An accidental but significant seepage of oil during the construction of the Assam-Dibrugarh railway line led to colonial India's first ever commercial oil discovery in the country's eastern state of Assam in 1890. However, India’s oil output in British-controlled India was mostly exploited by British companies with international alliances during the colonial period. In fact at one stage the entire oil output from India was geared primarily towards supporting British troops in the first and second world wars and supporting British industrial complexes in England.
After India attained freedom from the British-Raj in 1947 - a transformative change took place in the oil and gas scenario in the country. Post India's independence, the new Government of India took total control of the exploration, processing and distribution of crude oil and associated gas. Such a move left very little scope for the private sector to team up with the Indian Government. Though some vestiges of colonial partnerships still remained in the form of Oil India which was a joint venture between Burmah Oil Company (now British Petroleum) and the Government of India.
A watershed period in 1956 saw the foundation of the industrial policy of India. It placed the oil and gas industry as a Schedule ‘A’ industry, which was accorded to those sectors which were to be an exclusive responsibility of the state.
Accordingly in October 1959, the state owned Oil and Natural Gas Commission (ONGC) was formed and vested with the overriding authority to explore, develop and produce oil and associated gas in India. The necessary technical expertise and know-how was allowed to be obtained from the then USSR, Romania, United Kingdom, West Germany and the USA.
From 1956 until 1991 exclusive governmental control was the norm. During this period however, a number of notable milestones were acheived such as when ONGC in 1960 struck oil and associated gas, at the Ankleshwar field in Gujarat; and ONGC’s magnum opus in 1974 when oil was discovered in the Bombay Offshore Basin (the southern part of the famous Bombay High field ).
It then became apparent, that much of India’s biggest oil and gas fields would primarily be offshore based, and no longer onshore as had been the norm. With this, the J M Baxi group foresaw its ability to partner in offshore projects, and in 1976 set up Arya Offshore Services to provide specialised and customised services to the massive offshore oil and gas market that was opening up.
In 1978 India's first ever underwater pipeline project was commissioned by ONGC to transport crude oil from the Bombay High offshore installations to Uran in Maharashtra. The turn-key contract was awarded to Brown and Root, USA who turned to the trusted J M Baxi group to hand-hold and support its first ever project in India, of constructing and installing pipelines over a nautical distance of 176 kms.
J M Baxi and Arya Offshore played a pioneering and stellar role in establishing and providing on an exclusive basis, India’s first-ever shore cum supply base at the Ferry Wharf complex in Mumbai in 1978 and attended to comprehensive logistics, crewing, ship-management and agency services to more than 180 offshore vessels and 3 giant pipe-laying barges over a period of three years.
In 1988, Gas Authority of India Ltd. (GAIL) commenced work on the longest ever onshore pipeline spanning 374 kms over three Indian states by connecting the transportation of gas from Hazira in Gujarat to Jagdishpur in Uttar Pradesh. This mammoth and complex project was awarded to the French Spiecapag led consortium. The company joined hands with J M Baxi group and Arya Offshore to provide exclusive support to the entire logistics process – agency, import-export, route surveys, heavy lift cargoes, manpower resources etc. and support services.
In 1991, the Government of India launched its new economic policy, which was based on the liberalisation, privatisation and globalisation model. This resulted in the deregulation and de-licensing of core sectors, including the oil and gas sector.
Meanwhile the Panna-Mukta-Tapti offshore oil fields were discovered by ONGC, who initially operated the fields. Following the privatisation policy a Reliance and Enron consortium gained a 25 year lease on the oil field in February 1994. The lease was awarded under a Production Sharing Contract (PSC) arrangement. The Government of India would receive a variable share of profit depending on the investment multiple. In December 1994 a joint venture between ONGC (40 percent), Enron (30 percent) and Reliance (30 percent) took control of the field.
In this first-of-its-kind venture in India, J M Baxi and Arya Offshore Services played a pioneering role once again in the Bhavnagar shore cum supply base in Gujarat for the ONGC-Reliance- Enron consortium, along with a customised and comprehensive range of shore cum support services.
- The 21st century
At the turn of the new millennium it was evident that the reforms initiated earlier in the general polity of the national oil and gas framework now needed to be consolidated. The first attempt at consolidation resulted in the launch of the second round of the New Exploration Licensing Policy (NELP-1) in which 25 exploration blocks were offered on a PSC basis. This was followed in quick succession, by the NELP-2 for 27 blocks for exploration of oil and natural gas. Of these, 9 blocks were deepwater, 7 shallow offshore and 11 on land. PSCs were duly signed thereafter for 23 exploration blocks (9 deepwater, 6 shallow offshore and 8 on land). Significantly Indian Oil Corporation Limited (IOCL) emerged as one of the new government players when 8 exploration blocks and 2 Coal Bed Methane (CBM) blocks were awarded to an IOCL-led consortium. Reliance Industries Limited (RIL), already the largest Indian private sector behemoth, joined the bandwagon of global deepwater oil and gas operators, after it started producing sweet crude of 420 API in its KG-D6 block that lies in the Krishna-Godavari basin of the Bay of Bengal.
It was around this time that the pan India capabilities of the J M Baxi group and Arya Offshore became apparent, when the gamut of marine logistics and base services were deployed off the east coast of India to serve RIL’s development of the KG-D6 block. In this context, Arya Offshore provided critical agency and logistics support to companies like Allseas, Technip, Mcdermott, Gazprom and a host of others who were actively engaged in the exploration and development, off India’s east coast.
With the commissioning of the new refinery in its Special Economic Zone (SEZ), RIL’s Jamnagar refinery became the petroleum hub of the world. With 1.24 Mn barrels per day of nominal crude processing capacity, it is the single largest refining complex in the world. Meanwhile Gas Authority of India (GAIL) won the rights to lay a 1550 km, US $ 1 Bn natural gas pipeline from Surat in Gujarat to Paradip in Orissa, connecting the country’s west and east coasts.
Along with RIL, the Vedanta controlled Cairn India became one of the largest independent oil and gas exploration and production companies in India with a market capitalisation of US$ 10 Bn. Smaller Indian companies too were invited to participate in India’s quest for oil and gas with the announcement of Discovered Small Field Policy which was laid open to all companies. The Ministry of Petroleum announced India’s Hydrocarbon Vision 2025 policy, in which 100 percent of the Indian sedimentary area is to be appraised. On land area covers 1.63 Mn Sq Km (48.5 percent) and offshore area covers 1.73 Mn Sq. Km. This represents a massive market for the Indian and international oil and gas players.
Finally the experience of the war in Ukraine and subsequent embargoes have brought home to the Government of India the absolute necessity to become rapidly self reliant in oil and gas, and to successfully implement the ‘Make in India’ policy. In this context, the transfer of technology and joint ventures with suitable international oil and gas players has become the need of the hour.
From the socialistic days of the nineties, to the rapidly changing dynamics of the present age, the Indian oil and gas industry continues to evolve for the long road that lays ahead.