Gold,8000 Feet Under The Sea

On a lazy Sunday afternoon while every other person was resting or taking an afternoon nap, most of India’s business community had its eyes set on Reliance Industries’ Corporate Park in Mumbai. As the chairman Mukesh Ambani held up a bottle of something dirty, sludgy and green, a reassuring calm spread across the room. No outsider could ever comprehend the wonderment at this strange colored liquid but those who knew what it was were fully smiling from ear to ear.

This was the liquid that Reliance had been searching for from the past six years. Deep in The Bay Of Bengal a team of scientists, engineers and servicemen had toiled away braving everything from the uncertain weather to the prospect of not finding anything. So when Mukesh Ambani formally announced that his company had struck crude oil 8000 feet under the sea, India’s business community rejoiced and so did the people.

The achievement in every sense of the word is a landmark one for India. It is only the second time that the country has found a huge reserve of crude oil in its own territory. The only other major oil well India owns is located on the west coast called Bombay High. This one, one among many which have yet to be fully explored is located on the east coast within the basin formed by the two Indian rivers, the Krishna and the Godavari.

Hence called the KG basin, the area has already been touted many a time as what could possibly be the biggest reserve of oil in the world. It is undoubtedly India’s very own Gulf of Mexico and one that can drastically improve India’s energy situation. The country is heavily dependent on crude oil imports and has to often deal with supply and price changes.

The oil found in the D6 block of the KG basin is of the light type making it easy to refine. Current production will start at 5000 barrels/day and move on to its peak of 550,000 barrels/day. This increase in production will take place over the next two to three years. Since the import costs will be reduced, the economy is expected to save at least Twenty Billion Dollars on oil imports.

What is the most critical feature of this development is that it marks the beginning for India to move into being a natural gas powered economy. Automobiles like buses and two wheelers will radically undergo changes and should probably be powered via gas instead of petrol or diesel.Gas can also be used to power cooking cylinders which means that Reliance will be among the first private companies to provide cooking gas. Even the environmentalists should be satisfied as gas is less polluting.

There is also a direct spin-off for the company in the refining business. It already owns two mammoth refineries in its Jamnagar area. There will be a constant supply of crude which once refined can and will be sold to others at a higher price. This is a good sign for investors in the company.

What however stands out is Reliance’s doggedness to find oil in the vastly unexplored Bay of Bengal and the world record speed with which they set up their second Jamnagar refinery. This should prompt others also to work at the same pace.