. But realising the importance of oil and gas for industrial and economic development and its strategic role in defence, top priority was accorded to this sector while framing Industrial Policy Resolution in 1948. Soon, Oil India Ltd (a JV between the government of India and Burmah Oil Company) was developing two fields—Naharkatiya and Moran in Assam—while in West Bengal, the Indo-Stanvac Petroleum Project (a JV between the government of India and Standard Vacuum Oil Company of the US) got busy exploring oil.

In 1955, a decision was taken to develop the oil and natural gas resources in the country by an undertaking in the public sector, and an ‘oil and natural gas’ directorate was set up with a nucleus of geoscientists drawn from the Geological Survey of India. Simultaneously, a high-level delegation under the leadership of KD Malviya, the then minister of natural resources, visited several countries to study their oil industries and to organise training of Indian professionals for exploring potential oil and gas reserves.

Experts from the US, West Germany, Romania and erstwhile USSR were invited and, ultimately, a team of Soviet experts drew up a detailed plan for geological and geophysical surveys and drilling operations. In 1956, the Industrial Policy Resolution placed mineral oil industry amongst the Schedule A industries, development of which became the exclusive responsibility of the state. It soon became apparent that with its limited financial and administrative powers, the department could not function efficiently and the directorate was upgraded to a commission with enhanced powers, and converted into a statutory body by an Act of Parliament in 1959.

The watershed year for ONGC was 1974, when Indira Gandhi hand picked Nuthakki Bhanu Prasad, a chemical engineer and management expert whose work culture had been forged in the competitive environment of the US, to head ONGC. Prasad had earned his spurs earlier by commissioning Apsara, India’s first atomic reactor, for which he was awarded Padma Shri in 1960. Not given to India’s ‘babu’ culture, he got ONGC into high gear, venturing into offshore activity and discovered Bombay High, which, along with subsequent discoveries of huge oil and gas fields in western and eastern offshore areas, proved to be a game-changer.

ONGC has, over the years, managed to find not only new resources in Assam but also established new provinces in Cambay basin (Gujarat), while adding new petroleum-bearing areas in the Assam-Arakan Fold Belt and east coast basins (both inland and offshore). Proven deposits now stand at over 11 billion tonnes and ONGC has 1,184 oil wells and 151 gas wells (offshore), and 4,735 oil wells and 606 gas wells (onshore), producing 1.2 million barrels of oil equivalent per day, or 52 MMT (million metric tonnes) per year.

ONGC’s international arm, the ONGC Videsh Ltd (OVL), charged with prospecting for oil and gas acreages outside India, including exploration, development and production of oil and gas, has 38 projects across 17 countries, with its oil and gas production standing at about 13 MMT for FY2017. However, with 80% of its needs of hydrocarbons still being imported, India has a long way to go before it can claim to be self-reliant.

The author is Former Member, Railway Board

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