India's outlook
Patrick CrowIndia's crude oil production continues to slip, removing any lingering doubts over the growing importance of imports to meet domestic energy needs.
Washington, D.C.
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Imported oil meets about 60% of the nation's petroleum requirements, and India's former hopes for energy self-sufficiency have faded as new offshore oil fields such as Neelam have been troubled by reservoir problems.
India's Oil & Natural Gas Corp. (ONGC) has surrendered some fields to private companies for development, but those projects have yet to make a substantial contribution to domestic crude oil production.
The only good news for the government is that international oil prices have collapsed this year, enabling India to reduce what once was a staggering bill for crude and refined products imports.
During the 1997-98 fiscal year, oil imports remained at around the same level as in the previous year, just over 54 million tons, but the import bill was 20% lower at $7.6 billion.
Low demand growth also is providing a cushion. Demand for refined products, especially diesel, had been growing at rates of 8-9%/year, but this year has marked a relatively sluggish 6%.
Bombay High
Observers say the reprieve in India's oil supply/demand picture seems to have removed some of the impetus for ONGC to add to its reserves and boost production above the 33.8-million ton/year level.However, ONGC has begun an ambitious midlife review of Bombay High, which at 245,000 b/d is far and away the largest oil field complex in the country.
Working with consultants Gaffney, Cline & Associates (U.K.), 20 ONGC personnel from five disciplines are working on the review, the first such project in ONGC's history.
The review of the offshore complex, aided by a recent 3D survey, will determine the best method for producing the remaining reserves.
Refining sector
Meanwhile, India is considering changes that would help its refining sector.The government is considering allowing foreign investors to hold up to 50% of joint-venture refining projects and allowing more than one foreign investor to participate in a refinery.
The current government policy allows only one foreign partner, with a maximum 26% equity share. The Indian partner must also hold 26%. The remaining 48% is sold to banks, institutional investors, or the public.
Indian Oil Co. (IOC) has been trying to interest foreign investors in two joint-venture refineries, each of which would have capacity of about 180,000 b/d.
It has been negotiating with Petronas, the Malaysian state oil company, and Mobil Corp. about constructing a 180,000 b/d refinery in southern India.
And IOC has been working with Kuwait Petroleum Corp. (KPC) to build a 180,000 b/d refinery at Paradip in the eastern state of Orissa.
IOC plans to complete negotiations with KPC next year and construct the $1.9 billion plant within 4 years.
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