India's 'deepwater' story: How Modi govt's push for offshore exploration has appealed energy giants

At a time when the world is experiencing a global energy crisis with oil and gas prices rising, India, one of the fastest-growing major economies worldwide, is focused on reducing its import dependency on fossil fuels. Currently, the nation imports 85 per cent of its oil requirements, and the Indian government aims to reduce its dependence on imported crude oil by at least 10 per cent in future. 

To reduce reliance on expensive LNG imports, the Narendra Modi government has been focusing on attracting new IOC investments to ensure affordable, sustainable, and secure energy supplies. The government has also undertaken vital reforms to make domestic oil and gas exploration competitive and accessible. 

According to Wood Mackenzie, a global research and consultancy organisation, multinational energy giants are eager to tap into India's 'deepwater opportunities' with the government's enhancements to facilitate ease of business adding to the attraction.

In its January 2023 report titled 'Why are the Majors interested in deepwater India?', Wood Mackenzie states the risk/reward balance in deepwater exploration is sufficiently tempting to bring in the industry's big players and concluded that there was significant alignment from the PM's Office to the regulator that more offshore exploration was the need of the hour.

The consultancy, which provides market intelligence reports in the energy sector, underscored that energy giants like ExxonMobil, Total and Chevron were looking at "deepwater opportunities" with state-owned Oil and Natural Gas Corporation (ONGC).

"India's vast energy market holds many attractions. Not just scale and growth, but also a compelling decarbonisation narrative as gas is required to displace coal," the report stated.

The report noted vital areas of interest for oil majors, which has made India a lucrative destination for deepwater exploration, including new area access, regulatory enhancements, gas pricing and marketing freedom.

While enlisting various reasons under the section 'Why is India attracting interest?' the report states that most of the deepwater areas released in 2022 were previously off-limits to explorers, but now they are accessible.

The report further adds that with fiscal and regulatory enhancements, the Modi government is ensuring more offshore exploration to secure affordable and sustainable energy supplies.

The report also noted that the Hydrocarbon Exploration and Licensing Policy (HELP) in 2016 revived interest in the sector. It adds that terms for frontier blocks were further enhanced in 2019, making the industry competitive in the Asia-Pacific region compared to Australia and China, among others.

A specific mention was made of the Indian government's recent initiatives on the 'India stack', a collective phrase for all the technological advancements being made to alleviate the ease of conducting business in the nation.

"Other regulatory improvements include PARIVESH, an online portal to speed up environmental approvals, and a move to accept more documents from contractors on a self-certification basis," the Wood Mackenzie report added.

The report also highlighted that gas pricing, marketing freedom since 2016, and evolving regulations are crucial reasons India is attracting international oil companies' interest. 

"An online portal for gas trading aims to increase transparency, and E&P companies can now auction and trade on the Indian gas exchange (IGX)," the report added.

Apart from the supply side, the report also highlights some key drivers to increase gas usage. 

The report states, "India has 13,000 km of gas pipeline under construction (versus 22,000 km in operation) that will serve new markets in remote regions." It adds that "a uniform pipe tariff policy aims to increase gas' competitiveness for remote users by reducing costs."

Taking to Twitter, Hardeep S Puri, the Minister for Petroleum and Natural Gas, posted a copy of the 'Wood Mackenzie' report and said that the "World looks at Modiji's leadership with confidence and hope."

Top executives from the main energy corporations recently attended the India Energy Week 2023 opening ceremony in Bengaluru, where they spoke with the PM and representatives from the energy industry. The massive energy event was well-received, and came to a positive conclusion about the prospects for oil and natural gas exploration in India and her waters.