India's Long Term Oil Roadmap

The price of crude oil has risen yet again. It has now crossed the $145 a barrel mark and in all probability unless a miracle occurs tomorrow’s weekly inflation figures will also show a rise.

For an oil consuming mammoth like India the news just went from bad to worse .Earlier in the week Saudi Arabia categorically stated that there was absolutely no chance of it increasing its oil production after already having done so by Five Hundred Thousand Barrels a day in the preceding months.

Another major oil producer in Libya too ruled out increasing its production supply. Even though these are significant developments, for the Indian government the problem remains in not as much in convincing the oil producers to produce more but to sell the oil already produced at a cheaper rate.

Because as said earlier, oil refineries will simply not refine oil at high prices which is why the government is paying even more subsidies to cover the refineries’ costs. An impact of this is the direct increase in the level of prices or inflation.

In India crude is a natural resource that has been found in just four places. The most famous among these is the oil well in the Arabian Sea known as Bombay High. It would be another miracle if this well does not run dry within the next decade. For a growing country like India just four oil wells can in no way provide enough fuel.

That is why the government has finally stepped on the accelerator to implement the India-Pakistan-Iran oil pipeline. An easy way of importing oil directly through Iran via Pakistan with no middle men involved. The problem with this one is the fact that large parts of the pipeline will be passing through areas not under direct control of the Iranian and Pakistani governments which may lead to large scale pilfering and damage to the pipeline itself.

However considering the desperate conditions the country is in that will probably be the last thing on their minds.

Desperation has also forced the government to make a few radical changes. The gates have been opened up for foreign companies to explore the Indian terrain for possible reservoirs of undiscovered crude. This has led to partnerships being formed both in the public as well as the private sector. Reliance Petroleum has made it very clear that despite having built the Jamnagar refinery in record time, they will continue to explore other regions for Crude.

Following the American example, the government has been getting interested in the idea of off-shore drilling. This has been the single biggest reason for foreign companies to be given permission to search for oil in India.

It is encouraging to know that the government has the evidence to believe that the vastly underutilized Bay of Bengal may hold large deposits of crude oil. A gigantic find in the bay will most definitely power up the country at least for a few more decades and at the same time provide the all important Petrol for the country’s ever increasing sea of automobiles.

But for now, the country will continue to depend on Oil imports.