India beckons oil firms hit by shale bust

India is striving to woo investors to develop already discovered but untapped smaller oil and gas

fields that hold more than the country’s total annual output

The casualties of the US shale bust are being offered a new frontier thousands of miles away in India

to remake their fortunes.

Prime Minister Narendra Modi is striving to woo investors to develop already discovered but

untapped smaller oil and gas fields that hold more than India’s total annual output. The South Asian

nation depends on energy imports, a risk Modi is seeking to tackle as the fastest expansion among

major economies turns India into a center of global oil demand growth.

“Entrepreneurs who have capped their wells in Alberta or North Dakota will be looking at this kind of

a story with a greater amount of interest, as there’s very little to look forward to in their own

fronts,” Atanu Chakraborty, the head of oil regulator the Directorate General of Hydrocarbons, said

in an interview on Tuesday.

India isn’t fussy about who takes up the challenge—whether foreign wildcatters or local internet

tycoons looking to diversify their investments—as long as they’re serious and have the money

needed, Chakraborty said. The government is offering incentives such as simpler permits, tax sops

and freedom from pricing restrictions to overcome the deterrent that low oil prices pose to boosting

production.

India’s robust domestic consumption is a buffer against the risk that prices “can fall again or will

remain low,” Chakraborty, 56, said in the interview in his office in New Delhi.

State-run Oil and Natural Gas Corp. Ltd dominates exploration and production in the South Asian

nation. Faced with maturing large fields, the company has struggled to stem the drop in India’s oil

output in recent years.

The $2 trillion economy imports about 77% of the crude and gas it needs. The 67 already-discovered

small fields Chakraborty is trying to develop hold about 625 million barrels of oil and gas, the

administration estimates.

Foreign explorers such as Canada’s Niko Resources Ltd and Edinburgh-based Cairn Energy Plc grew

businesses in India after starting with smaller fields. At the same time, the companies have faced

challenges ranging from arbitration spats with the government to tax disputes, underscoring the

regulatory risks that some investors fear in India.

Chakraborty said he’s planning roadshows in North America, the UK, Singapore and some Indian

cities to drum up interest. Some executives who lost their jobs in the crude slump have shown

interest in the fields on offer, he added.

“It’s a good idea to target the smaller companies, not just in the US, but globally—they are

aggressive and can definitely make a difference,” said Deepak Mahurkar, leader for the oil and gas

team at PricewaterhouseCoopers in India.

Saudi Arabia led the Organization of the Petroleum Exporting Countries’ response to the US shale

boom by sustaining production, opting to defend market share and drive out higher-cost producers

rather than cut output to tighten the market. Prices then tumbled, turning the American boom into a

bust.

NGS INDIA