Closer to the body: India wanted its own oil
The Indian government, led by Narendra Modi, announced plans to attract $100 billion in exploration and increase refining capacity to 6 million barrels per day by 2030. The goal is ambitious: to reduce import dependence, which currently stands at 85-88%. For New Delhi, its own mining is not a matter of profitability, but of national security and the stability of foreign exchange reserves. However, the history of Indian oil production, the geological specifics of the region and the current structure of the global market indicate that the path to commodity independence will be long, expensive, and without guarantees of success. Russian oil will definitely come in handy for India, Izvestia explains why.
The poverty of an industrial giant
From a historical point of view, India, along with Japan, is one of the world's poorest major powers in terms of hydrocarbon supply. While other BRICS countries (Russia, Brazil, and China) have significant proven reserves, India has remained a net importer over the past century.
The history of industrial mining in the country began at the end of the 19th century with the discovery of the Digboy deposit in Assam, but for more than a hundred years, India has managed to discover only one truly large ("elephant") The field is Mumbai High on the shelf in the 1970s. So far, it provides a significant share of national production, but its potential is almost exhausted: well flooding is increasing, and the flow rate is steadily falling.
Today, India produces only about 0.55–0.6 million bpd. At the same time, the country's consumption, due to rapid industrialization and population growth, requires almost eight times more. This gap turns India into a hostage of the global conjuncture and logistical risks. Increasing the refinery's capacity to 6 million bpd exacerbates the problem: refineries are a highly efficient business, but they require uninterrupted supply of raw materials that are not physically available inside the country.
Modi's new strategy is based on "printing out" territories that were previously closed for commercial use. Key areas include, firstly, previously closed no-go zones. We are talking about almost 1 million square kilometers of coastal territories and land areas, access to which was restricted by the Ministry of Defense. It is believed that the lack of systematic research in these areas leaves a chance for the discovery of intact structures.
Indian Prime Minister Narendra Modi
Secondly, it is a deep-sea shelf (the Krishna-Godavari basin and the Andaman Islands). Technologically, this is a serious challenge, since you will have to work at depths over 1000-1500 meters. At the moment, only the world's largest majors are doing business there. The Indian state-owned company ONGC has been trying to develop the Krishna-Godavari basin for many years, but the results so far remain modest due to the complex tectonics and high cost of projects.
Finally, there are unconventional reserves — shale and dense oil. Following the example of the United States and China, India hopes to apply hydraulic fracturing (fracking) techniques in category II and III basins (such as Rajasthan). However, it is not only geology that becomes an obstacle here, but also the shortage of water resources necessary for fracking operations.
World experience: good luck to "non-oil" countries
Indian optimism is fueled by the successes of other countries, which have been able to make a breakthrough in exploration and production over the past 15-20 years. The most illustrative example is that of Guyana. The country, which had no experience in oil production, has become one of the key players in the global market over the past decade thanks to the opening of the Stabrook block by the ExxonMobil consortium.
However, the case of Guyana, as well as the successes of Namibia or Senegal, confirm one rule: significant discoveries in the modern world are made almost exclusively on the deep-sea shelf with the participation of technological giants. This creates a dilemma for New Delhi: in order to find oil, it will have to undertake unprecedented liberalization of the tax regime and allow foreign capital to manage resources - steps that have always been perceived painfully in the country from the point of view of economic sovereignty.
China: energy security above all
For India, the experience of China is the most relevant. Beijing has also faced the problem of depletion of old deposits over the past two decades amid explosive consumption growth. China has not found a "second Saudi Arabia," but has accomplished an engineering feat by mastering ultra-deep drilling in the Tarim basin (wells over 9-10 km deep) and shale gas production in Sichuan.
However, the Chinese experience demonstrates that such a prey is "running with all your might to stay in place." Beijing spends tens of billions of dollars annually just to keep domestic production from falling. At the same time, China's dependence on imports has grown to 70% or more.
For India, this means that even in the most successful exploration scenario, its own resources will not replace imports, but will only create some kind of "safety cushion" in case of supply disruptions. Own production at ultra-deep horizons or in complex formations will always be more expensive than buying oil on the world market.
The economics of recycling and the Russian factor
The current success of the Indian economy is largely based on the "processing hub" model. Indian refineries (both state-owned IOCL and private giants like Reliance) skillfully exploit the price difference between crude oil and finished products. The re-export of gasoline and diesel to Europe has become a powerful source of foreign exchange earnings for Delhi.
In this business model, the key factor is the price of incoming raw materials. Since 2023, India has become a beneficiary of sanctions restrictions against Russia, purchasing Russian Urals grade oil at a significant discount. It was this "cheap oil" that provided Indian refineries with record margins and allowed the country's economy to demonstrate GDP growth rates above 7%.
India's own deep-sea offshore oil, by definition, will not be cheap. The cost of its extraction, taking into account the costs of infrastructure and technology, will be several times higher than the current price of discounted Russian oil. Thus, even if New Delhi manages to double its reserves by 2032, this oil will be a "strategic reserve," while imported raw materials will still remain the basis for commercial refining.
The plan to invest $100 billion in exploration is a recognition of the import vulnerability of the current growth model of the third world economy. However, in the oil industry, time is as scarce a resource as capital. The cycle from the first seismic scan to the first commercial oil on the deep-sea shelf averages from 7 to 12 years.
Even if India discovers significant structures in the Andaman Sea in 2025-2026, they will begin to have a tangible impact on the country's energy balance only by the mid-2030s. By this point, India is already planning to process 6 million barrels per day. This gigantic appetite will be impossible to satisfy without external sources. The republic can indeed expand its raw material base and attract technology, but it will not be able to perform a miracle.
For the foreseeable future, Indian refineries will remain the main consumers of oil from Russia and the Persian Gulf countries. For the government of Narendra Modi, exploration is an attempt to insure the future, but the country's current growth continues to be paid for by imported barrels, and it is technically impossible to change this proportion in the next 5-7 years.
Переведено сервисом «Яндекс Переводчик»
