Reliance Industries along with its UK partner BP plc have planned to invest around Rs. 6,000 crores towards gas recovery by 2016.
The companies have two major gas fields located in the eastern offshore KG-D6 block. This investment will help the companies to retain and improve the recovery from these fields.
The two companies are keen to develop the gas discoveries off the east coast in the next few years. These discoveries are spread across 3-4 trillion cubic feet. Major emphasis is also laid on enhancing the recovery of oil. This is because with just 1% of enhancement, 8% can be added to the present proved reserves of the country. This will result in around 450 million additional barrels for India. The two companies are also aiming to develop NEC-25 located off the Odisha that consists of many discoveries.
The industry is known for its high risks and sustaining with lack of government support. In contrast, the government is benefitted with taxes, profit and economic development of the nation. Due to unpredicted water and sand ingress, many wells have been shut. As a result, the gas output from the fields of Dhirubhai-1 and 3 (D1&D3) at KG-D6 block has been affected. Per day production is at 8 mmscm as against 54 mscm in 2010-2011.
Head of BP India, Sashi Mukundan, remarked that the current investment will expand the technologies used for deep-water gas recovery. This will be the first-of-its-kind initiative for India and will help to maintain production and make recovery efficient. He also expressed that the government should lend its support and relax the norms applicable to this industry to encourage more people to get involved in this intense and risky business. It should enable flexibility, provide space and encourage competition. It should also come out with a policy to give the players the freedom to decide the market and rates independently. He added that if the status quo is maintained then there will be more imports, less competition and balance of payment woes, leading to slowdown in the sector.
India's Needs and Recommended Way Ahead
Seeing the rise in energy consumption in India, the hydrocarbon needs are expected to increase by 120% by 2035. This will come to around 1,100 million tons of oil equivalent. This growth in need will be the fastest in the world.
India will have to wisely select amongst options and match the energy mix well. The oil-and-gas sector in the country is replete with opportunity and has great potential to attract many takers. If a group of integrated gas providers is set up then the gas sector will develop largely. This group will help the country to meet its future energy needs and establish a gas-based economy.
Globally, oil prices are at their lowest in 5 years. It is essential for India to encourage investments and explore new areas for oil and gas recovery. This will also help to develop current oil and gas reserves, boost the production of existing fields and build a global business based on petrochemicals, refining and marketing.