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Domestic and international energy companies say despite almost 10 months of the Narendra Modi government, nothing has changed on the ground for the oil and gas industry.
"This government's emphasis on development is lip service. Neither are the regulatory authorities nor partner companies planning to better the working conditions and increase production. Files are pending for ever and fields are without production," said the managing director of a domestic exploration and production company, which is looking to expand abroad. The company partners Hindustan Oil Exploration Company (HOEC) in one of its key blocks. HOEC's PY-3 block has not seen any production since 2011.
"It's a prolific block but thanks to the objections from various parties, production has been shut for nearly four years, while we are importing crude oil," he added.
The partners say there was a dispute with the Directorate Genaral of Hydrocarbons but now there are other issues. "Only the licensee was to pay the cess and royalty. Now, the partner companies are asked to share cess and royalty. To make more profit, contract terms cannot be changed arbitrarily. Nothing has changed with the change in government," said an official from HOEC.
HOEC says on the website restarting production from PY-3 has been a high priority and it has been working with all the partners.
HOEC had a total income of Rs 62.7 crore last year, 48 per cent less than the previous year, primarily on account of lower production in PY-1, due to steeper decline in reservoir pressure and higher water ingress in existing producer wells. Eni, the Italian petroleum exploration and production company, which holds 47.18 per cent in HOEC, has been planning to sell its stake for some time.
"When we came to India, we were very positive about the prospects. We were promised a great deal but nothing has worked so far. We have been forced to exit India," said the chief executive of an international exploration and production firm, on condition of anonymity.
Another international firm, which partners Reliance Industries in a few blocks, says it is not interested in being in the country any longer.
Canada’s Niko Resources is another example. The company is evaluating plans for its oil and gas assets in India. Niko owns 10 per cent in the D6 block, off the eastern coast of India. BP Plc has 30 per cent stake in the block and the rest is owned by Reliance Industries. The company also holds a stake in the Hazira field in western India.
“We are disappointed by the way the government is working in India. Nobody is interested in business and progress,” said a senior official from another international company, on condition of anonymity.
BP Plc has already written down the value of its investment in the eastern offshore KG-D6 block by $790 million, beside another $830 mn in impairment charges, following a lower than expected gas price rise.
