why foreign companies not coming to India for oil exploration?

Satyesh Bhandari

Oil & Natural Gas Corporation (ONGC) of India announced to engage a Technical Service Provider to enhance production from its maturing prolific Mumbai High oil field in west coast of India.

?The Mumbai High field, which recently celebrated its golden jubilee of discovery year (1974), began oil production in 1976 and it is now in a mature stage. It has already been producing oil and gas for last 48 years. Over the years, ONGC has implemented various schemes to sustain and enhance production levels.

Earlier, few months back ONGC showed intention to invite foreign partners to explore the blocks that the firm has been allotted in Category-II and Category-III basins under the Open Acreage Licensing Policy.

Government of India is also trying its best to attract foreign oil companies to come invest in India for exploration and production of oil and gas, however the response is very poor. There is ample room for enhancement of foreign investment.

Now the point here is, while the oil giants like ExxonMobil, Total, Shell, Bp all go to little known small countries and make big discoveries that too in deep water and ultradeep water, but they do not prefer to come to India. Big new discoveries, especially in Deepwater, in past few years have been made in the countries where no exploration was carried out, or any discovery was seen in the past hundred years. All these new discoveries were made by the oil majors of the world.

We need to introspect that why the foreign are not showing any interest in India for oil and gas exploration in India.

There could be several factors which can influence why foreign companies may be hesitant to invest in oil exploration in India:

1. Regulatory Environment: it is a common perception among foreign investors that the regulatory environment in India is complex and restrictive for foreign companies. There are uncertainties in the regulations, taxation, and licensing procedures which are keeping away the foreign investment. The government imposing a tax like windfall tax is a deterrent for the investors, as no compensation is made in case of a huge losses.
2. Geological Challenges: Oil exploration requires significant investment, and success is not guaranteed. The basin in India except few are very poorly explored and prospectivity currently estimated is very low. Geological challenges, such as complex geology or uncertain reserves, also make it risky for foreign companies to invest in exploration projects in India.
3. Infrastructure: The availability and reliability of infrastructure and oil field related services, including transportation networks, impact the feasibility of oil exploration projects. These increase exploration costs and logistical challenges for companies coming from far away countries.
4. Environmental Concerns: Increasing global awareness of environmental issues and tough regulations requiring long time for approvals also make oil exploration projects more challenging due to potential environmental impacts and regulatory scrutiny.
5. Political Stability: Political stability is crucial for long-term investments like oil exploration. Any signs of political instability at any point of time or frequent policy changes discourage foreign companies from committing to exploration projects. Fortunately, as of now the country has got a politically stable government.
6. Technical Expertise: The locally available oil field related experts are very few in number in India. The foreign experts from western countries are reluctant to come and stay in India for a long time during the exploration and development period.

Addressing these factors through clear and stable regulations, providing incentives for foreign investment, improving infrastructure, and demonstrating geological potential in convincing manner could help attract more foreign companies to invest in oil exploration in India.

https://theprint.in/economy/ongc-invites-global-bid-for-technical-services-to-enhance-production-from-mumbai-high/2121128/