Turning the tide on oil

India has faltered in locating its oil reserves for decades, but now a path is being paved to facilitate its transition from an oil importer to an exporter

India is the world’s third-largest importer of crude oil, following the European Union and China. The share of oil imports in India’s consumption basket rose to a massive 87.3 per cent in 2022-23, constituting 23.6 per cent of India’s imports.

Oil and gas imports not only deplete foreign exchange reserves but also pose a strategic vulnerability, evident in geopolitical crises like the Iraq war, sanctions on Iran, and the ongoing Russia-Ukraine conflict, which is compelling India to make payments for Russian oil in Chinese yuan. Control over substantial oil reserves can give a nation significant leverage over other countries, especially those heavily reliant on oil imports. Oil-rich nations can leverage control over other oil importing countries by manipulating production quantity and prices or imposing access restrictions.

India’s oil dependence results from limited oil discoveries. While India has seen relatively more success in offshore regions, such as in Mumbai High and Bassein oil fields in the 1970s, and subsequently in the Krishna-Godavari basin and the Gulf of Khambhat in the 2000s, the scale of production remains modest compared with other parts of the Indian ocean or with countries like Saudi Arabia, Qatar, and Oman in the West and Malaysia, Indonesia and Vietnam in the East.

In 2022, Bangladesh found trillions of cubic feet of gas reserves in the Bay of Bengal, sufficient to meet its needs for a century. A massive oil reserve was discovered in one lakh square km off the coast of Kenya and Somalia. India’s Exclusive Economic Zone (EEZ), a vast area of 2.36 million square km, shares the same geo-strata and is likely to have reserves much higher than those discovered so far. Unverified reports suggest the Bay of Bengal has 30 billion tonnes of oil equivalent (BTOE), 2.5 times Iraq’s reserves, and almost as much as Saudi Arabia’s. Conservative estimates put India’s EEZ’s undiscovered resources at over 7.4 BTOE, sufficient to meet its needs for more than 50 years. India’s failure to locate these reserves and continued oil import raises serious questions.

Oil exploration necessitates the allocation of large, contiguous areas for exploration. This enables geologists to understand geological formations, identify potential oil traps and reservoirs, obtain more accurate sub-surface images using seismic surveys, and better understand the connectivity and extent of potential reservoirs. Most importantly, economically viable and technologically sophisticated exploration requires a large contiguous area.

However, this has not been possible in the Indian EEZ because nearly 42 per cent of the EEZ, i.e., over one million sq km, has been declared “no-go zones” by different government agencies. A no-go zone is an area where no activity is allowed. Compounding the issue, these no-go zones are not confined to a single area but are scattered pockets disrupting contiguity across most of the EEZ. The no-go zones were required for various safety considerations. The Defence Research and Development Organisation (DRDO) enforced a safety zone for missile testing; Indian Space Research Organisation (Isro) established secure zones for satellite launch debris; and the Navy for defence preparedness related considerations, especially in the underwater domain. While these reasons were undeniably vital, they came at a significant economic cost to the Indian economy.

The scenario began to change in mid-2022. Technological advancements enabled advanced radars and sensors to track and manoeuvre objects; geographic information system and satellite navigation systems enabled precise location tracking and information sharing; new technology also significantly improved under-water domain awareness. All of this prompted a rethink of the need to have large loosely defined no-go zones.

Moreover, it was argued that missile testing and satellite launches are infrequent and planned events that allow for coordination with oil exploration vessels. An agreement to adhere to Notam/Navera protocols and coordinate between oil exploration vessels and the DRDO and ISRO for vessel safety was agreed upon. It was also agreed that government agencies will be indemnified through adequate insurance cover in the event of an unlikely accident.

As a result of this review, it was decided to permit exploration activities across 99 per cent of the EEZ. In 2015, a consultative mechanism, the Sectoral Groups of Secretaries, was constituted to resolve inter-agency and inter-ministerial issues without having to escalate them to higher authorities. The group also formed a committee under the defence secretary to deal with any residual matters.

Following the agreement, the Ministry of Petroleum and Natural Gas (MoP&NG) uploaded a new map, liberating the Indian EEZ for oil exploration. The new map was uploaded on August 15, 2022, marking 75 years of India’s Independence. Since then, swift progress has been made. In September 2022, the MoP&NG issued an operating framework. By June 2023, they completed the first-ever comprehensive seismic survey of the Indian EEZ. The MoP&NG has also launched a mega bid process, its largest ever, to attract companies to explore large offshore blocks. The goal is to cover 5 lakh sq km by 2025. The first pre-bid meeting was held in Houston, Texas in July 2023.

India is potentially looking to produce more oil and gas than it can consume, especially considering its plans for green renewable energy. Even if the global target of net zero emission by 2050 is not met, fossil fuels will see a significant decline in demand in the next 30 to 50 years. Therefore, India would need to export oil and gas to optimally benefit from its reserves. This is a game-changer. India faltered in locating its oil reserves for decades. No point in regretting missed opportunities. The dawn of Amrit Kaal promises oil security and new strategic options for India.

The writer is former defence secretary, and distinguished visiting professor, IIT Kanpur