In a remarkable turn of events for India’s energy sector, the Krishna-Godavari basin, known for its rich natural resources, has witnessed a historic milestone with the discovery of crude oil. This groundbreaking revelation, credited to the relentless exploration efforts of the state-owned Oil and Natural Gas Corporation (ONGC), holds the promise of revitalizing the local economy, bolstering India’s domestic oil output, and curbing reliance on oil imports.
ONGC Strikes Oil in Kakinada:
The triumph of ONGC unfolds as it initiates production from its latest oil discovery, the Krishna Godavari Deep-Water Block 98/2, situated in the Bay of Bengal. Positioned around 30 kilometres off the coast of Kakinada, a city entrenched within the Krishna Godavari basin, the commencement of oil extraction from Block 98/2 stands as a testament to ONGC's unwavering commitment to exploring the region's potential. This success is backed by extensive geological surveys, seismic studies, and rigorous drilling operations.
Implications of the Discovery:
Union Petroleum Minister Hardeep Puri anticipates production to soar to 45,000 barrels per day by May or June, constituting 7% of India’s total crude oil production. Phase 3 of the project, aimed at reaching peak oil and gas production from the basin, is already underway and is slated to conclude in June 2024. This venture bears the potential to augment ONGC's total Oil and Gas production by 11% and 15%, respectively.
Impact on India’s Energy Security:
This development marks a pivotal stride in India’s pursuit of energy security. With surging energy demands, harnessing and optimizing domestic resources become imperative. The discovery of crude oil in the Krishna-Godavari basin not only amplifies India’s domestic oil production but also sets the stage for increased investment in the region’s energy infrastructure and further exploration initiatives.
Stock Performance Of India’s Oil Giants:
ONGC’s stock surged to a new one-year high, reaching Rs 221.45, propelled by the commencement of oil extraction from the newly discovered Krishna Godavari Deep-Water Block. This represents a 1.61% increase compared to the preceding trading day. Despite a subsequent slight decline, the shares are presently trading around Rs 217 (as of the report's composition).
India’s domestic crude and gas production capacity:
- India produced 13.9 million tonnes of petroleum products from domestic crude oil between April and September 2023, accounting for 12.2% of the nation's total energy demand.
- As of December 2023, India’s crude oil imports amounted to 4.44 million barrels per day.
- Statista reported a decline in India's petroleum product export volume to 45.7 million tonnes until December FY23, down from 62.8 million tonnes in the preceding year.
- India stands as the second-largest refiner in Asia, following China.
- Globally, India ranks 85th in petroleum exports.
- Official data notes India's production of 12,355 mt of onshore crude oil and 24,376 mt offshore in FY20.
- India's total gas production stood at 8,021.58 mt, with offshore production accounting for 15,828.77 mt in FY20.
- The estimated sedimentary basins for hydrocarbon production in India cover an area of 33,54,449 sq km, according to official data.
The discovery of crude oil in the Krishna-Godavari basin represents a watershed moment for India's energy security, promising both economic and strategic advantages. As ONGC's operations progress and India’s energy landscape evolves, leveraging domestic resources is poised to play an increasingly pivotal role in meeting the nation’s energy needs while minimizing reliance on imports.
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