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India’s captain Virat Kohli plays a shot during a recent one-day international cricket match between New Zealand and India India Photo: AFP/SCANPIX gets on the front foot

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OVERVIEW India drives ahead with ambitious plans

Government looks to attract overseas investment while eyeing incentives for state-owned companies

AMANDA BATTERSBY Singapore

NCREDIBLE India” has been ernment is also finalising OALP 3, We are thinking of oering fiscal applicable to the DSF bid rounds), the tourism mantra of the expected to involve another 12 then why cannot ONGC be o¤ered government since 2002 and exploration blocks, which could incentives to nomination blocks, those terms and retain operator- it certainly seems to be be opened within weeks. which is where the bulk of our ship? working —I in December last year Meanwhile, bids for the DSF 2 Secondly, why cannot ONGC a record 1.19 million foreign tour- round were submitted to the DGH production lies. itself be allowed to line up farm-in ists arrived in the country. on 30 January. partners who could boost output However, the authorities are One foreign oil industry o†cial at these fields? well aware that attracting such notes that India opening its India’s Petroleum & Natural Gas Minister With just two months before international interest in the National Data Repository, which Dharmendra Pradhan India goes to the polls, it seems nation’s oil and gas industry is means prospective companies that the authorities have listened going to take a lot more than a today have ready access to data, is to the pleas of state-owned outfits. catchy alliterative slogan. encouraging for exploration. 2022. Key to meeting that demand (ONGC) and Oil India Limited “We are thinking of o¤ering fis- Supermajors BP and Shell do Whether these latest licensing will be boosting the nation’s liq- (OIL). cal incentives to nomination already have significant upstream exercises tempt overseas inves- uefied natural gas import capacity The committee is headed by blocks, which is where the bulk of businesses in India but the nation tors — or there is the all too famil- from the existing 30 million Rajiv Kumar, vice chairman of our production lies,” Petroleum & has been hoping to attract more iar lacklustre response from inter- tonnes per annum in tandem The National Institution for Natural Gas Minister Dharmendra through initiatives such as its national operators — remains to with ramping up indigenous pro- Transforming India, and has Pradhan said in January. novel Hydrocarbon Exploration & be seen. duction. ONGC managing director Shashi Almost 70% of India’s crude pro- Licensing Policy (HELP), the first However, private sector Indian The Indian government, which Shanker on board. duction today comes from fields round of which was launched in companies themselves might yet revises domestic gas prices every “While reducing India’s oil on blocks that were awarded August 2017. prove to be a match for the gov- six months, last September hiked import dependence by 10% in the to ONGC and OIL on a nomination International heavyweights ernment in attracting fresh cash the domestic gas sales price by next three years remains a hefty basis ahead of licensing rounds Total and ExxonMobil, in addition and novel technology into the 10% to $3.36 per million British goal, the planned sale of the being implemented in the to BP and Shell, are believed to nation’s oil and gas sector. thermal units. smaller fields to private domestic 1990s. have been among foreign compa- While that might have been and foreign companies is a step in However, these mature assets nies that bought data packages for Partnerships welcome for existing producers, the right direction,” says Verisk do not benefit from the improved blocks made available by the Vedanta Resources, which landed such pricing can make it di†cult Maplecroft political analyst Asia, terms and incentives that have Directorate General of Hydrocar- 41 of the 55 blocks from the OALP for LNG imports to be attractive to Marthe Hinojales. been subsequently introduced but bons (DGH) in the maiden open 1 round, has reached out to inter- some customers. are not applied retroactively. acreage licensing round (OALP 1). national contractors, including Prime Minister Narendra Modi Resistance The state-owned companies Ultimately, the 55 blocks o¤ered heavy-hitters Baker Hughes, Hal- has set another ambitious, short- However, there could well be also have long argued the govern- in this first round went to local liburton and Schlumberger, pro- er-term goal to reduce by 10% some resistance to this proposal, ment should change its terms for companies, however. posing strategic partnerships to India’s dependence on imported not least from state-owned ONGC gas produced at their nomination Undeterred, an ever-upbeat fast-track streamlined work crude from mid-decade levels by itself. blocks, saying they make some DGH last year embarked on a across these assets. 2022. In 2017, the DGH proposed a fields uneconomic. series of roadshows, at home and Vedanta’s Cairn Oil & Gas is Over the past four years the similar scheme involving 15 pro- Revealing the incentives con- abroad, to promote its second Dis- hoping for o¤ers from contractors nation has actually increased its ducing fields but this initiative sidered for nomination blocks, covered Small Fields (DSF) bid during the first quarter. reliance on imported volumes to never left the drawing board after Pradhan confirmed “most of the round and OALP 2, which was The Indian government aims to upwards of 83%. ONGC management dug in their policy changes made in recent launched in January after a short increase gas to 15% of the primary Perhaps spurred by this, the heels. years apply to new fields or those delay. energy mix by 2030, up from the government late last year estab- The company is understood to that would start producing in OALP 2 comprises 14 oil and gas current 6.5%. lished a six-member committee to have two objections. future”. exploration blocks — eight Projected gas demand in India evaluate the possibly contentious Firstly, if the DGH is prepared to However, only time will tell onshore, five in shallow water and is already put at 654 million cubic sale of up to 149 more small pro- o¤er these producing assets to whether the government puts in one ultra-deepwater tract in the metres per day in 2026-2027 versus ducing fields operated by the likes other companies on preferential place any new policies before Krishna Godavari basin. The gov- the forecast 443 MMcmd in 2019- of Oil & Natural Gas Corporation terms (similar to those terms India goes to the polls in April. Subscribe to read the latest oil and gas news 8 February 2019 FO C U S INDIA 25

Indian oil demand is all set to surge in world’s fastest growing energy market INDIA is the world’s fastest (While there has been) a growing energy market, with the Directorate General of dramatic and positive change in Hydrocarbons (DGH) forecasting oil demand to increase to 7.5 the direction and substance of million barrels per day in [India’s] oil and gas policy, it’s 2030 from 4.7 million bpd in 2017, writes Amanda Battersby. quite possible that perceptions With a GDP growth rate exceeding 7% in recent years, have not kept pace with this the nation’s economy and its appetite for hydrocarbons show reality. no signs of slowing. New Delhi is therefore as keen Brookings India chairman Vikran Mehta as ever for fresh investment in its upstream sector. “We have an overall investors in the oil and gas is a firm political reality. The environment in which the sector today have two main central government cannot government is sympathetic and concerns — whether business dictate to state governments, responsive to investors’ needs, be done without breaching one’s especially when the centre and to those who want to put their ethical standards, and whether the state are ruled by di‘erent money and their resources the di‘erences between the political parties,” explained into oil and gas exploration,” central and state governments Mehta. an Indian diplomatic oŠcial will lead to delays in approvals “This reality has at times, no told the DGH roadshow for the and cost overruns. doubt, deepened the operating country’s second Discovered Speaking of his days at Shell, challenges for E&P companies. Small Fields (DSF 2) round in Mehta, chairman of research and For they have had to yield to Singapore. analysis firm Brookings India, two — or more — governments The government has been revealed that while there were and at times this has led to pulling out a lot of the stops to plenty of highs, it was certainly delays in approvals and in the improve terms and conditions was not one long bed of roses. acquisition of essentials like for its recent acreage o‘erings. “There were delays, there land, water and electricity.” However, while there has been were hassles and there were However, Mehta told the “a dramatic and positive change unwelcome interventions — and industry attendees at the in the direction and substance the tax authorities did make roadshow that while there of [India’s] oil and gas policy, it’s some extraordinary claims”, he could be challenges ahead, the In the hot seat: India’s Petroleum quite possible that perceptions said. potential rewards of operating in & Natural Gas Minister have not kept pace with this Overcoming the hurdles India still make it an attractive Dharmendra Pradhan reality,” former Shell India of bureaucracy is an issue destination for investors. Photo: BLOOMBERG chairman Vikram Mehta said in commonly cited by would-be The DGH is continuing to work Singapore. investors in the nation’s oil and to reduce red tape and help to He noted that potential gas industry. “Today, federalism make doing business easier.

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EXPLORATION ‘Overwhelming’ response to new bid round India’s second Discovered Small Fields round receives submissions for all but one of the 25 contract areas on oer

Participation: VP Joy, the Director General of India’s Directorate General of Hydrocarbons, at a DSF 2 event Photo: DGH

AMANDA BATTERSBY Singapore

NDIA has an interesting and tracts, and said evaluation of the the sole bidder for Area 14, desig- and three of those fields lie within tested onshore areas in DSF 2 were successful initiative o er- bids would begin soon. nated KG/ONDSF/Kaza/2018, so it around 2.5 kilometres of existing CB/ONDSF/Sanganpur/2018 and ing companies the opportu- “The government endeavours to looks likely to add that to the 41 platform infrastructure. CB/ONDSF/Vadatal/2018 in the nity to acquire and exploit award the contract areas by end of blocks it was awarded last year Four of the five fields hold both Cambay basin in Gujarat that discoveredI small fields that oper- February 2019, so as to expedite from the maiden auction under oil and gas reserves and one is a respectively attracted 12 and 10 ators have elected not to develop. the monetisation of the hydrocar- India’s Open Acreage Licensing gas field. bidders. The second Discovered Small bon production from these fields,” Policy. Of the international players, The tiny 4.49 square kilometre Fields bid round (DSF 2) on 30 Jan- said the DGH. The area that whetted the most Oilex is one of the 10 bidders vying CB/ONDSF/Sanganpur/2018 is fully uary received bids for all but one “The production from areas appetite in this bid round was RJ/ for CB/ONDSF/Vadatal/2018, while covered by 3D seismic and both of of the 25 contract areas on o er. o ered in DSF 1 is likely to start as ONDSF/Chinnewala/2018 onshore Soco is competing against Arch the two wells earlier drilled deliv- Describing the response as per contract timelines in 2019 to Rajasthan, which attracted bids Softwares Private Limited for area ered the goods. This contract area “overwhelming” compared with 2020 and now DSF 2 areas follow, from 17 companies or consortia. NEC/OSDSF/D11/2018 in the Bengal near to the city of Mehsana has 6.3 DSF 1 held in 2016, the Directorate as a continuum, to add to the This area is home to the CT-1 Purnea basin in Mahanadi o - million barrels of oil in place in General of Hydrocarbons (DGH) domestic production and increase and CT-2 discoveries made earlier shore. the Sanganpur field. noted that only one o shore block the numbers of oil and gas opera- this century by India’s Oil & Nat- NEC/OSDSF/D11/2018 has six CB/ONDSF/Vadatal/2018, which failed to attract interest. tors in the country.” ural Gas Corporation (ONGC) that discovered gas fields in two clus- was also previously operated by “This bid round saw more than have 1.9 billion cubic metres of gas ters with a total of 16.54 Bcm of ONGC, hosts two fields — Vada- anticipated participation from Global roadshows in place, according to the DGH. gas in place. Seven wells have tal-10 and -11. new entrants from India and for- DSF 2 comprised 15 onshore and 10 Moving o shore, 11 bids were been drilled on this contract area, These discoveries respectively eign countries such as the US, the shallow-water o shore contract received for MB/OSDSF/D18/2018 one of which came up dry. have 661,500 and 1.6 million bar- UK, Australia, Singapore and the areas, which were promoted via a in the Mumbai O shore area rels of oil in place in Lower Eocene United Arab Emirates,” said the series of global roadshows. while eight bidders — not includ- Applicants and Middle Eocene reservoirs. DGH. Of the 39 companies that bid for ing Vedanta — submitted applica- HBA O shore is one of a trio of ap- Meanwhile, it is not diªcult to A total of 39 players, either fly- the acreage, five were Indian pub- tions for KG/OSDSF/GSKW/2018 in plicants for area KG/OSDSF/ see why there were 11 applications ing solo or in consortia, submitted lic-sector undertakings or their the Krishna Godavari basin. G4/2018 in the Kutch o shore and for AA/ONDSF/Umatara/2018 o n- a total of 145 e-bids for 24 of the 25 subsidiaries, 28 were private MB/OSDSF/D18/2018 o shore one of the 11 outfits competing for shore Assam. contract areas hosting a combined domestic companies and six were the state of Maharashtra covers MB/OSDSF/D18/2018. This asset operated by Oil India 58 oil and/or gas discoveries. foreign outfits. 207.55 square kilometres and is Area KG/OSDSF/G4/2018 covers Limited contains two oilfields — The bidders included six over- International players in the fray home to the D-33 oil and gas field. 91.85 square kilometres and is South Rajgarh and Umatara — seas companies, said the DGH. include HBA O shore of Singa- The D-33 field contains in-place home to the YS-5 and G-4-6 fields. with combined in-place crude DSF 2, launched last August, pore, London-headquartered Soco reserves of 175.7 million barrels of The latter is an attractive devel- reserves of 35.6 million barrels. comprised 59 discovered oil and International and Australia’s oil and 16.7 Bcm of gas. opment candidate with in-place There is existing nearby surface gas fields totalling more than 3000 Oilex. Six wells, including two dust- reserves put at 324 million barrels infrastructure that could be uti- square kilometres with a prospec- Local giant Vedanta Resources ers, have to date been drilled on of oil and 2.6 Bcm of gas. lised to exploit these reserves. tive resource base upwards of 1.4 made its mark on this bid round, this area that has almost full 3D Five wells have been drilled to The one area that failed to drum billion barrels of oil equivalent. submitting applications for all of seismic coverage. date at this area o Andhra up any interest was Area 16 — or The DGH received 42 bids for o - the onshore blocks and six out of KG/OSDSF/GSKW/2018 has five Pradesh, all but one of which were GK/OSDSF/GK39/2018 — in the shore areas and 103 for onshore the 10 o shore areas. Vedanta was discovered fields in two clusters successful. Other heavily con- Kutch o shore. Subscribe to read the latest oil and gas news 8 February 2019 FO C U S INDIA 27

REGIONAL OUTLOOK New dawn for Northeast’s oil The landlocked Breakthrough: The north-east is Hydrocarbon Vision 2030 initiative aims targeting a to double oil and gas production in doubling of oil Northeast India. and gas output Photo: AFP/SCANPIX by 2030

AMANDA BATTERSBY Singapore

HE eight states that com- prise Northeast India of- ten seem worlds apart from Delhi and the coun- try’sT commercial capital Mumbai. However, the region was in fact the birthplace of India’s oil indus- try. An oil refinery was con- structed at Digboi in Assam in 1901 after crude was discovered nearby in the previous century. Such is the terrain of the region Rudrasagar, Charali, Changmai as 2021. “The ambitious project of the development of the region’s skill development and cross-bor- that at one time an elephant was and Disangmukh oilfields and sat- a gas pipeline from Barauni to hydrocarbon potential,” added der trade.” employed — and was actually paid ellite fields in Sivasagar district. Assam and other northeastern Pradhan. Northeast India today com- a salary — to deliver produced oil Compatriot Megha Engineering states is likely to be completed “Such e‰orts need to be aimed prises eight states. These com - in barrels to customers. Even Infrastructure (MEIL) recently within the next three years time,” at a range of areas, such as better prise the original seven states, today there is limited pipeline won the contract for the Lakshmi OIL chairman Utpal Bora said last utilisation of resources available Arunachal Pradesh, Assam, Mani- infrastructure. Zen oilfield in Assam from India’s year. in the region, investments in the pur, Meghalaya, Mizoram, However, there are ambitious first Discovered Small Fields (DSF “To realise the full potential of hydrocarbon sector and develop- Nagaland and Tripura — often still plans in the Hydrocarbon Vision 1) licensing round and is wasting the North East region, concerted ment of concomitant infrastruc- referred to as the Seven Sisters — 2030 initiative for Northeast no time at this asset. e‰orts are needed to address the ture as well as towards creating were subsequently joined by Sik- India, which is targeting a dou- “We are planning to start pro- specific issues that can catalyse new avenues of growth through kim in 2002. bling of oil and gas production by duction in these fields in 2020,” the end of the next decade. said MEIL associate vice president Other Vision 2030 aims include of hydrocarbons, P Rajesh Reddy. access to clean fuel — pipeline The Assam government has natural gas or liquid petroleum already granted MEIL approval to gas — at an a‰ordable price for carry out work on the oilfield, 100% of all households and the which is located in the North East- development of a natural gas grid ern Arcan basin. and compressed natural gas high- The Indian operator is also plan- way. ning to construct treatment and “I firmly believe that a para- e¤uent plants to treat the pro- digm shift in production and uti- duced crude, which it hopes to sell lisation of hydrocarbons is due to compatriots such as Indian Oil and can catalyse growth in the Corporation and Gail. region,” said Minister of Petro- leum & Natural Gas, Dharmendra Producing assets Pradhan. Many of the producing assets in Northeast India is estimated to Assam are mature fields and play- contain more than half the coun- ers will be looking to enhanced try’s onshore oil and gas resources recovery techniques to help arrest and 18% of India’s total o‰shore output declines. and onshore resources, according Acreage in the states of Assam to the Directorate General of and Tripura drew healthy interest Hydrocarbons. in the country’s second Discov- Exploration might have started ered Small Fields (DSF 2) round in back in 1866 but less than 60% of January. the region’s total sedimentary Meanwhile, an industry source basins have been explored. claims that the states of Aruna- chal Pradesh and Mizoram could Current production o‰er some of the better prospects Most of the current production is for new gas discoveries in the from domestic companies includ- region. ing state-owned Oil & Natural Gas India’s Cabinet Committee on Corporation (ONGC) and Oil India Economic A‰airs (CCEA) last year Limited (OIL). extended the timelines for explo- ONGC is looking to boost its ration and appraisal in Northeast regional oil and gas output via a India because of the geographical, development drilling campaign of environmental and logistical up to 200 wells in Assam. challenges facing companies This seven-year programme, there. costing upwards of $850 million, The CCEA increased by two is expected to start before the end years the exploration term and of March, according to the compa- will allow a further year for ny’s onshore director SK Moitra. appraisal work to be carried out, The Assam drilling campaign is according to local reports. understood to be key to Vision This upstream drive in the 2030 and is also expected to con- region is being matched by initia- tribute to India’s aim of reducing tives to improve oil and gas infra- crude imports by 10% by 2022. structure. ONGC’s Assam asset covers the Guwahati in Assam and other entire North Assam shelf and state capitals of the northeastern includes the producing Geleki, states are likely to be connected to Lakwa, Lakhmani, Laipilingaon, India’s National Gas Grid as early Subscribe to read the latest oil and gas news 28 FO C U S INDIA 8 February 2019

CORPORATE OUTLOOK Krishna Godavari takes centre stage for ONGC Development of flagship deep-water asset o‘ east coast key to boosting production

NISHANT UGAL New Delhi

PENDING at India’s Oil & coast over the past few decades, Natural Gas Corporation spending billions of dollars on (ONGC) is expected to brownfield developments. reach about $4.5 billion Project observers suggest that thisS fiscal year as the state-con- while a full-fledged redevelop- trolled operator continues devel- ment plan for Mumbai High might opment of its deep-water KG- not be on the cards during the DWN-98/2 east coast block while short term, ONGC needs to con- aiming to maintain the produc- tinue investing to maintain the tion profile of its west coast shal- production profile of some of its low-water assets. key fields o” the west coast. ONGC is progressing swiftly ONGC is executing key o”shore with its $5 billion-plus plan to tenders for its Heera and Cluster 7 develop the Cluster 2 region developments, and a separate ten- KG-DWN-98/2 that is expected to der for a new water injection plat- significantly ramp up its domestic form, with the three projects oil and gas production in another touted to be worth more than two to three years. $800 million. At peak, the asset is expected These three projects include add more than 35 million cubic several new wellhead platforms in metres per day of gas production addition to the water injection and 77,000 barrels per day of platform, multiple segments of crude. o”shore pipelines and associated Success at KG-DWN-98/2 could o”shore infrastructure expected position ONGC among the world’s to be commissioned over the next elite deep-water producers, capa- two to three years. ble of handling technically chal- Later this year, ONGC is set to lenging and complex projects. start development of its GK-28/42 It would also establish the shallow-water project in the Guja- Krishna Godavari as one of India’s rat Kutch area, thought to be most prolific gas basins, marking worth more than $300 million. a major shift from ONGC’s matur- The GK-28/42 project is expected ing assets o” the western coast. to produce around 3 MMcmd of More than $10 billion in total gas initially. investments have been lined up The project workscope will by ONGC to develop the flagship include five new wellhead plat- east coast asset. forms, four segments of infield In addition to the Cluster 2 area, pipelines totalling 40 kilometres, ONGC plans to launch develop- one 65-kilometre trunkline and ment in the Cluster 1 and Cluster other associated o”shore infra- 3 regions of the block, likely to be structure, industry sources say. taken up within a year or two. ONGC also plans to charter a mobile o”shore production unit Doubling output for a 12-year period to process gas ONGC aims to nearly double its to from the shallow-water field, domestic gas production to about sources say. 42.7 billion cubic metres per year Later this year, ONGC is also by 2021-22, with much of this in- expected to start the sixth devel- cremental output expected from opment phase of its pipeline the east coast asset. replacement project (PRP 6), also Several west coast shallow-wa- o” the west coast. Centre point: success at KG-DWN-98/2 could position ONGC among the world’s elite deep-water producers Photo: REUTERS/SCANPIX ter projects are also expected to PRP 6 is likely to be carried contribute. between 2019 and 2022, with at ONGC plans to continue to least 60 to 70 kilometres of o”- invest in the region over the next shore pipeline expected to be OVL prepares for significant investment as it looks to expand foreign portfolio few years with plans to boost gas installed each year, sources claim. INDIA’S overseas explorer ONGC higher in coming years. “We hope ently focusing on “geographical output from new reservoirs and ONGC operates more than 37 o”- Videsh (OVL) is expected to spend to sustain this growth in the com- hot spots like Africa and Latin maintain hydrocarbon production shore rigs and is expected to con- around $1 billion each year during ing years through mergers and America” and also the former from maturing fields. tinue its spending on drilling the next four to five years as it acquisitions, as well as from Soviet Union states. Its gas production recently hit exploration and development aims to further ramp up produc- organic routes,” he adds. He adds that OVL will continue an all-time high of around 70 wells this year. tion from its existing global oil Since its inception, OVL has to scout for acquisition opportuni- MMcmd, with west coast fields It reportedly drilled more than and gas assets and continue spent more than $28.4 billion in ties and aims to capitalise on contributing most to the rise. 500 onshore and o”shore wells spending on key development pro- acquiring a global portfolio that assets that could bring value to its The growth was led primarily during the 2017-2018 financial jects, writes Nishant Ugal. includes 15 producing assets, four portfolio. by new developments including year, with 119 believed to be explo- The Indian giant has signifi- discovered assets, 18 exploration “M&A is one of the critical ele- the C-26 Cluster fields and the ration wells. cantly increased its hydrocarbon blocks and four additional pipe- ments of our growth strategy to Daman and Vasai East fields. Sources say ONGC is expected to production over the years and pro- line projects. achieve our short- to medi- ONGC has carried out several continue drilling a similar num- duced more than 132 million bar- While OVL has not formally um-term targets,” he says, while redevelopment phases on its ber of wells annually over the rels of oil equivalent during the revealed its acquisition targets for noting that the company has Mumbai High asset o” the west next few years. previous fiscal year ending March the coming years, industry “quite a strong portfolio” now 2018. experts believe that the state-con- with 18 exploratory projects in the ONGC SPENDING PLANS Managing director Narendra trolled giant is expected to pump works. Verma says the company has in billions of dollars over the next In addition, OVL plans to “ven- ■ Capex plans of $4.5 billion in 2019 financial year moved from about 60 million boe five years as it aims to further ture into moderate-risk, high-vol- ■ Progressing on $5 billion plus development of KG-DWN-98/2 in the 2014 financial year to more grow its global footprint. ume environments such as Iraq, (Cluster 2) than 100 million boe in 2018 — an Expanding its global portfolio is Ecuador, Guyana, Suriname, Mex- ■ Total $10 billion investment plans lined up for KG-DWN-98/2 increase of 70%. a strategic priority for India as it ico and West Africa”. ■ To spend between $1 billion and $2 billion each year on west Verma says OVL’s oil and gas prepares to reduce its dependence However, Verma adds that the coast projects production could reach about 107 on crude imports by 10% during company will carefully evaluate To open up Gujarat Kutch o‘shore basin with $300 million ■ million boe during the current the next few years. all opportunities before such plus development year and is expected to be even Verma says that OVL is pres- acquisitions, considering the Subscribe to read the latest oil and gas news 8 February 2019 FO C U S INDIA 29

Krishna Godavari takes centre stage for ONGC

Discovered resources: HOEC managing director P Elango Photo: BLOOMBERG HOEC at the double with low-cost model 55 MMcfd,” he says. In addition, HINDUSTAN OIL HOEC has submitted a revised field development plan for PY-1 EXPLORATION to the Directorate General of Hydrocarbons (DGH), along with an application for extension of Company aiming to double the block’s production sharing output within two years contract. “The plan envisages drilling of three new wells and is CHENNAIBASED Hindustan Oil expected to double our current Exploration Company (HOEC) production from PY-1,” says aims to more than double its Elango. hydrocarbon production in The company has developed another two years and plans to a keen understanding of PY-1’s participate in India’s upcoming geology and has “identified licensing rounds, writes Nishant considerable additional Ugal. potential in shallower tertiary The company has been prospects”, he says. working on a turnaround plan HOEC picked up the B-80 that focuses on developing its oˆshore field during India’s first discovered resources using a Discovered Small Fields (DSF) less costly fast-track model. round. HOEC is producing about 7000 It is presently executing the barrels of oil equivalent per day final development plan for B-80 and plans to ramp up to more and is targeting production than 15,000 boepd by 2020 to from the first quarter of the 2021, says Elango. 2020-2021 financial year, says Most incremental production Elango. has been coming from HOEC’s The development plan for operated Dirok onshore field, B-80 is likely to involve drilling where its partners are state- of two wells and installation of owned Oil India Limited and a mobile oˆshore production Indian Oil Corporation. unit. HOEC has also recently “We are in advanced stages revived production from the of finalising a contract for PY-1 field oˆ India’s east coast. hiring of the MOPU and hope to “The successful completion conclude the same soon,” adds of phase one development Elango. Centre point: success at KG-DWN-98/2 could position ONGC among the world’s elite deep-water producers Photo: REUTERS/SCANPIX in Dirok and the production The establishment of a revival campaign in PY-1 has National Data Repository and provided us with a solid base for the launch of the DSF and Open focused growth in the next few Acreage Licensing Policy (OALP) OVL prepares for significant investment as it looks to expand foreign portfolio years,” says managing director rounds have opened India’s parameters involving fiscal terms years to start producing LNG, he Lower Zakum is the only produc- P Elango. industry to smaller domestic and conditions, competition, adds. ing one. HOEC plans to boost players such as HOEC, Elango access to capital and capacity of Russian projects hold a key Oil and gas production from production with the second says. the national oil company. position in OVL’s overall portfolio other blocks is presently stalled development phase of the Dirok The company remains “very OVL holds a 16% interest in with about 63% of the company’s due to geopolitical issues. field, additional development interested” in participating in Mozambique’s giant oshore production being contributed by OVL’s global proven and proba- of the Karsang onshore field, a India’s upcoming bid round and Rovuma Area 1, where recoverable those projects. ble reserves are thought to be follow-up drilling programme growing its portfolio. gas resources are touted to be OVL’s Russian reserves in key around 5 billion boe, which it on PY-1 and development of the “We will leverage between 50 trillion and 70 trillion projects such as Sakhalin and believes would lead to sustainable B-80 oˆshore field on the west opportunities for expanding cubic feet. Vankor are thought to have a growth in the coming years. coast. our portfolio with the right The Mozambique investment by combined base of about 1.8 billion OVL is a 100% subsidiary of “Over the next three years, we kind of assets organically OVL and other Indian state-owned boe. India’s state-controlled Oil & Nat- are planning for development through DSF/OALP bid rounds players is thought to be one of the OVL acquired a 4% stake last ural Gas Corporation (ONGC). capital expenditure of around and inorganically, as and when largest overseas investments year in Abu Dhabi National Oil The Indian government has $50 million, and it will be opportunities arise,” he adds. made by Indian oil companies Company’s Lower Zakum oshore been considering plans to list OVL funded through internal The company says that it is during the past decade, involving concession, marking its entry into on domestic stock exchanges. resources,” Elango says. also keenly looking forward billions of dollars’ worth of invest- the lucrative United Arab Emir- However, Verma says such deci- Dirok is presently producing to the government’s plan to ments. ates upstream sector. sion would lie with ONGC. about 35 million cubic feet per privatise 149 discovered oil Verma says that a development Industry experts suggest that “As such, listing plans, if any, day of gas of gas and Elango fields that are presently being plan for the Mozambique project OVL is expected to continue to lie within the domain of the par- says it expects government operated by state-owned has been approved by the Mozam- look out for assets in the UAE over ent,” he says. approval of its next-stage companies such as Oil & bique government and its final the next few years, as it aims to A listing decision would have to development plan for the field Natural Gas Corporation and Oil investment decision is under pro- further consolidate its position in factor in the “current portfolio of by March 2019. India. gress. the Middle East. the company along with the “The plan envisages drilling “We are well positioned to Once sanctioned, the project is Six out of OVL’s 41 assets are global exploration and production of four to five additional wells to grab such an opportunity as and expected to take another four based in the Middle East, but environment”, he adds. increase the production to about when it comes up,” Elango says. Subscribe to read the latest oil and gas news 30 FO C U S INDIA 8 February 2019

CORPORATE OUTLOOK

Cairn points to Rajasthan as it plans output drive Indian operator to embark on number of exploration and enhanced oil recovery projects as it looks to boost oil and gas production

NISHANT UGAL New Delhi

NDIA’S Cairn Oil & Gas is aiming to more than double its has been defined yet by the oper- 90/1 block in Rajasthan during the Licensing Policy (OALP 1) round planning to significantly existing production from Rajast- ator to achieve the envisaged pro- next couple of years. under the new licensing regime, ramp up oil and gas produc- han over the years, with a signif- duction levels. The company has three produc- winning 41 out of 55 blocks o”ered tion from its key Rajasthan icant reserve boost. Mathur says that the company ing oil and gas assets in India — last year. onshoreI asset through increased “Our growth projects in Rajast- plans to invest a further $4 billion the Rajasthan onshore block, In addition to the Rajasthan exploration and enhanced oil re- han will add around 400 million over the next four years in India Cambay o” the west coast and the acreage, Cairn is expected to spend covery projects. barrels of reserves with a peak to ramp up oil and gas production Ravva field o” the east coast. heavily on initial exploration and The Vedanta Resources subsidi- production rate of around 200,000 through increased exploration Together, the trio are producing development of the OALP 1 blocks ary currently produces about boepd from new projects,” says and enhanced oil recovery pro- about 200,000 boepd with output and on further exploration and 153,000 barrels of oil equivalent Cairn chief executive Sudhir jects. expected to increase sharply to development at its Ravva and per day from the Rajasthan Mathur. A majority of the expenditure to 300,000 boepd in another two Krishna Godavari basin blocks. RJ-ON-90/1 asset, mostly from its The various ongoing projects in be incurred by Cairn in India is years. Cairn is now carrying out o”- Mangala, Bhagyam and Aish- Rajasthan are expected to peak at likely to be focused on projects Cairn had bid aggressively dur- shore exploration at a Krishna warya (MBA) oilfields. Cairn is di”erent times and no schedule under way at its flagship RJ-ON- ing India’s first Open Acreage Godavari basin block on the east Exploration push to start soon as spending plans made CAIRN Oil & Gas is expected to start to engage partners before initiating square kilometres of 3D seismic over the multiple basins, including the Mumbai, exploration activities within months at exploration in OALP 1 acreage and next few years. Krishna Godavari, Cauvery and the 41 licences recently awarded under company representatives recently met Cairn’s upcoming exploration drive is Gujarat Kutch areas. India’s first round of Open Acreage several players in Houston. thought to be the largest carried out by The onshore acreage is mostly located Licensing Policy (OALP 1), writes Nishant The operator is expected to award any private-sector operator in India in in the Rajasthan, Cambay and the Ugal. contracts within the next three to four recent years. Assam-Arakan basins. The Vedanta Resources subsidiary months for seismic studies on the new The company is betting big on India’s Mathur says that most of the 41 blocks plans to spend about $550 million acreage. hydrocarbon potential and believes the are in established sedimentary basins initially on exploring OALP 1 acreage, Cairn has also “started applying for initial blocks that have been o’ered and many lie close to existing with most of the expenditure anticipated environmental and other crucial through the OALP 1 round are likely to infrastructure, which could make within the next four years. clearances” required before activities can have high potential. development more cost-e’ective. “In the blocks awarded to us under begin, Mathur says. Mathur says that the new blocks “will India’s improved contractual OALP 1, we have outlined an initial Most of the requisite clearances are significantly expand the company’s conditions for oil and gas exploration investment of around $550 million for likely to be in place either by the first or geographical and business reach”. prompted the operator to take a long- exploration activities. This number will second quarter of this year. Cairn’s OALP 1 blocks — 33 onshore and term view of the country’s potential. ramp up manifold should there be a Cairn is expected to drill more than 8 o’shore — together hold a potential 1.4 “We believe that with increased focus discovery,” says Cairn chief executive 150 exploration wells, both onshore and billion to 4.2 billion barrels of oil and an enabling environment, India will Sudhir Mathur. o’shore, and acquire a total of 7000 line- equivalent, according to the company. be able to attract a lot more investment Mathur says Cairn is actively looking kilometres of 2D seismic and 17,000 The o’shore blocks are located across in the [oil and gas] sector,” Mathur says. Subscribe to read the latest oil and gas news 8 February 2019 FO C U S INDIA 31

Enhanced

Stepping up: Cairn Oil & Gas recovery Energy operations in Rajasthan, India Photo: CAIRN OIL & GAS in the mix SPOTLIGHT ON KEY FIELDS

Range of methods to be used to add reserves

CAIRN Oil & Gas is embarking on several projects in Rajasthan in India that together are likely to add 400 million barrels of reserves, writes Nishant Ugal. In addition to ongoing exploration activities at the Rajasthan Block RJ-ON-90/1, Cairn is carrying out polymer enhanced oil recovery at the Bhagyam and Aishwariya oilfields. It is also carrying out an infill and liquid handling upgrade and tight oil development at Mangala and a deep gas development at Raageshwari. “We deployed a full-field peak polymer injection in Mangala in 2016, and we are now replicating that success at the Bhagyam and Aishwariya fields. We are also in the midst of deploying a key ASP [alkali surfactant polymer] project in Mangala,” Cairn chief executive Sudhir Mathur tells Upstream. Rajasthan has been a predominantly oil-producing block, but Cairn is progressing swiftly with the further development of the Raageshwari Deep Gas (RDG) field. Cairn is installing early production facilities at RDG and aims to more than double gas production by next year. “The early production facility shall be commissioned in the fourth quarter of the 2019-2020 financial year and shall result in an increase in gas production by coast that is thought to hold in Rajasthan, where several wells an additional 90 million cubic resources of 300 million boe. are likely to be drilled. feet per day,” adds Mathur. The company reported an oil and It also intends to carry out a The operator’s gas production gas find in the Krishna Godavari separate o‘shore exploration from RDG is currently thought basin block last year, after spud- campaign at the Ravva block, to be around 60 MMcfd and, ding its first exploration well. where a four-well drilling pro- along with the incremental gramme has been earmarked for volume, total gas production Campaign the second half of this year. from Rajasthan is expected to Cairn’s parent Vedanta said last The Indian government last go up to 150 MMcfd by next year. September it had notified the year allowed exploration and pro- Cairn has also awarded an Indian Ministry of Petroleum & duction of unconventional engineering, procurement and Natural Gas and Directorate Gen- resources in existing fields. construction contract to eral of Hydrocarbons of a discov- Cairn is among the private-sec- Petrofac of the UK for building a ery with the A3-2 well in Block tor operators that plan to explore surface facility in the block, KG-OSN-2009/3. for shale resources in the country, primarily comprising a gas Cairn is currently carrying out says Mathur. “We are set to kick terminal. a two-well exploration campaign o‘ the initial testing for shale Mathur says that the new in the Krishna Godavari basin resources and exploration over terminal is expected to be block, and aims to further the next two quarters.” commissioned by 2021 and appraise the discovery following Long term, Cairn aims to con- could increase gas production its conclusion. The operator is also tribute up to half of India’s total from the Rajasthan field by expected to spend heavily over domestic crude output by produc- another 90 MMcfd to about 240 the next few years on exploration ing about 500,000 boepd. MMcfd during the next two years. ONGOING CAIRN PROJECTS IN RAJASTHAN The Vedanta Resources subsidiary is also carrying out Name Estimated Peak Production further exploration activities at reserves* estimates** the field and is expected to drill Bhagyam & Aishwariya 40 19 about 50 additional wells during Polymer flood the next three to four years, Mangala Infill & Liquid 28 28 adds Mathur. Handling Upgrade In addition, around 70 Tight Oil (ABH) 32 15 onshore wells are also expected Tight Gas (RDG) 85 30 to be drilled by Cairn in MBA ASP 200 108 Rajasthan in the new blocks * Million boe awarded under the Open ** Thousand boepd Cairn Oil & Gas chief executive Sudhir Mathu Acreage Licensing Policy round, Photo: CAIRN OIL & GAS says Mathur. Subscribe to read the latest oil and gas news 32 FO C U S INDIA 8 February 2019

Afcons CONTRACTORS building success

INDIAN oshore and civil engineering player Afcons is set to begin work on a challenging central processing platform project for Oil & Natural Gas Corporation’s (ONGC) giant KG-DWN-98/2 development after having successfully completed work on the operator’s ICP-R and HRD process platforms, writes Nishant Ugal. Afcons, part of the Shapoorji Pallonji Group, led a consortium with Malaysia’s Sapura Energy that was awarded the $720 million deep-water CPP project in December last year in a highly competitive tender process. The CPP is a crucial part of ONGC’s ambitious $5 billion-plus KG-DWN-98/2 deep-water development o the country’s eastern coast. Afcons tells Upstream that the oshore project “assumes great importance for the country in terms of oil and gas security” but also presents a challenge with an aggressive schedule. “The oshore working window in the east coast is only for four months (January to April) and therefore there is no scope for any slippage in schedule,” the company says. “We need to complete the installation, hook up and commissioning during this four-month window.” Afcons has emerged as one of the key oshore engineering, procurement and construction contractors in India and is mainly focused on jobs being oered by ONGC. In addition to the CPP project, the company is working on two brownfield projects for ONGC known as Life Extension to Well Platforms 1 and 2. “We are revamping around 43 ageing wellhead platforms for ONGC,” the company says. Better known for project management, Afcons’ strategy has not historically ventured into fabrication or asset ownership, but that could soon change. “We are in the process of developing a fabrication yard in India that will certainly help L&T positions to benefit from spending splash us to be more competitive in the greenfield projects,” the company says. Portfolio of yards in key locations and capabilities give engineer The domestic oshore engineering, procurement and plenty of muscle for contract battles in highly competitive arena construction market has of late become highly competitive, with NISHANT UGAL several yards from South-East New Delhi Asia and the Middle East battling it out for a slice of ONGC projects. However, Afcons insists it is NDIAN contractor INDIAN tioned yards L&T stands to gain competition and margins are risers and subsea production sys- competitive and will leverage contractor Larsen & Toubro from various projects being expected to be relatively lower in tems contract for the its record of partnerships and (L&T) is expected to benefit floated on the east and west coasts the o‚shore EPC industry. How- KG-DWN-98/2 deep-water develop- joint ventures on key process from state-owned Oil & Nat- of India by ONGC. ever, L&T appears to be quite well ment. platform projects to win work. uralI Gas Corporation’s (ONGC) ag- The state oil company is positioned across the value L&T’s workscope for the multi- Afcons says it could benefit as gressive spending plans over the expected to o‚er o‚shore EPC pro- chain,” an industry source says. ple projects under execution India pursues a government next few years as subsidiary L&T jects worth between $1 billion to The company is thought to be involves several o‚shore plat- initiative launched five years Hydrocarbon Engineering aims $2 billion each year, industry currently executing four or five forms, laying of multiple seg- ago to boost local content. for top spot in the domestic o‚- sources say. key o‚shore developments for ments of o‚shore pipeline, modi- “Going forward, there is a lot of shore engineering, procurement ONGC that are together worth fications and other associated thrust on improving local and construction industry. Intense competition more than $1 billion to L&T. o‚shore infrastructure. content in domestic projects L&T operates three major o‚- While L&T faces intense competi- The projects include the pipe- While the Bassein and SURF under the ‘Make in India’ shore fabrication yards — Hazira tion from domestic players as well line replacement project PRP 4, plus SPS contracts were awarded (programme). We are hopeful of and Kattupalli in India and Sohar as yards in South-East Asia and the Neelam redevelopment and last year, the other projects using this as an opportunity to in Oman — that are believed to the Middle East, observers suggest Bassein development, a transpor- including Neelam, Daman and become more competitive.” have combined annual fabrication that the Indian giant could prove tation and installation project for PRP 4 were awarded in 2017 and The contractor now aims to capacity of more than 150,000 to be highly cost-competitive ow- the Daman field and, in a consor- are thought to be close to comple- expand its horizons to Africa, tonnes. ing to its local engineering and tium with McDermott and Baker tion, industry sources say. “where huge potential lies in Project observers say that with fabrication capabilities. Hughes, a $1.6 billion integrated As ONGC progresses with the $5 the field of oil and gas”. these three strategically posi- “There is going to be a lot of subsea umbilicals, flowlines and billion deep-water development of Subscribe to read the latest oil and gas news 8 February 2019 FO C U S INDIA 33

Sidvin casts an eye to

Investment: L&T’s global FPSO market Hazira yard Photo: L&T OFFSHORE engineering and 2021. Last year, Sidvin completed design company Sidvin Core-Tech work related to front-end engi- is banking on the global market neering and design for the B&V for floating production storage Golar Mark 2 floating liquefied and o£oading systems to be resil- natural gas project and is hoping ient enough over the next several to grab similar opportunities in years to provide ample opportuni- the next few years. ties for Indian engineers, writes Nagarajan believes that in addi- Nishant Ugal. tion to the FPSO market, the wider The Bangalore-based company engineering design market has has been at the helm of several improved, a trend likely to benefit global FPSO engineering jobs in the company. the past, owing to a lower cost He is bullish on Sidvin’s home base in India and abundant engi- country and its engineering neering talent in the domestic capacity. market. “The talent in India is abundant However, the FPSO market and the quality of engineers we slowed down drastically during have been able to attract is very the recent downturn due to sus- good,” he says. tained low crude prices and few However, he does see coming awards. challenges from other South-East Managing director Mohan Asian countries. Nagarajan says the market senti- “We only fear that the costs ment has now improved in the should not rise beyond a point and FPSO industry and is expected to we see some sti„ competition remain upbeat. coming from countries like the “We are very positive on the Philippines and Indonesia,” he FPSO market for the next three to says. four years. There are many fields Sidvin was able to weather the where the investment decisions industry downturn and use it as have been frozen and we are wait- an opportunity to diversify its ing for the bids to come out operations. shortly,” he says. “The lull in the oil industry gave Over the past two decades, Sid- us a chance and time to look at vin has executed more than 15 what more we could do,” Nagara- FPSO engineering design projects, jan explains. catering to global giants such as Sidvin established a joint ven- Modec and SBM O„shore. ture company with Finland-based The company is currently metals and minerals player Outo- involved in completing topsides tec and has also set up a marine and marine engineering work on practice for executing engineer- Modec’s Guanabara MV-31 FPSO ing projects related to hull refur- for Brazilian state-owned giant bishment. Petrobras. The company is also in the pro- Nagarajan says that current cess of establishing a water treat- projects in the pipeline should ment practice that could help in keep Sidvin busy until at least further diversification. SPOG is stepping up SHAPOORJI Pallonji Oil & Gas that necessitate deployment of (SPOG) has emerged as one of FPSOs. Over the next five years, India’s largest domestic floating four to five MOPUs are expected production storage and o£oading (on the west coast),” the company system contractors, writes Nishant says. Ugal. SPOG says that being an Indian Along with its joint venture FPSO player has its advantages, partner, Malaysia’s Bumi Armada, including the cost-competitive- SPOG operates the Armada Sterling ness and access to resources that and Armada Sterling-II FPSOs o„ it can draw on for future projects India’s western coast and is among in India and overseas. L&T positions to benefit from spending splash the key contenders battling it out “The focus on localisation has for a prestigious contract with Oil helped SPOG to be cost competi- & Natural Gas Corporation (ONGC) tive. A 100% indigenisation of for the KG-DWN-98/2 FPSO o„ the FPSO crew and consumables for east coast. the Indian operations is an e„ec- The SPOG-Bumi Armada joint tive long-term strategy for keep- venture is competing with other ing the operating cost lower,” the ONGC-qualified players Modec and company says. SBM O„shore for the award. While SPOG has positioned SPOG says India’s floater market itself as a strong FPSO contractor will continue to provide opportu- in the country, the company now its KG-DWN-98/2 asset, industry vide work opportunities for con- L&T Hydrocarbon Engineering, in nities, with up to two new FPSO plans to emerge as a global player sources suggest L&T’s Kattupalli tractors such as L&T. partnership with Subsea 7, will prospects likely to come up rela- and is looking at several bidding yard is well positioned for some of L&T also has a strong presence deliver EPCI services for the Zuluf tively soon o„ the country’s east- opportunities in other geographi- the upcoming developments in the Middle East o„shore EPC and Berri fields, including three ern coast. cal regions. in the country’s east coast sector. oil production deck manifolds and “Over the next few years, India Along with Bumi Armanda, region. The Indian giant is one of the subsea pipelines. may see one or two more FPSOs in SPOG is targeting the Aker Ghana L&T is also said to be among the select long-term agreement con- “This is the fifth award for the the eastern o„shore contingent DT-CTP FPSO project and is also key bidders for the ongoing Clus- tractors in a consortium with consortium and provides a signif- upon the resource potential and exploring several FPSO and MOPU ter 7 and Heera o„shore project Oslo-listed Subsea 7 for o„shore icant project pipeline for future development plans of ONGC and opportunities in India and South- tenders that are thought to work with Saudi Aramco. work,” L&T Hydrocarbon Engi- (Reliance Industries), two key East Asia. include several new platforms and L&T has been executing a $1.6 neering said. players in eastern o„shore,” the The company has also been subsea pipelines. billion o„shore EPCI contract “At present, there are four o„- company says. involved in the engineering, pro- India’s o„shore EPC market has with Aramco awarded in 2016 shore contracts under execution However, on the west coast curement, construction and been dominated by ONGC in the involving work on the Hasbah by the consortium for Saudi Ara- SPOG says there are likely to be installation of the FPSO Karapan past few decades, but ongoing incremental facilities project. mco under the Long-Term Agree- more opportunities for mobile o„- Armada Sterling III in the Madura licensing rounds could bring in The contractor is also believed ment.” shore production units than o„shore field in Indonesia and more private-sector operators to be working on other brownfield The Zuluf and Berri work will be FPSOs. hopes to pursue other interna- such as Cairn Oil & Gas and Hin- o„shore developments for Aramco performed at L&T’s flagship Haz- “Most of the new discoveries in tional opportunities, including dustan Oil Exploration Company and landed a new contract with ira yard in Gujarat, India, the the western o„shore do not have floating production systems (HOEC), which in turn could pro- the operator in January this year. company said. a production profile or conditions beyond FPSOs and MOPUs. Subscribe to read the latest oil and gas news 34 FO C U S INDIA 8 February 2019

LIQUEFIED NATURAL GAS

LNG key to meeting India’s gas demand

Sector expansion under way but pricing and aordability issues combined with a current shortage of established infrastructure are hindering progress

AMANDA BATTERSBY Singapore

ATURAL gas today ac- Energy Forum at just how price the world. The country has four facilities at Dahej in Gujarat and commit on their respective equity counts for around 6.5% sensitive the LNG market is in existing LNG import projects — all Kochi in Kerala. investments. of India’s energy mix that country. on the west coast — with current IOC has been in talks to divest “Gail and IOC are jointly carry- and the government “I was struck by an almost combined capacity of 30 million some of its 95% equity in the ing out techno-commercial and hasN announced a target of increas- unstated but nevertheless quite tonnes per annum. Ennore facility, with Petronet and legal due diligence studies,” Gail ing that to a 15% share by 2030. transparent price that was set Any day now the Dahej, Hazira, Malaysia’s Petronas touted as told the Economic Times in late With questions hanging over by India as being the ceiling at Dabhol and Kolkata receiving and potential new co-venturers, January. the commercial viability of devel- which they will buy gas,” said regasification facilities will be although no deals have yet been Meanwhile, France’s Total oping some indigenous gas dis- Houston. joined by the Ennore project, the finalised. signed an agreement with Adani coveries given the low domestic Assuming a notional $8 per mil- first such project on India’s east The sole existing partner in the last October to jointly develop sales price, imported liquefied lion British thermal units deliv- coast. 5 million tpa Ennore LNG facility “various regasification LNG termi- natural gas could help to meet ered, that would have been $2.50 is the Tamil Nadu Industrial nals”, including Dhamra. increasing demand provided the lower than cargoes for December Initial cargo Development Corporation on 5%. Total chief executive Patrick price is right. delivery were being touted two Indian Oil Corporation (IOC) was Meanwhile, compatriots IOC Pouyanne said: “We are thrilled to India’s LNG industry is expand- months before, he explained. planning in late January to com- and Gail are still considering com- build this broad partnership with ing but still relatively slowly with “So already one of the great mission its Ennore LNG import ing on board Adani Group’s 5 mil- the Adani Group, benefitting the main stumbling blocks to markets that needs a lot of gas is terminal in Tamil Nadu with an lion tpa Dhamra LNG import ter- from its in-depth knowledge boosting LNG imports being a lack already priced out by the (prevail- initial cargo due to arrive before minal in Odisha, which is of the Indian energy market, as of gas distribution infrastructure ing) buy-sell,” Houston told the the end of the month. expected to be India’s second east well as its access to infrastruc- and the cost of the volumes them- Gas Asia Summit in Singapore. Construction of the onshore coast terminal. tures through a significant foot- selves. “Meeting the aˆordability ques- receiving and regasification facil- Adani had earlier agreed to print in several of the country’s The global LNG market is some- tion for Asia, particularly in mar- ity is already complete and the divest a total 50% stake in the key ports.” times viewed as being simply one kets like India, is going to be dredging required to allow carri- Dhamra receiving and regasifica- This was an interesting move of supply and demand but aˆorda- extremely important.” ers to berth was almost finished tion terminal to Gail and IOC. from Total, which a couple of bility is a key criterion, especially Delays to the installaton of new at the time of publication. While the two state-controlled months before had divested its in the Indian market. pipeline infrastructure have Ennore is IOC’s first operated companies are availing them- 26% equity in the Hazira LNG ter- Tellurian vice chairman Martin slowed the rate of expansion of LNG import project, although the selves of a combined 4.5 million minal to operator Shell. Houston recalls being surprised India’s LNG industry, which today company has a 12.5% stake in Petr- tpa of regas capacity in the The Dhamra LNG terminal, during a CERAWeek India is the fourth-largest importer in onet LNG that operates import Dhamra facility, they have yet to which is scheduled to come into Subscribe to read the latest oil and gas news 8 February 2019 FO C U S INDIA 35

FSRUs on horizon for new era

FLOATING storage and regasifica- tion units with lower capital expenditure and faster start-up than land-based terminals are being tapped for several new Indian liquefied natural gas import pro- jects, though the first such project has yet to come into operation, writes Amanda Battersby. H-Energy missed its proposed 2018 start-up of the Jaigarh LNG import project in Maharashtra, despite the FSRU on charter from France’s Engie having been inau- gurated in May last year. “The launch of India’s first FSRU-based LNG terminal marks a new era of opportunities to drive the development of port-based industries and social infrastruc- ture in India,” said JSW Infra- structure, which owns and oper- ates Jaigarh Port. Engie is supplying Hoegh’s FSRU GDF Suez Cape Ann, which will ini- tially handle up to 4 million tpa of LNG at Jaigarh, under a contract of at least five years’ duration. H-Energy had hoped to receive its maiden LNG cargo before the end of last year but heavy mon- soon rains delayed construction of pipeline infrastructure connect- ing the Jaigarh facility to the national gas grid at Dabhol. The second such unit to come into operation in India could well be Swan Energy’s 5 million tpa Jafrabad FSRU — a project that was first proposed back in 2008. Hyundai Heavy Industries is constructing the newbuild Jafra- bad FSRU in South Korea. The unit, which is being built to Lloyd’s Register oˆshore unit clas- sification rules, is due for delivery Contribution: the Kochi LNG in December and it could be oper- terminal on India’s west coast ational oˆ Gujarat in 2020. Photo: PETRONET LNG Swan LNG’s Bhavik Merchant earlier said: “Our FRSU-based LNG Terminal at Jafrabad will help India’s push to increase the pro- portion of gas in its energy mix to power its economic expansion.” Other such proposed FSRU pro- jects include APGDC’s Kakinada development, although this 5 mil- lion tpa scheme, believed to still be on the drawing board, had orig- inally been targeting completion in March 2018. This east coast LNG import pro- operation in the second half of track record of project schedules minal in Kerala has fallen Gail will complete the Kochi- ject stalled the previous year 2021, will ultimately be expanded slipping considerably and of some victim to delays in the construc- Mangaluru pipeline within a when Anglo-Dutch supermajor to 10 million tpa. proposed import schemes never tion of key pipeline infrastructure few months and that should Shell and GDF Suez (now Engie) of Looking further ahead, the Hin- seeing the light of day. to deliver regasified volumes enable Kochi to increase its France walked away from their dustan Petroleum Corporation One LNG import project where to customers. Petronet hopes imports. respective 26% stakes. (HPCL) and a subsidiary of the wheels of progress have cer- While no reason was publicly Shapoorji Pallonji have teamed up tainly slowed is Petronet’s pro- INDIA LNG TERMINALS stated, local sources say that the for the proposed 5 million tpa posed Gangavaram, which had European partners were con- Chhara LNG project in Gujarat. been targeting operational cerned over the rate of gas demand start-up in 2016. Terminal Operator Capacity(tpa) growth in India. Agreement Front-end engineering and In Operation: APGDC is a joint venture The duo has already signed an design work has been carried out Dahej Petronet LNG 15 million between the Andhra Pradesh state agreement with Gujarat State Pe- for the Gangavaram terminal in Hazira Shell 5 million government and Gail. troleum Company to tie in regasi- Andhra Pradesh and all necessary Dabhol Gail and NTPC 5 million The Indian government is plan- fied volumes to its nearby gas approvals have been obtained, Kochi Petronet LNG 5 million ning to draw up a policy to help pipeline infrastructure. according to the operator. Under Construction: facilitate the development of LNG This import terminal would This LNG project was pegged Ennore IOC 5 million FSRU projects at strategic port include one main jetty able to with initial capacity of 5 million Mundra Adani 5 million locations across the nation. handle carriers of between 80,000 tpa that would be increased to 10 Dahej Expansion Petronet LNG 2.5 million The policy is intended to spur the cubic metres and 266,000 cubic million tpa in future. Dhamra Adani 5 million development of FSRUs by private metres’ capacity, with provision Petronet has already embarked Jafrabad Swan 5 million investors and boost LNG import for a standby jetty, and two on a further expansion of its Jaigarh H Energy 2.5 million capacity much faster than could be 200,000-cubic metre LNG storage Dahej LNG import project in Guja- Planned/Proposed: achieved by land-based facilities. tanks. rat that later this year will boost Gangavaram Petronet LNG 5 million Mumbai Port Trust has already Chhara is envisaged as being its capacity by 2.5 million tpa to Kukrahati H Energy 4 million invited investors to install FSRUs. expanded to 10 million tpa capac- 17.5 million tpa. Krishnapatnam LNG Bharat 2.5 million However, there was zero response, ity in a second development However, while Dahej has often Chhara HPCL and Shapoorji Pallonji 5 million which one local report attributed phase. Delays are nothing new in operated above its nameplate Kakinada APGDC 5 million to the absence of policy frame- the LNG industry but India has a capacity, the operator’s Kochi ter- work from the government. Subscribe to read the latest oil and gas news 36 FO C U S INDIA 8 February 2019

UNCONVENTIONALS Bid to double CBM output Players launch major drilling campaigns with target of 4 MMcmd in four years

NISHANT UGAL New Delhi

EADING coalbed methane private sector players in India are carrying out ex- tensive drilling cam- paignsL in hopes of more than dou- bling the country’s CBM production over the next three to four years. A strong local gas market, improved pipeline infrastructure, policy reforms initiated by the government and a market-based gas pricing regime have improved the investment climate for CBM operators. UK-listed Great Eastern Energy Corporation (GEECL), India’s Essar Oil & Gas and private-sector giant Reliance Industries are at the fore- front of the industry and have commercialised gas production from key CBM acreages in the eastern and central part of the country. India’s CBM production grew by almost 30% to about 735 million cubic metres during the financial year that concluded in March 2018. While the private-sector opera- tors are carrying out expansion programmes at their acreages, state-controlled Oil & Natural Gas Corporation (ONGC) is also expected to revive some of its key CBM exploration blocks in the country. The eˆorts being made by pri- vate and state-owned players is expected to lead to significant incremental CBM production with volumes likely to more than dou- ble to 4 million cubic metres per day in another three to four years.

Strong future GEECL’s chief executive Prashant Modi tells Upstream that he sees a strong future for the CBM indus- try and a robust gas market over the next few years. GEECL was the first player in the country to have commercial- ised CBM gas production from its Raniganj (South) block in West Bengal. The company presently pro- duces about 509,000 cubic metres per day of gas from the block and is carrying out a 300-well drilling campaign to expand production from the CBM acreage. Modi says: “156 wells have been Drilling: GEECL chief executive Prashant Modi Photo: GEECL done. We are going to drill another 144 wells during the next few preparing to ramp up gas produc- drilling of 152 additional wells. good prospective business in the this year. Along with GEECL years.” tion to 2.3 MMcmd in another two Tawde says the company has country. and Essar, Reliance Industries The company plans to ramp up to three years. invested about 4000 crores ($573 “CBM is the cleanest of the fuel is also producing from its Sohag- CBM production from the Rani- Essar is presently producing million) in the Raniganj (East) with significantly lower emis- pur CBM blocks in Madhya ganj (South) block to about 2 about 550,000 cubic metres per block and plans to invest an addi- sions,” he says. Pradesh. MMcmd in the long term but has day but aims to increase CBM pro- tional $143 million over the next In addition to the Raniganj Around 33 CBM blocks have not defined a specific time frame. duction to 1 MMcmd in March 18 months in drilling. (East) block, Essar also operates a been awarded by the Indian gov- While agreeing that commer- this year. He adds about 348 wells have few other CBM acreages that are ernment during the past few dec- cial CBM production in India is “We will reach 1 MMcmd in already been drilled in the Rani- yet to commence production, ades through four auction rounds. challenging, Modi says that it is a another four to five months when ganj (East) block of which between including Rajmahal in Jharkhand, India holds about 2.6 Bcm of viable business. the Gail pipeline gets operational. 180 and 190 are producing. Talcher and Ib Valley in Odisha CBM, according to the Directorate CBM production is quite diˆer- This will give us a much wider The company is presently sell- and Sohagpur in Madhya Pradesh. General of Hydrocarbons. ent from conventional oil and gas access with the Urja Ganga pipe- ing its entire CBM production The blocks are estimated to However, industry sources sug- and takes years of dewatering, the line,” says Essar Oil & Gas chief from the West Bengal block to jointly hold about 282 billion cubic gest that about 17 to 18 CBM blocks right kind of technology and executive Vilas Tawde. transmission player Gail, based metres of reserves and the have been relinquished by opera- attention to detail, he says. The company plans to further on a 15-year oˆtake agreement initial exploration work on the tors in the past, owing to chal- Essar Oil & Gas, operator of the increase its CBM production to 2.3 finalised last year. Rajmahal and Sohagpur acreages lenges involving technology and Raniganj (East) CBM block, is also MMcmd once it completes the Tawde believes that CBM is a is expected to start by end of development of assets. Subscribe to read the latest oil and gas news 8 February 2019 FO C U S INDIA 37

UNCONVENTIONALS

Development: GEECL CBM fields in West Bengal Photo: NISHANT UGAL

Getting on the trail of shale

Policy change means players such as GEECL and Essar plan to launch major exploration campaigns

NISHANT UGAL New Delhi

NDIA’S move to permit ex- tal concerns, have restricted said it could spend up to $1 billion changes happening, there are tain the true value of gas potential ploration of shale oil and gas state-owned players from carry- for drilling about 250 wells in the signs that there should be in the block. and other unconventional ing out shale exploration cam- West Bengal block. increased shale exploration in While GEECL and Essar have resources in existing pro- paigns. Existing coal bed methane India during the coming years,” laid out plans to explore shale gas ductionI sharing contracts is likely However, policy initiatives operators like GEECL and Essar are he says. in the country, operators such as to attract interest from several announced by the Indian govern- among the first to have spelled Independent reserve engineers Reliance, Cairn Oil & Gas and private-sector players. ment last year allow operators of out their ambitions for shale gas at Advance Resources Interna- other domestic players could also Two of India’s leading opera- existing conventional hydrocar- exploration, as the two players tional (ARI) have carried out an look at exploring India’s shale tors, Essar Oil & Gas and UK-listed bon and coalbed methane con- aim to take advantage of the assessment for GEECL’s Raniganj resources over the next few years. Great Eastern Corporation tract areas to explore for shale. existing infrastructure in West South block that gives a high esti- According to the Indian govern- (GEECL), recently announced The changes will likely produce Bengal. mate of shale resources of up to ment, more than 72,000 square plans to embark on extensive an increase in exploration activi- GEECL chief executive Prashant 6.63 Tcf of gas. kilometres of New Exploration shale gas exploration campaigns. ties for the unconventional Modi says the company plans to Modi says the most recent Licensing Policy and pre-NELP The country’s shale gas resource. capitalise on its years of experi- report by ARI increases the origi- blocks and 5269 square kilometres resources are believed to be signif- ence dealing with CBM produc- nal gas in place at Raniganj South under existing CBM contracts icant, with government estimates Shale resources tion and sees a lot of synergies in to up to 9.25 Tcf, “with an undis- have been opened for simultane- suggesting in-place reserves in GEECL recently said it will launch exploring shale resources in the counted value of $13.78 billion and ous exploration and exploitation five key sedimentary basins of a shale gas exploration campaign same acreage. a discounted value of $4.31 billion”. of conventional and unconven- between 100 trillion and 200 tril- later this year on its Raniganj “We can share a lot of above tional hydrocarbons. lion cubic feet. South block in West Bengal and ground infrastructure. Shale Existing infrastructure However, industry experts Not much is known about the aims to invest up to $2 billion on needs a lot of water and CBM pro- Essar chief executive Vilas Tawde believe that commercialising commerciality of shale gas pro- development of shale resources. duces a lot of water,” he says. also believes that his company shale resources could prove chal- jects in the country and several Another key operator, Essar, Modi insists that “shale gas can capitalise on its existing CBM lenging. challenges in the past, including which operates the Raniganj East resources can be explored and infrastructure in the Raniganj One industry source points out land acquisition and environmen- coalbed methane block, has also developed cost-eˆectively in tan- East block. that commercialisation could dem” with ongoing CBM develop- Essar aims to start a shale gas take longer than expected to INDIA’S SHALE PLANS ment in GEECL’s West Bengal exploration campaign in the Ran- materialise because of issues block. iganj East asset towards the end involving land acquisition, water, ■ Shale gas resources in five key basins between 100 Tcf and Shale “is viable”, he says, adding of this year, which is likely to cost technology and high development 200 Tcf that he hopes shale development about $30 million. costs. ■ Players line up $3 billion plus for exploration will follow the success of 20 years Tawde says that out of 8 Tcf of However, others say that an ■ GEECL, Essar and Cairn set to explore for shale of Indian CBM production. shale resources in its West Bengal improving policy environment ■ Operators of NELP and Pre-Nelp blocks permitted for shale Modi also holds the view that asset, 1.5 Tcf is likely to be recov- and pipeline infrastructure will exploration pipeline infrastructure has erable. enable operators to overcome ■ ARI estimates shale resources (high) at 6.63 Tcf for GEECL’s improved in the country and is However, Tawde adds that the many of the hurdles that have Raniganj block expected to give an impetus for company first needs to drill and held beck shale gas exploration shale development. “With all the frack the wells in order to ascer- and development in India.