Two weeks ago, it was reported that Pakistan has made a significant discovery of oil and gas reserves in its territorial waters. This find is said to be so large that it could alter the economic future of the struggling nation. While the exact amount of Pakistan’s hydrocarbon resources has yet to be determined, some estimates suggest that these reserves could be among the largest in the world, possibly ranking fourth overall.
However, the global oil companies seem skeptical about the opportunity. In July, Pakistan’s Petroleum Minister, Musadik Malik, informed a parliamentary committee that international firms are showing little interest in exploring oil and gas offshore in Pakistan. In fact, those companies currently operating there are considering leaving. Malik pointed out that security concerns are a significant issue. He stated that companies have to invest heavily to ensure the safety of their employees and assets in regions where oil and gas exploration is conducted.
In contrast, India, Pakistan’s neighbor, does not face similar obstacles. India’s Oil Minister, Hardeep Singh Puri, has urged major oil companies to increase exploration efforts to reduce the country’s dependence on imports and to ensure sustainable, affordable fuel. During a conference at Urja Varta, he highlighted that exploration and production activities could present investment opportunities worth $100 billion by 2030.
Currently, only 10% of India’s vast sedimentary basin, which spans 3.36 million square kilometers, is being explored. Nonetheless, India is rich in fossil fuels. According to S&P Global Commodity Insights, four largely unexplored sedimentary basins in India may contain up to 22 billion barrels of oil. These lesser-known Category II and III basins—Mahanadi, Andaman Sea, Bengal, and Kerala-Konkan—are believed to hold more oil than the well-known Permian Basin, which has already produced 14 billion barrels out of its total 34 billion recoverable reserves.
Rahul Chauhan, an upstream analyst at Commodity Insights, emphasized the untapped potential in India’s oil and gas sector. He noted that ONGC and Oil India hold leases in the Andaman waters under the Open Acreage Licensing Program (OALP) and have planned significant projects. However, the entry of an international oil company specializing in deepwater exploration is still awaited for current and future OALP bidding rounds.
Exploration Efforts Expand in India
India has made notable discoveries in the Krishna-Godavari, Barmer, and Assam basins, but exploration in other regions has progressed slowly. Of India’s 3.14 million square kilometers of sedimentary basins, 1.3 million square kilometers are in deep waters. Earlier this year, India initiated deepwater exploration in the Bay of Bengal’s Krishna-Godavari Basin through the state-run Oil and Natural Gas Corporation (ONGC). ONGC plans to invest over $10 billion to develop multiple deepwater projects in the KG-DWN-98/2 block within that basin.
Additionally, state-owned Oil India Ltd aims to start exploration activities in Nagaland. An official stated, “We have 30 blocks under the OALP. We have drilled in all awarded blocks except in Nagaland. We are working with the ministry and a high-powered committee involving OIL, ONGC, and government officials to address the issue with the Nagaland government and resume exploration.”
Unlike Pakistan, India is expected to attract major oil and gas companies without difficulty. British energy giant BP Plc is holding a board meeting in India this week to explore more opportunities in the country. BP has partnered with Reliance Industries to operate 1,900 fuel retail stations in India and produces oil and gas from a deepwater block in the Krishna-Godavari basin. The joint venture has also collaborated with ONGC to bid for exploration rights for an offshore block in India.
National oil companies (NOCs) currently account for 58% of global reserves and 56% of production. However, international oil companies (IOCs) play a crucial role in the energy sector by contributing to economic and social development in host countries. Under Production Sharing Agreements, IOCs are required to pay royalty fees to the host country.
Analysts predict that India will become a key driver of global oil demand growth, surpassing China. Emma Richards, a senior analyst at Fitch Solutions Ltd, told The Times of India that China’s role as a global oil demand engine is rapidly diminishing. Over the next decade, China’s share of emerging market oil demand growth is expected to decrease from nearly 50% to just 15%, while India’s share will double to 24%.
A rapidly growing population in India, which may have surpassed China’s, is anticipated to drive consumption trends. However, India’s transition away from traditional gasoline and diesel-fueled transportation is likely to lag behind other regions, unlike China’s swift shift toward electric vehicles and clean energy.
“India was always going to exceed China in terms of being the global demand growth driver, mainly due to demographic factors like population growth,” said Parsley Ong, head of Asia energy and chemicals research at JPMorgan Chase & Co. in Hong Kong.
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