"We are an underexplored country and exploration has been a low-key business in India so far. I am preparing to start dialogues with companies like Royal Dutch/Shell Group, ExxonMobil, ChevronTexaco and others and market India as a major oil and gas destination," said Vinod Kumar Sibal, the new head of the Directorate General of Hydrocarbons, the government's main energy agency.
Sibal, who has worked with government oil and gas companies for over 30 years, started on his five-year assignment Monday.
The Indian government's previous initiatives to draw investors to the energy exploration sector haven't attracted top multinationals as the potential income from oil and gas blocks isn't perceived to be significant by global standards.
So far, U.K. firms Cairn Energy PLC (CNE.LN) and BG Group PLC (BG.LN) and Canada's Niko Resources Ltd. (NKO.T) have invested in the sector.
"Oil and gas exploration is a high risk and high return investment. The perception about India has undergone a change after two recent major discoveries - by Cairn in an onshore field in Rajasthan and by Reliance Industries in the offshore Krishna-Godavari basin," said Sibal.
Cairn's discovery in the northwestern state of Rajasthan could hold up to 600 million barrels of recoverable crude, according to industry estimates. Reliance Industries Ltd. (500325.BY) discovered gas reserves of around 14 trillion cubic feet in October 2002 in the Bay of Bengal, the biggest such discovery that year globally.
The new blocks to be offered in January are located offshore as well as onshore. The government has so far awarded 90 oil and gas blocks to companies through international auctions under four rounds of the New Exploration Licensing Policy to shore up static domestic petroleum output. The January auction will be the fifth round.
India's crude oil production has stagnated over the past two years at around 33.2 million metric tons a year. The country's gas output, at about 80 million cubic meters a day, meets just 70% of domestic demand.
India imports around 70% of its crude requirement but is looking to reduce its dependence through local energy sources.
Sibal said he would aim to double the recovery from the country's existing oil and gas fields.
"We are going to employ global consultants and cutting edge technology to increase the recovery factor in our fields to 60% over the next five years from about 30% at present," he said.
Sibal is also looking to work closely with state-run exploration companies Oil & Natural Gas Corp. (500312.BY) and Oil India Ltd. (OIL.YY) and encourage them to drill new oil wells.
"We have currently about 4,500 oil producing wells. If all goes well, this figure should go up four times by the end of 2009," said Sibal.
India's overall base of oil and oil-equivalent gas reserves in its sedimentary basins is close to 33 billion metric tons, and the potential for finding more reserves is "huge", said Sibal.
Sibal said India has so far drilled and produced oil and gas in only about a third of the country's sedimentary basins, due to paucity of funds.
"But things are changing fast. There are more funds with the oil companies than ever before and this area is going to become exciting in the coming days."
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