8/8/2019 38399227 Oil Exploration in India
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Oil Exploration in India
Prior to 1999, the major oil and natural gas explorations were
being carried out by the public sector
companies such as ONGC. In 1999, Ministry of Petroleum and
Natural Gas (MoPNG) introduced the
New Exploration Licensing Policy (NELP) as a part of its
Hydrocarbon Vision 2025, a landmark 25-year
planning document. NELP permitted foreign companies to invest in
100% equity of oil and natural
gas projects. NELP was able to provide a level playing field to
both the Public and the Private sector,
through allocating acreages on the basis of open competitive
bidding as opposed to the nomination
basis as earlier. Currently seven rounds of NELP have been
undertaken, auctioning off more than 200
exploration blocks to domestic and foreign private
companies.
To meet with the growing gulf between the supply and demand of
oil [Exhibit 1], India heavily relied
on oil exports majorly from Middle East. After the huge spike in
the crude oil prices in 2007, MoPNG
has been promoting various exploration projects in an effort to
boost domestic oil production.
MoPNG is now considering a new licensing regime for oil
exploration known as Open Acreage
Licensing Policy (OALP). Under OALP the oil exploration
companies will be provided with freedom to
choose their own oil blocks. Under the NELP, MoPNG used to bring
only some specific blocks forbidding. When a firm approaches
government for a specific block, that particular block will be put
on
for bidding and the best bidder with receive the rights to
explore within the block.
Iran Pakistan India (IPI) Natural Gas Pipeline
Issue:
In 1995, Pakistan and Iran settled upon an agreement for
construction of a natural gas pipeline
linking the Iranian South Pars natural gas field in the Persian
Gulf with Karachi. Furthermore, Iran
proposed to extend the pipeline to India as Iran is one of the
major exporters of crude oil to India.
Indian government was reluctant to enter into any agreements
with their neighbours due to strained
relationship between the two. India later signed an agreement
with Iran in 1999. In 2009, India
backed out of the deal citing security and pricing issues.
Negotiations:
Iran is the second largest exporter of Oil and natural gas to
India [Exhibit 2]. The proposed pipeline
originates in Asaluyeh, travels to Pakistan through Khuzdar, on
to Multan, finally ending up at Delhi.
The current stands are that the Indian government wants to pay
only for the gas it will actually
receive from the Pakistani border. The Iranian government wants
to charge India for the amount of
gas that will leave its border for India and do not want to take
into account any discrepancies that
might occur during transit through Pakistan.
The latest round of tri-party negotiations are set to be
undertaken in August 2010.
