The past year has been quite good for India, especially when it comes to the bill for crude oil imports. Thanks to the slump in global oil markets, India's crude oil import bill nearly halved to $64 billion (from $112.7 billion) in the fiscal of 2015-16. According to Petroleum Ministry, India imported 202.1 million tonnes of crude oil in the fiscal year that ended March 31, compared to 189.4 million tonnes of crude oil in the previous 2014-15 fiscal.
But then, even as imports grew, the domestic crude oil production did not; it hovered at around 36.9 million tonnes in 2015-16, down from 37.5 million tonnes in last fiscal. The fall in global crude prices seems to slowed India's move towards energy independence.
In this light, the latest deal between oil major ONGC and GE assumes significance. ONGC has signed up a contract with GE Oil & Gas, under which the latter will support the state firm's exploratory drilling campaign in shallow to medium waters for the next three years. Ashish Bhandari, CEO -Oil & Gas, GE South Asia, in an interview with Shashwat DC, Features Editor (Special Projects), shares his take on the project and also talks about the prospects of domestic production in India. Excerpts.
Can you throw a bit more light on the new partnership with ONGC wherein GE will provide an estimated 55 subsea wellheads (SG5) over three years? How complex are these subsea wellheads?
Wellheads are critical pieces of equipment used as part of drilling and exploration campaigns. With this contract, GE will address most of ONGC’s needs for their anticipated activity over the next three years.
What is the kind of investments in India that this project will entail?
This specific project involves “service from India”. There are several other projects where we are actively considering “Make in India.” The partnership for subsea manifolds with L&T, our plant for BOPs in Chennai, and other capabilities in Pune and Coimbatore are good examples in this regard.
You have been a big votary for India's self-reliance, how do you think such exploratory drilling can aid the country's energy supply capabilities? What is the potential that we have?
India is not an oil and gas “rich” country, but we can do a lot more to maximize the potential that we have as a country. We have significant unchartered territory in deep water and even in discoveries that we have made, our recovery rates are typically much lower than global benchmarks. This can be improved. With better policy driving new technology and new investment, we can narrow our demand-supply gap. In the case of gas, we can indeed double domestic production in five years.
There has been much enthusiasm for the Modi government's new energy and gas pricing policy. Do you think it could provide the boost for domestic exploration of Oil & Gas, especially since the crash in the global crude prices has taken a toll on the domestic industry?
I think the new policies together are a very positive step forward. A lot of projects become viable, with marketing and pricing freedom for deepwater, marginal fields, and the forthcoming HELP, even at current energy prices. As a net energy importer, our threshold price for domestic production is higher than global benchmark pricing. LNG imports to India continue to rise 20%+ annually. While the crash in global prices has hurt domestic players, these policy decisions will make a lot of new projects viable.
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