Oil and gas to India

Trends and opportunities

The market

India is among the world’s largest consumers of energy. The country’s energy consumption is set to grow from 724 MTOE (million tonnes of oil equivalent) in 2016 to 1,921 MTOE by 2040.

Access to economically viable and abundant energy sources is crucial to sustaining India’s growth aspirations. There is also a need for India to diversify its fuel mix and look to global energy markets for its needs. LNG, in particular, as a proven and commercially viable energy source, is a long-term energy solution to India’s needs.

Natural gas demand is expected to grow to 746 mm3/day by 2029–30, up from 242 mm3/day in 2012–13, as per the ‘Vision 2030 Natural Gas Infrastructure in India’ report. With 3.14 million sq km of potential reserves lying unexplored until 2016, India’s potential in the oil and gas sector is immense and there exists vast headroom for new discoveries.

The Government of India has also set an ambitious target of increasing the share of natural gas (in primary consumption) from 12% in 2010 to 20% by 2025.

Hydrocarbons

The Government of India has developed a ‘Hydrocarbons Vision 2025’ roadmap that outlines its priorities and vision for the exploration and production of the sector, including areas like energy security, use of alternative fuels, and interchangeability of technology.

The Government of India announced a slew of reforms to encourage domestic exploration and production, including:

1. Hydrocarbon Exploration and Licensing Policy (HELP): The policy focuses on providing

a) a uniform licence for exploration and production of all forms of hydrocarbon;
b) marketing and pricing freedom for the crude oil and natural gas produced;
c) an easy to administer revenue-sharing model
d) an open acreage policy.

Read more at http://online.dghindia.org/oalp.

2. The Discovered Small Fields Policy and Bidding Round (‘DSF Bid Round’): This was launched in 2016 to develop and commercialise production from already discovered small fields and marks India’s move towards a new era of hydrocarbon production. Under the DSF Bid Round, 134 e-bids were received for 34 contract areas. Subsequently, in February 2017, 22 companies (singly or in consortium) were shortlisted for 31 contract areas. Read more at online.dghindia.org/dsf2.

Opportunities

Due to the significant role that oil and gas, specifically LNG, is expected to play in India’s energy future, there is a requirement for the Indian oil and gas sector to develop extensive capabilities in the entire hydrocarbon value chain.

For Australian oil and gas operators, services and equipment providers, the following areas offer significant opportunities:

  1. Long-term technology and R&D partnerships with companies in the Indian oil and gas value chain
  2. Capacity building partnerships with Indian technical training institutions in the oil and gas sector and in-house training institutes of major oil and gas companies.

There are specific opportunities for Australian oil and gas industry suppliers in:

a) Physical Infrastructure: India has about 15,000 km of pipelines with 15,000 km of additional pipelines planned in the near future. Creating pipeline networks would be key to meeting India’s gas demand. At the same time, certain safety incidents have made companies conscious of the need for meeting global work health and safety standards.

These factors are key drivers for increased demand for pipeline related services and technologies. There are potential opportunities in:

i) Pipeline integrity management solutions
ii) Corrosion monitoring systems
iii) In-line inspection: onshore and offshore – integrity assessment method
iv) Intelligent big data analysis, quantitative risk assessment and hazard and operability studies
v) Audit of existing pipeline networks
vi) Engagement of consultants for health assessment of pipelines
vii) Environmental impact assessment for oil and gas facilities and pipelines.

b) Review of existing operation and maintenance practices for oil and gas facilities, gap analysis and comparison/benchmarking of standard operating procedures

c) Exploration of ultra-deep assets: The current exploration activities are in onshore and shallow basins across India. There are significant reserves in many deepwater and ultra-deep water basins. This creates significant opportunities for Australian companies that have relevant technical expertise in ultra-deep water exploration.

d) 2D and 3D seismic studies for exploration blocks.

e) Innovation and R&D: Indian oil and gas companies are investing heavily in developing better technologies to address efficiency challenges, unlock assets and develop new applications of gas in fertilizers, transport and railways. This presents an opportunity for Australian research and academic institutions to collaborate with Indian companies and technology providers.

f) Education and training: As India expands its use of LNG, there is a growing requirement for skilled resources in:

  1. Design, construction and operation of LNG import terminals
  2. Gas exploration and production (especially offshore)
  3. LNG floating storage and re-gasification units.

This opens up education, training and skill development opportunities for Australian training providers.

Planned future developments and areas of opportunity

India’s largest hydrocarbon producer ONGC will invest around US$10 billion in deepwater projects in the Krishna-Godavari basin.

ONGC expects a higher output from the resource-rich area by studying the challenges faced by other exploration companies in this basin. ONGC expects the area, including its KG-DWN-98/2 block, to add about 40 mmscmd to its daily gas production output. Oil output could rise by 77,000 bpd within five years. ONGC’s field development plans estimate production of 15 to 18 mmscmd, while Reliance Industries is expected to produce about 25–30 mmscmd.

India’s largest private sector company, Reliance Industries, has partnered with BP for a project in the KG basin that is producing only 9 per cent of its estimated target. Unearthing deposits from the basin, where the depth of water is comparable to those in the US Gulf of Mexico, is critical to the Government’s plans to reduce energy imports and narrow its budget deficit.

Areas of opportunity

The drilling of the project’s first well, #KDG-A by ONGC, commenced in April 2018. The initial gas output is expected in June 2019 followed by oil production in March 2020. The Cluster 2 development is scheduled to be completed by June 2020.

However, clusters 1 and 3 are still in the development stages and they are expected to provide significant opportunities for technology and service providers in the following areas:

a) Geotechnical consultancy to address challenges faced while developing offshore oil and gas structures, covering services like feasibility, site characterisation, subsea infrastructure and construction support for offshore structures.

b) There is a demand to set up Mono Ethylene Glycol (MEG) plants. Natural gas hydrates, when formed in sufficient quantities, can form plugs and stop flow in pipelines, flowlines and equipment, and create pressure build-ups that could damage pipelines. MEG is the most widely used gas hydrate inhibitor to prevent hydrate formation in pipelines.
c) Met ocean services and consultancy.
d) Hydrogen sulfide mitigation.
e) Carbon dioxide capture.
f) Flow assurance technologies and services: Establishing flow assurance has been one of the biggest challenges for deep-water projects.

Reliance Industries

Reliance Industries is the operator of KG-D6 block in partnership with BP plc, UK and Niko Resources, Canada. Reliance has 19 oil and gas discoveries in the Krishna-Godavari basin. Production commenced in the first field in September 2008 and two more fields went onstream in April 2009.

Reliance is developing three fields: R-Cluster, Satellite Cluster and MJ fields in the KG-D6 block at a cost of US$8 billion in a bid to increase gas supply. These fields together would contribute 30–35 mmscmd of peak output. Initial gas production will commence from 2020. The development is expected to contribute 1Bcf/d of dry gas production on stream between 2020 and 2022.

The ongoing Satellite Cluster project offers the following opportunities for Australian suppliers:

a) Geotechnical engineering consultancy covering services like feasibility, site characterisation, subsea infrastructure, and construction support for offshore structures.
b) Vessel requirements for floating production storage and offloading, an opportunity for shipbuilding companies.
c) Remotely operated underwater vehicles and support vessels.
d) MET ocean and consultancy services, covering modelling and studies to evaluate the feasibility of ongoing and future operations in challenging coastal and offshore environment

The Indian hydrocarbon sector offers opportunities across the value chain for Australian companies in the oil and gas sector willing to establish a presence in the market or form partnerships with local players. Austrade can assist you with:

  1. Identifying the best opportunities and market entry strategies through customised visit programs, and targeted meetings with potential partners and customers.
  2. Promoting your solutions in a timely and cost-effective manner through tailor-made marketing campaigns, events and seminars to oil and gas companies, government agencies and potential partners.
  3. Identifying suitable distributors or local partners through comprehensive market research studies.
  4. Setting up a presence in the market through introductions to relevant partners and assisting with taxation, legal and financial advice.
  5. Advice on resolving market access issues, addressing market challenges and navigating business set-up processes

Links and industry contacts

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