India Offers $9 Billion to Spur Oil Exploration After War Shock

Article content

(Bloomberg) — India will provide about 841 billion rupees ($9 billion) in financial support over the next five years, to stimulate deepwater oil and gas exploration as part of its effort to reduce its growing dependence on energy imports.

Article content

The cabinet approved a plan that includes 432 billion rupees to help accelerate offshore exploration and 285 billion rupees for large-scale seismic data gathering through the financial year ending March 2031, Information Minister Ashwini Vaishnaw told reporters in New Delhi on Friday.

Article content

Article content

Article content

The government aims to add more than 600 million tons oil-equivalent reserves with this plan, he added. Domestic production is expected to increase by 10 million-15 million tons of oil equivalent annually, according to Vaishnaw.

Article content

Article content

While the impact of the war has rippled across the globe, disruptions to energy flows hit import-dependent economies such as India particularly hard, triggering acute shortages of cooking fuel. A growing appetite for oil and its derivatives, coupled with limited domestic crude and gas production, has left the region vulnerable after the closure of the Strait of Hormuz.

Article content

Domestic production has lagged for decades, leaving the nation to rely on imports for almost 90% of its oil requirements and half of its gas needs. Most of these inflows passed through Hormuz before the war began. 

Article content

India’s oil and gas production fell for a second year, dropping more than 3% to 62.7 million tons in the 12 months ended March, government data showed. Local supplies contribute less than 20% of the country’s oil and gas needs. Imports are expected to rise further as refining capacity will grow 16% to 6.2 million barrels a day by 2030. 

Article content

Article content

Prime Minister Narendra Modi’s administration has struggled to draw major investment into oil and gas exploration since taking office in 2014.

Article content

The government will provide financial support for the acquisition and processing of seismic data as well as drilling of 60 deepwater and ultra-deepwater wells to both private and state-owned firms. 

Article content

The plan is expected to “stimulate significant investments across the exploration and production value chain, creating long-term opportunities for industry, innovation and economic growth,” according to a statement on cabinet decisions.

Article content

The conflict has renewed interest in oil and gas exploration globally, after years of investment cuts. Flush with cash as higher energy prices boosted earnings, major producers are pumping money into regions once considered too risky or uneconomic.

Article content