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The Indian government has plans to finance a deepwater oil exploration campaign to be led by ONGC as it seeks to boost local oil production amid strong demand and rising international prices.
The Economic Times cited unnamed sources familiar with the plans that the state-owned energy major would begin drilling in the Andaman basin after the monsoon was over and was currently in talks with Exxon and Shell to take them on as partners.
The plan involves drilling three to four wells in the Andaman Sea, with the drilling funded by the Indian government. The supermajors’ involvement will be as third-party assessors of the resource potential of the site since they have the deepwater experience required for the job.
ONGC has the rights to two blocks in the Andaman Sea’s deepwater sector and another one in shallower waters.
India relies on crude oil imports for more than 80 percent of its consumption. Domestic production, meanwhile, has been on a decline for the past four years, reaching the lowest in almost three decades in the latest financial year, which ended this May.
In the meantime, India is boosting its imports of cheap Russian oil. Since April, these have risen 50-fold, now accounting for a tenth of India’s total crude imports and sparking worry that India is acting as a “back door” for Russian crude into Europe through its refined product exports.
Because of its appetite for cheap crude, India drew the pointed attention of the U.S., which is seeking to stifle Russian oil exports but in such a way as to not push oil prices even higher.
This week, the U.S. and the other six members of G7 discussed an oil price cap for Russian crude with India and China, with one unnamed source saying the discussions were “positive”.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com