India Set to Unlock Vast Oil Reserves with Multi-Billion Dollar Investments
India is preparing to capitalize on its vast untapped oil reserves as part of a bold strategy to strengthen its domestic oil production and reduce its reliance on costly imports. Amid mounting trade pressures from the U.S. and concerns over President Donald Trump’s ongoing tariff policy, which has already led to significant trade restrictions on steel and aluminum, experts see India’s oil exploration potential as an opportunity to boost local industries and mitigate future trade imbalances. Currently, India imports a staggering 87% of its oil, spending over $132 billion annually on crude oil imports. However, the country is sitting on an estimated 22 billion barrels of untapped oil reserves, located in underexplored basins like Mahanadi, Andaman, Bengal, and Kerala-Konkan. These reserves, found in lesser-known Category-II and Category-III sedimentary basins, are estimated to contain more oil than the Permian Basin in the United States, which has already produced 14 billion of its 34 billion barrels of recoverable reserves. Rahul Chauhan, an upstream analyst at S&P Global Commodity Insights, believes that India’s vast unexplored oil and gas sector is primed for significant growth. “With ONGC and Oil India already holding acreages in the Andaman waters under the Open Acreage Licensing Program (OALP), there’s potential for major discoveries, particularly with the entry of an international oil company experienced in deepwater and ultra-deepwater exploration,” Chauhan said. Despite only 10% of India’s 3.36 million square kilometers of sedimentary basins currently under exploration, the Indian government is aiming to increase this figure to 16% in 2024, following the upcoming OALP bidding rounds. The OALP program allows companies to bid for exploration rights and carve out areas for oil and gas exploration throughout the year. So far, 144 blocks covering about 244,007 square kilometers have been awarded under the program. India’s Petroleum Minister, Hardeep Singh Puri, has highlighted the sector’s potential, estimating that India’s oil and gas exploration activities could attract up to $100 billion in investments by 2030. “Our Exploration and Production (E&P) activities offer immense opportunities, and we are working towards increasing our exploration footprint to tap into these reserves,” Puri said. India’s increasing emphasis on domestic oil production is likely to attract interest from major global energy companies. BP, a British energy giant, has already formed a joint venture with Reliance Industries to operate 1,900 fuel retail stations across India and develop deepwater projects in the Krishna-Godavari Basin. The partnership with ONGC for offshore exploration rights demonstrates India’s appeal as an attractive destination for oil majors looking to diversify their portfolios.
Deferred EU Ban On Transshipment of Russian LNG In Force Today
An EU ban on transshipment of Russian liquefied gas (LNG) in ports introduced in June 2024, with a deferral granted until March 26, 2025, has finally come into force. The sanctions also prohibit EU countries from providing technical support, brokerage services, and financing for transshipment operations. Similar to previous sanctions, the import ban is intended to disrupt Putin’s ability to continue financing his war in Ukraine. Although Russian LNG accounted for just 5% of the bloc’s energy consumption in 2023, it still netted the Kremlin ~$8 billion in revenues. “If they can’t transship in Europe, they might have to take their ice-class tankers on longer journeys,” Laura Page, a gas expert at the Kpler data analytics firm, told Politico, adding that Russia “may not be able to get out as many loadings from Yamal because their vessels can’t get back as quickly.” Europe has cut Russian gas imports dramatically, with imports of Russian gas declining from about 450 million cubic meters per day (mcm/d) at the end of 2021 to about 150 mcm/d currently. Norway and the U.S. have replaced Russia as Europe’s biggest gas supplier: In 2023, Norway supplied 87.8 bcm (billion cubic meters) of gas to Europe, good for 30.3% of total imports while the U.S. supplied 56.2 bcm, accounting for 19.4% of total. However, there are talks about a potential return of more Russian gas to European markets, including during the latest London’s International Energy (IE) week. The Financial Times has reported about a plan by the former head of Nord Stream 2’s parent company to start up Nord Stream 2 with U.S. businesses buying the pipeline so as to act as middlemen between Russia and European consumers in the hope that would make flows seem more reliable. However, StanChart has pointed out that such a plan would need approvals from multiple jurisdictions, with the injection of U.S. interests not necessarily improving the reliability and supply security of Russian flows.
Dallas Fed Survey Respondents Bearish on Short Term Oil Prices
The latest Dallas Fed Energy Survey has revealed that activity in the oil and gas sector increased slightly in the first quarter of 2025. The survey found that U.S. oil and gas production increased slightly in the first quarter, with the oil production index moving up from 1.1 in the fourth quarter to 5.6 in the first quarter. Meanwhile, the natural gas production index also improved from -3.5 to 4.8. U.S. oil rig count gained one to 487 according to the latest Baker-Hughes survey, keeping it in the 472-488 rigs range for the 40th consecutive week. Oklahoma and its borders were the most dynamic area in the latest data, with Granite Wash drilling increasing by two w/w to a six-year high of 10 rigs and STACK drilling adding two w/w to 12 rigs. In the Permian Basin, Delaware Basin drilling fell by three w/w to 164 rigs while the Midland Basin rig count was unchanged at 110 rigs and other Permian activity was unchanged at 27 rigs. The US gas rig count fell by one to 100, continuing its long sideways move; it has stayed within six either side of 100 rigs for 48 consecutive weeks. However, the company outlook index decreased 12 points to -4.9, suggesting slight pessimism among energy companies, while the outlook uncertainty index jumped 21 points to 43.1. Costs increased at a faster pace relative to Q4 2024, with the input cost index advancing from 23.9 to 30.9 among oilfield services firms while the development costs index increased from 11.5 to 17.1 among E&P firms. On average, respondents expect a West Texas Intermediate (WTI) oil price of $68 per barrel at year-end 2025, slightly lower than the current price of $69.87 per barrel. However, respondents were more bullish about long-term oil prices, expecting WTI oil price of $74 per barrel two years from now and $82 per barrel five years from now. Respondents also expect a U.S. natural gas price of $3.78 per million British thermal units (MMBtu) at the end of the current year, again slightly lower than the current price of $3.88/MMBtu. However, they expect gas prices to hit $4.30/MMBtu two years from now and $4.83/MMBtu five years from now.
Oil Prices Gain On Venezuela Tariffs
Oil prices rallied in Wednesday’s session, a day after U.S. President Donald Trump announced that any country that buys oil or gas from Venezuela will pay a 25% secondary tariff on trades with the United States. Trump claims that Venezuela has sent “tens of thousands” of people to the U.S. who have a “very violent nature.” Brent crude for May delivery gained 1.2% to trade at $73.89 per barrel at 11.30 am ET while the comparable WTI crude contract climbed 1.2% to $69.84. The secondary tariffs will target China, India, Spain, Italy and Cuba–all major buyers of Venezuelan oil. The tariffs could disrupt global oil supply chains, with U.S. oil companies likely to emerge as key beneficiaries of Venezuela’s customers looking for alternative supplies. Earlier this month, Chevron Corp. (NYSE:CVX) received a 30-day notice from the Trump administration to wrap up its operations in Venezuela. The deadline, set for April 3, provides the company only 30 days instead of the normal six-month wind-down period. Since 2022, Chevron has been allowed to operate in Venezuela as an exception to U.S. sanctions, exporting crude to the United States. According to Secretary of State Marco Rubio and other foreign-policy hawks, Chevron has been providing a financial lifeline for Maduro’s regime to enrich itself and suppress civil rights. Venezuela produced about 20% of Venezuela’s oil in 2024, close to Maduro’s goal of 1 million barrels per day. Chevron is the only major oil producer with a waiver to operate in Venezuela despite Washington’s sanctions against President Nicolás Maduro’s regime. Venezuela’s crude oil production has declined sharply from 3.2 million b/d in 2000 to 735,000 b/d in September 2023 mainly due to sanctions and poor maintenance. Global Oil Demand Robust Despite Tariffs Oil prices have held up surprisingly well over the past couple of weeks despite the presence of numerous headwinds that could have pushed Brent prices more decisively below $70/bbl. Indeed, front-month Brent has exceeded $70/bbl at some point on each of the past eight trading days. Speculative positioning, however, remains skewed to the short side of the market, particularly for gasoline and crude oil. Trader sentiment remains negative largely due to concerns over the potential demand effects of U.S. tariff policies and the potential supply effects of a U.S. switch to policies that are more accommodative of Russian targets. Despite the prevailing bearish sentiment, Standard Chartered analysts argue that global oil demand remains strong, averaging 102.77 million barrels per day (mb/d) in January—a 2.19 mb/d year-on-year increase. The bank forecasts demand will surpass 105 mb/d by June and peak at 105.6 mb/d in August, with full-year growth projected at 1.41 mb/d. They also expect demand to outpace supply in Q2 and Q3. While U.S. tariff policy remains a key downside risk, current demand fundamentals appear solid, supporting a more bullish outlook than recent market sentiment suggests. Standard Chartered sees a few reasons why oil prices haven’t collapsed further in recent weeks. These include an oversold market, underpriced geopolitical risk, and a shift in trader sentiment away from excessive bearishness. Additionally, bullish inventory data reports and a weaker-than-expected U.S. shale supply outlook are lending support.
GAIL gets Petroleum and Natural Gas Regulatory Board nod to expand key pipeline
GAIL (India) Limited on Wednesday, March 26, said it has received the Petroleum and Natural Gas Regulatory Board’s (PNGRB) approval for the capacity augmentation of its Dahej-Uran-Dabhol-Panvel Natural Gas Pipeline (DUPL-DPPL) network. The approval allows GAIL to increase the capacity of the pipeline from the existing 19.9 million metric standard cubic metre (MMSCMD) per day to 22.5 MMSCMD. The expansion is expected to contribute significantly to the company’s business growth by facilitating increased natural gas transportation. The PNGRB approval is valid for three years from the date of communication.