- New government policies should boost country’s output: IHS
- Domestic gas production peaked near 5 billion cubic feet/day
India’s efforts to revitalize natural gas exploration will help the country’s output rebound to peak levels in less than a decade, according to IHS Markit Inc.
The country’s gas output peaked between 2010 and 2011 at about 5 billion cubic feet per day, according to Rebecca Keller, Singapore-based associate director at IHS. Production has declined since then in part due to aging fields, as well as a dearth of new discoveries by explorers discouraged by policies that were seen hampering profitability. Keller sees the country’s output returning to its peak level by 2022.
Energy reforms from Prime Minister Narendra Modi’s government with a more liberalized pricing structure that allow companies to charge higher rates is one of the main reasons behind the expected recovery, she said. The nation’s cabinet approved measures earlier this year including a gas price cap linked to alternate fuels liquefied natural gas, fuel oil, naphtha and imported coal for deepwater development.
“They’ve made a lot of progress on upstream policies this year, if they keep with this reform agenda they will see results,” Keller said in a phone interview Tuesday. “We have seen a few projects already sanctioned or players talking about sanctioning them, so we are seeing that response happening. But it takes a few years for these projects to start up even if they are sanctioned today.”
State-run Oil and Natural Gas Corp. has embarked on its largest ever exploration campaign as it plans to invest about $5 billion in its block in the Krishna-Godavari Basin off the east coast of India to produce 530 million cubic feet a day of gas and 77,000 barrels a day of oil in about five years. Overall, the company plans to invest 11 trillion rupees ($166 billion) by 2030 to expand oil and gas production.
Reliance Industries Ltd. and partner BP Plc are looking to produce 1 billion to 1.2 billion cubic feet a day of gas by 2022 from their east coast block after they develop three new fields, Sashi Mukundan, BP India unit head had said in August. Gas production from KG-D6 averaged about 307 million cubic feet a day in the April to June quarter, Reliance had said in a July 15 presentation. Production from the KG-D6 block, discovered in 2002, has tumbled since hitting a peak in 2010 of around 2.2 billion cubic feet a day.
“India does have gas reserves that it could be tapping into,” Keller said.