KGBasin

In 2002, the D-6 block of the KG basin made global headlines when Reliance Industries made the world’s largest gas discovery of the year there.  Besides, India has been rewarded with a number of significant gas discoveries in recent years which could potentially transform the country’s energy landscape.

However, it was not always smooth sailing for enthusiastic Indian oil explorers. With an astounding annual average growth rate of  6-7% compared to the world average of 1.54%, India’s need for petroleum products was growing in leaps and bounds. In June 2009, the country was the 11th-largest consumer of hydrocarbons and was forecasted to be the 5th-largest in the next 2 decades. Oil consumption was expected to grow from the current 2 million bo/d to 3.2 million bo/d by 2010. Since India imported at least 70% of its hydrocarbon requirements in the mid-1990s, the Government realized the urgent need to tackle the issue of its energy needs and responded by a drastic overhaul in the petroleum sector.

Realizing that an increased level of exploration activity supported by large-scale capital investment was necessary to expand domestic exploration and production, the Government formulated the New Exploration Licensing Policy (NELP). Approved in February 1997, many of the exclusive privileges of the two national oil companies, ONGC and OIL, were withdrawn with the ambitious goal of developing a more competitive environment in the hydrocarbon sector.  As a result, instead of obtaining exploration licenses on a nomination basis, these PSUs had to lock horns with private sector companies for them. For the first time, a level playing field was established between private and public companies in the petroleum sector.