How will the new offshore blocks affect India’s domestic energy supply!

The development of new offshore blocks, such as the recent ones in the Saurashtra Basin involving ONGC, BP, and Reliance, alongside India’s broader offshore exploration initiatives under programs like the Open Acreage Licensing Policy (OALP), is poised to significantly impact India’s domestic energy supply in the following ways:

• Increase in Domestic Hydrocarbon Production: Successful offshore exploration and development can substantially boost India’s domestic oil and natural gas output. This increase helps reduce the country’s heavy reliance on imports, which is over 88%, thereby improving energy security and strategic autonomy. The government and analysts estimate that new offshore discoveries could add from hundreds of thousands to over a million barrels per day in production in optimistic scenarios, potentially cutting import dependence by 10-20% or more.

• Economic Savings and Stability: By increasing domestic production, India can reduce its vulnerability to global oil price volatility, which currently leads to significant economic and fiscal pressures. Lower import volumes mean less foreign exchange outflow and reduced inflationary impact from fuel price shocks1.

• Strategic and Technological Advancements: Collaborations with global industry majors bring advanced deepwater exploration technology and expertise, which enhance the country’s capacity to efficiently explore and develop challenging offshore deepwater reserves, securing long-term energy supplies.

• Environmental and Carbon Footprint Benefits: Domestic offshore production is considered to have a lower carbon footprint compared to imported fuels due to reduced transportation and associated emissions. The government is also emphasizing environmental safeguards in offshore exploration and production activities under the new tender frameworks.

• Support for India’s Balanced Energy Transition: While India aggressively pursues renewables, conventional hydrocarbons remain vital for energy security during the transition period. Offshore oil and gas supply from new blocks bridges current demand-supply gaps and supports economic growth alongside renewable energy expansion efforts.

Overall, the new offshore blocks and ongoing exploration initiatives represent a critical component of India’s strategy to enhance indigenous energy production, reduce import dependency, ensure supply security, stabilize the economy against external shocks, and enable a transition to a balanced and sustainable energy portfolio.

These impacts will unfold over several years as exploration progresses to development and production stages, but the new offshore ventures mark a pivotal step towards securing India’s domestic energy future. Sources:bloomsberg