India’s state-run Oil and Natural Gas Corporation (ONGC) has tapped TotalEnergies and other global oil majors for deepwater exploration, but the country’s upstream sector can attract a steady inflow of overseas funds only through tax reforms and incentives.
S&P Global Commodity Insights explains in its latest report that, as part of India’s upstream push, TotalEnergies, ExxonMobil, Equinor and Baker Hughes are in discussions with state players to collaborate in exploring frontier areas and geologically challenging locations, including providing technical expertise and reducing greenhouse gas emissions during the development of deepwater blocks.
“The interest of global oil majors in India’s upstream sector is a positive sign and partnering ONGC is the logical way to go,” said Rajeev Lala, Associate Director (Upstream Companies and Transactions) at S&P Global Commodity Insights.
Although New Delhi has been taking steps in the right direction, additional financial incentives may be needed to woo foreign investors to the upstream sector in India, where oil and gas demand is decades away from reaching its peak, he added.
Licensing rounds
S&P said that ONGC had, last August, signed an agreement with US energy major ExxonMobil for deepwater exploration of the country’s east and west coasts.
The tie-up focuses on the Krishna-Godavari and Cauvery basins in the eastern offshore region and the Kutch-Mumbai region in the western offshore area.
Similarly, the state-run upstream major had, in September, signed an agreement with Chevron New Ventures, a subsidiary of California-based energy major Chevron Corporation, to assess exploration potential in India.
The tie-ups are part of ONGC’s outreach programme to invite global exploration and production companies to partner in exploring frontier areas and geologically challenging and difficult locations.
“What is worth noting is that these agreements are intended to assist the national oil company in technologically complex exploratory areas but do not affirm the commitment to developing India’s hydrocarbon resources,” S&P Global Senior Research Analyst Mansi Anand said.
The big story would be if the agreements result in participation in OALP (open acreage licensing policy) Bid Round VIII and the Special CBM (coal bed methane) bid round, she added.
ONGC reported its crude oil and condensate output fell 3.7 per cent year-on-year to 21.71 million tonnes (MT) in FY22 (April-March), while its total gas output fell 5 per cent over the same period to 21.68 billion cubic meters (BCM).
The PSU is forecasting a 1 per cent Y-o-Y gain in production in FY23 and a 4-5 per cent increase in FY24 due to more production from its ultra-deepwater assets in the eastern offshore Krishna-Godavari basin at KG98/2 block and western offshore projects.