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India needs foreign drillers on board to increase its crude oil production as it plans to reduce its dependence on imported oil. According to Wood Mackenzie, the world’s fastest-growing oil consumer needs to improve the recovery rates from its mature fields—and for that it will need the expertise of foreign operators.
Wood Mac’s President, Neal Anderson, explained that achieving the government’s target of 10 percent lower crude oil imports by 2022 would be impossible through new discoveries alone. “Opening up exploration has such a long lead time. And it will not meet the five-year timeline,” the executive said, as quoted by Bloomberg.
Currently, 80 percent of the crude oil Indian consumes comes from imports, and the situation is becoming worse as consumption continues to rise while domestic output declines because of field depletion. As a result, the government has launched an initiative to attract US$300 billion in investments over the next decade.
The initiative involves laxer pricing rules for oil and gas marketers as well as a uniform policy on oil and gas production—production companies will now need just one license to extract all types of hydrocarbons from a deposit.
In addition, India will seek to tender larger areas in newly discovered oil and gas deposits to boost the likelihood of bigger finds.
Related: Oil Prices Poised To Rise In Early 2018
India needs urgent measures to address the inexorable increase in domestic energy demand, which is driven mainly by the fast urbanization of the population. “Like China since the start of this century, India is in the midst of a huge wave of urbanization, the scale of which has few parallels in history,” the Indian Department of Industry, Innovation and Science said report last week.
The report said it expected the nation’s total urban population to jump from 439 million last year to 642 million by 2035. OPEC figures say India should expect a 150 percent rise in oil demand by the year 2040.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.