Rajasthan government and HPCL sign an MoU Black Gold Shines In Barmer
In western Rajasthan, the people often jocularly say that the Sun will rise in the west. There was jubilation in the western part of the state when the Ashok Gehlot government finally managed to pull through and signed an MoU with the oil public sector undertaking company, Hindustan Petroleum Corporation Limited (HPCL), to set up a nine million tonne refinery in Barmer district.
The Thar desert in its underbelly contains millions of tonnes of oil and gas and in a few years from now, the desert will witness spurt in economic activities. The production of crude petroleum in the Sanchor-Barmer basin of the Thar desert altered the face of the economy of not only the desert district, but in the whole state.
The setting up of the refinery and the petrochemical complex in the desert would provide over one lakh direct and indirect employment and would be a big revenue earner for the state.
The refinery was a sort of fulfillment of a dream. This was a personal success of Chief Minister Ashok Gehlot who for the past four years had been trying to get the refinery for the state. The previous government headed by Chief Minister Vasundhara Raje also tried to pursue the Union government for setting up the refinery. But the lackadaisical attitude of the ONGC and the apathy of the Cairn India did not help the cause of the Rajasthan government.
The refinery is a personal success for Gehlot. The refinery would go a long way in boosting the economy of the state. The persons of the area who would be displaced because of the acquisition of 3000 acres of land would be able to get the jobs in the refinery. Needless to say there would be a huge demand for skilled personnel.
The proposed refinery and petroleum complex has the potential to be a platform for developing the services sector in and around the region. “The proposed petroleum complex will be the first such complex specially designed to produce petrochemicals from the indigenous crude oil,” said oil and gas minister Veerappa Moily. Chief Minister Ashok Gehlot ever since the foundation stone for the Bathinda refinery was laid by the former Prime Minister Atal Behari Vajpayee had been pleading the case of a refinery for Rajasthan.
Underbelly of the desert has huge oil and gas
The coarse sand of Rajasthan’s potential resource that was estimated to be 6.5 billion barrels of oil equivalent is in place after recent discoveries by Cairn India could go up to 2,40,000 barrels of oil per day (bopd). Cairn India Limited, the exploring and production company, has a vision to produce 2,40,000 barrels per day within two years and for this Cairn India would invest $2 billion using the state-of the-art technology. The company has already invested $4 billion in exploring oil and gas.
Cairn India has already made sales arrangements for 143,000 bopd with two public sector and two private sector refineries. The results from the ongoing development drilling campaign in the Mangla field confirm the excellent reservoir quality of the Fatehgarh Formation and support an increase in the production potential to 150,000 bopd.
Once the oil fields of Manglam, Bhagyam and Aishwarya would become fully operational, it would be able to produce 28 per cent of the domestic production of petroleum. This would result in reducing eight per cent of the oil import in future in an era where every country is looking for better options of energy security. Thar desert region of Western Rajasthan is emerging as the next energy hub of country. The Thar desert has many attributes and the region has rich deposits of oil, gas, lignite coal, coal bed methane and to top it all solar and wind energy. The emergence of energy will alter the face of the desert and this would change the energy map of the country. Many companies are in queue for establishing their energy projects in the region and after lignite-based power projects and wind energy a number of solar power units would dot the landscape of the desert.
The import bill for India’s growing economy would continue to grow and the discovery of oil and hydrocarbons in the desert would continue to rise. The successful growth of the Indian economy is largely dependent on a stable supply of hydrocarbons. Rajasthan is likely to substantially supplement the existing contribution, as the state alone will meet 28 per cent of the total crude oil requirement of the country. The Union government would receive Rs 46,000 crore over the life of the project. Focus Energy and Oil India Limited have discovered oil and gas in the desert. The ONGC is also claiming progress in its exploration activities. Oil has assured a supply of around 9 lakh cubic meter gas to the power sector companies in Jaisalmer. Barmer is the store house for hydrocarbon, coal, CBM and solar power sector companies. The JSW of Jindal Group has established lignite-based thermal power units and many companies are planning to set up power station in the area.
We import 75 per cent of our oil demand, yet we fail to tap significant unexplored opportunities for exploration and production. Thanks to an elephant and a British geologist, India discovered its first oil in the jungles of Assam in 1889, much before any member of OPEC could do it. But that’s history. The reality today is over 75 per cent of our sedimentary basins are yet to be categorised as “moderate-to-well explored” even as we import over 75 per cent of our oil demand by spending a whopping $134 billion during FY 2011-12. Such high import dependence has led to high trade deficit and widening of current account deficit. It’s a vicious cycle that can only be broken through a bold vision and a swift set of actions.
Every challenge represents an opportunity. India presents significant unexplored opportunities for the exploration and production industry. So far only 73 billion barrels of oil and oil equivalent gas could be established through exploration, out of 205 billion barrels of prognosticated hydrocarbon resources. Thus, about 133 billion barrels of prognosticated resources remain to be unlocked through exploration. The size of the prize when we move the 65 per cent of prognosticated hydrocarbon resources to “in-place volumes” from “yet-to-find” category could be significant.
On an average, India drills about 200 exploratory wells every year while the US drills about 2,000. Factoring in the geological risks, this pace needs to be accelerated to identify and drill out each prospect in the 26 sedimentary basins that provide the hydrocarbon base for India spread over 3 million sq km.
The Ministry of Petroleum & Natural Gas recently set the ball rolling with a vision to reduce oil imports by 50 per cent (2020), 75 per cent (2025), and 100 per cent (2030) and a roadmap is being evolved. The first significant step in this direction is the policy decision to allow exploration in all producing blocks, even as the industry awaits further procedural clarity.
The Hydrocarbon Vision 2025 aims at 100 per cent exploration coverage of sedimentary basins by 2025. To achieve this, we should scale up our exploration efforts to move 50 per cent of the sedimentary basin to the ‘moderate-to-well explored’ category in the next five years by providing a policy framework. (PB)
The project will be set up in partnership with HPCL, Rajasthan State Refinery Limited and others. The proposed refinery will be set up at an estimated capital investment of Rs 37,230 crore. The project is expected to take about four years after getting formal approval from the Centre.
“The proposed refinery will process the locally available Rajasthan crude as well as other crude. The refinery-cum-petrochemical complex shall be designed to produce motor fuels with latest environmental specifications and wide range of petrochemicals which will have a substantial impact on the economy of Rajasthan. The project-related studies have been carried out by renowned consultants,” said C Roy Choudhry, CMD of Hindustan Petroleum.
Choudhry added that while the complex will process 100 per cent Rajasthan crude, however, considering the projected availability of the crude, the refinery complex is to be based on 4.5 million tonne per annum (MMTPA) of Rajasthan crude and 4.5 MMTPA of Arab-mixed crude. He said the refinery-cum-petroleum complex will produce Euro IV/V grade petrol and diesel fuel in addition to petrochemical products such as Propylene, Polyethyle, Benzene, Toulenes and Xylenes. There will be huge potential to develop downstream industries and other services in and around the region. The by-products from the refinery and aromatics products could result in various downstream industries such as plastics, textiles, automobiles, resins and solvent.
“National and international experience suggests that higher domestic production has a transformational impact on the host governments. In our own country, Rajasthan is the most recent example. As per the Rajasthan Budget Study 2013-14, revenue from the petroleum sector now constitutes more than 40 per cent of the total non-tax revenue of the State government from just 0.2 per cent in 2008-09. The petroleum sector is estimated to contribute Rs 5,500 crore to the State government’s non-tax revenue, primarily because of oil production from the Barmer Basin. Oil discovery and the resultant higher revenues from the sector have helped the State to present a more balanced budget, enabling large fund allocation to social and economic development projects,” said P Elango, CEO of Cairn India.
By Prakash Bhandari from Jaipur