India has huge growth prospects in oil and gas space

Since liberalizing its economy in the 90s, India has witnessed unprecedented levels of economic expansion. Driven primarily by demographic changes, rapid industrialization and a strong exportoriented services framework, the Indian gross domestic product grew more than 3.3 times from 2002 to 2012, second only to Chinas.

As its economy flourished, Indias demand for energy has risen by more than 70 percent. And this trend is expected to continue in the next decade making India the third largest energy consumer globally by 2020. With the growth in automobiles, power and fertilizers, oil and gas as an energy source now represents more than 45 percent of the countrys total energy consumption.

However, this rapid surge in demand for hydrocarbons has not translated proportionately toward the growth of domestic exploration and production (E&P) in the oil and gas industry. A case-in-point is that of the 11th five-year plan period, for which India committed to produce 206.8 million tonnes (MT) of crude oil but the actual production was 176.9 MT, equating to an incremental import burden of over $20 billion for the period at todays prices.

In the last decade, India has taken important steps toward ensuring energy security. For instance, the New Exploration Licensing Policy (NELP) was designed to attract new activity in oil and gas exploration, and the country agreed to allow 100 percent foreign direct investment (FDI) in the upstream sector. Despite this, an FDI investment of just over $2.5 billion was recorded in the E&P sector since 2005.

Ensuring long-term energy self-sufficiency appears to be a formidable task for India, given the magnitude of the country's energy needs, the complexity of technologies involved, the large investments required, and the obstacles in the political landscape to overcome.

Despite these challenges, India has large possibilities for growth in the oil and gas sector. Only half of the countrys potential basins have been explored, and large blocks offshore remain untested, especially i n deep water. Indias total hydrocarbon reserves are estimated to be around 2 BMTOE (Billion Metric tonne of Oil Equivalent) (approximately 15 BBOE (Billion Barrels of Oil Equivalent)). With the current oil production level of around 815,000 barrels per day, on estimated reserves of 1.2 BMT (Billion Metric Tonne), the reserves-to-production ratio is 25 years. The potential for gas seems brighter; at the current

production level of around 40 BCM (billion cubic meters) per year on an estimated reserves base of around 1,500 BCM, translating to a reserves-to-production ratio of more than 30 years. The nine rounds of NELPs have seen 247 blocks being awarded, but only 16 of those have been developed so far.

This presents great opportunities for companies across the oil and gas value chain to be involved in industry growth. New technologies and easier access to capital allows for increased activity, which may cater to requirements spanning upstream operations to downstream refineries.