The view from the rigging
THE Indian ministry of petroleum and natural gas estimates fresh investments of nearly US $30 billion over the next 5 to 7 years in exploration and production as well as refining and marketing. The blowout, unfortunately, wiped out the government's plans to invest nearly US $2 billion in exploration, announced by the minister of state for petroleum and chemicals, Satish Sharma, just the day before.
Private firms are goggle-eyed by the "vast potential" oil reserves in India (although India is a piffling player in an industry that can guzzle the country's entire year's production in 3 days and 8 hours flat). Geologists say that India has hydrocarbon reserves of over 130 billion barrels (7.3 barrels=1 tonne) of oil and oil equivalent of gas (about 900 litres of gas=1 kg of crude). The point is that it's all hidden till it's struck. Exploration is a gamble. More precise calculations lead geoscientists to broadly locate "in-place" reserves of over 35 billion barrels of oil and gas, of which actual production may be just 18-22 per cent.
The current national production is about 200 million barrels (MMB) -- about to increase by 25MMB this year -- far short of India's needs. The Oil and Natural Gas Commission's (ONGC) 103 onland rigs and 25 offshore rigs produce 175 million barrels, and Oil India Limited's (OIL) mostly onland onland rigs the rest. India's annual import bill for crude oil and petroleum products exceed US $5 billion, at US $14-16 a barrel.
Foreign stakes Last year, 17 oil fields (see map in Share the Oil Wealth) were offered for bidding. They have a production potential of 270 million barrels of crude and 45 billion cubic metres of gas.
India has 2 joint ventures for developing oilfields: the offshore Ravva oil project in the Krishna-Godavari basin, where the Australian Command Petroleum (ACP) and Videocon have stakes along with the ONGC; and the Tapti-Mukta-Panne oil and gas project, jointly operated by Enron, Reliance and the ONGC, in the western offshore stretch. There is some resentment at the idea of the ACP selling the government oil at international prices after the ONGC had sunk Rs 400 crore into discovering the oilfield.
The 2nd Black Gold Rush The opening up of the Confederation of Independent States in Central Asia has impelled the current boom -- this is the second Black Gold Rush, after the West moved into West Asia in the '50s. And it is grab as grab can, although the finds have been few. US giant Chevron doubled the number of potential fields under its command when it recently signed a contract with Kazakhistan's government to jointly invest US $20 billion to develop the oil-rich Tengiz field near the Caspian Sea. The US government estimates that there could be 30-60 billion barrels hidden deep there. Shell, Exxon, Amoco and Texaco are rooting about in Russia -- Shell and Amoco, in fact, have already started developing Siberian oilfields.
Mobil is planning to jab into the Blue Dragon field (500 million barrels), 200 miles off Vietnam's southern coast, which it had explored in 1974 and lost to the Communists. In China, the Tarim desert basin is expected to contain 70 billion barrels, 1/3rd of all of Saudi Arabia's explored reserves. Exxon and Japan-Indonesia Petroleum have already won rights over a major part of it.
Relatively undrilled Colombia, Papua New Guinea and Venezuela have roped in Western oil giants: Papua New Guinea's Foi and Fasu tribesmen, whose hunting and fishing grounds were damaged by Chevron's oil hunt, have reportedly secured, at arrow point, 30 per cent royalties over the company's local oil profits.
The Exxon Valdez spill in 1989 in Alaska was an eye-opener. The massive compensation was a spoiler for international oil companies. Smaller spills cause proportional damage and command proportional damages. On January 7 last year, a barge spewed 750,000 gallons of oil on the beaches of Puerto Rico.
The oil spill following the gigantic Kuwait oil well fires formed a thick slick over the Persian Gulf and was a marine oil disaster nonpareil. The smoke blocked out the sunlight in Kuwait for weeks.
Polluting continues, often unabated. Jack Doyle of Friends of the Earth has noted in Crude Awakening that the oil industry wastes the energy equivalent every year of 1,000 Exxon Valdez spills, costing US $10 billion in oil replacement, pollution and healthcare costs. The other main problems are old, decrepit oil structures, inefficient refineries and huge amounts of routinely discarded oil waste.
India has had close shaves. Last year, there was a minor spill near off the coast of Goa. In 1993, a tanker was stuck on the Gauthami riverbed in the Krishna-Godavari basin, raising fears of a spill. Accidents have so far been mainly limited to blowouts and fires.