India’s oil and gas exploration projects are facing significant delays due to a global shortage of drilling rigs, further intensifying the country’s dependence on oil imports, which now account for 87% of its consumption.
The scarcity, particularly of jack-up rigs, is attributed to a surge in global exploration activity driven by high oil prices. Companies such as Vedanta, Oil India, and ONGC, which secured exploration blocks in recent bidding rounds, are encountering setbacks in regions like the Northeast, KG Basin, and Kerala-Konkan basin.
The delays are affecting blocks auctioned under the Open Acreage Licensing Policy (OLAP) in 2018 and 2019. Oil India has emphasized the crucial role of high-performance drilling rigs in exploration activities, while ONGC has reported challenges in attracting rigs in recent tenders, with the utilization of marketed rigs rising from 66.1% in 2018 to 92.7% in 2023.
The tight rig market is expected to persist as West Asian producers plan to hire over 40 rigs by June 2024, posing challenges for ONGC’s tendering process in terms of participation and prices. The demand for jack-up rigs from Indian explorers could create a regional market imbalance alongside global supply constraints. India has awarded over 100 exploration blocks in the last five years, aiming for major discoveries and increased output.
As reported by The Economic Times, the liberalization of terms under OLAP to attract investments, coupled with the rig shortage and the impact of the pandemic, has hindered the country’s efforts. The decline in domestic oil production has heightened India’s dependence on imports, with half of its natural gas consumption sourced from abroad. High and volatile global gas prices last year compelled some domestic factories to reduce production.
