But put a transparent policy framework for stakeholders
Pump priming oil and gas output through investments and technology from old fields will definitely work to India’s advantage. Narendra Modi government’s move to hand out contracts to private sector players for deploying enhanced oil recovery (EOR) technology and processes with global best practices must be seen in this context.
Petroleum minister Dharmendra Pradhan’s proposed policy for investments and technology deployment through EOR would only serve to get the best output from existing oil fields operated by state run companies like ONGC and Oil India.
There’s bound to be political outcry on any move involving domestic and foreign private oil giants in enhancing the output from the nominated oil fields awarded to ONGC and OIL. But unless oil and gas extraction is maximised from the fields that currently account for 70 per cent of domestic output, India’s energy economy may be crippled.
Let’s not forget that already India’s turned into one of the biggest importers of crude oil and gas products globally with an annual sourcing of 225 million tonnes. Already, heavy import dependence has made the Indian economy vulnerable to externally induced shocks owing to volatility in international prices, as also exchange rate fluctuations.
India has to rein-in the aggregate oil import bill of about $100 billion incurred annually in the last three years. Only then can her economy be insulated from cyclical pricing volatility in energy markets internationally. In this context, pushing up the domestic output from the existing and old fields could be the best option.
Sadly, despite holding so many auctions under the Nelp series, India has never ever seen bulge bracket global behemoths, charging in for a piece of the exploration blocks. Barring a Niko or Cairn, nobody from the big five has ever bothered to come to India. Instead of investing taxpayers’ money into exploiting the oil fields through technological intervention, enlisting the domestic and foreign private players partnership will have to be explored. Enhanced oil recovery techniques globally have given handsome dividends both in Europe and US by increasing the hydrocarbons output by anything between 25-30 per cent. This too seems fraught with risk as the experience of foreign majors with Indian partners leaves a lot to be desired.
Water, steam and water — carbon dioxide flooding techniques under extreme pressure conditions are deployed under enhanced oil recovery processes to push the hydrocarbons towards wells that can eventually be sucked out. Flooding with hydrocarbons and other solvents is a globally accepted practice to extract the maximum crude from the lower sedimentary layers of wells.
Given that EOR techniques are capital intensive and take at least three years to evolve tailor-made solutions to suit each of these wells on a case-to-case basis, bringing in the best players is an imperative. World’s largest polymer injection technology induced EOR programme undertaken by Cairn Energy at its Barmer project has maximised the output from Mangala oilfields in Rajasthan. This must have given hope for the Modi government to limit the oil import bill, enhance the domestic output from the nominated oil fields many of which are about seven decades old.
However, there’s bound to be a nationwide debate on the terms of engagement with global private players in ONGC and OIL fields. Conspiracy theories are bound to circulate on any fresh policy push radically different from the past.
But revenue sharing contracts linked to enhanced output with clear milestones will have to be drawn up not giving any scope for arbitration a7s in the case of Reliance KG-basin imbroglio. Wherever the ONGC and OIL can draw-up low cost home-made solutions to push up output from some of its relatively easier wells, the state run oil firms should be mandated right away.
Transparent policy framework for commercial engagement with private players based on cost-benefit analysis should be put in place. Relatively easier crude price prevailing globally should also be leveraged to build strategic reserves that many countries boast of.
Multi-pronged strategy for securing India’s energy interests globally is the only way forward.