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ONGC has signed an MoU with Shell Energy India to explore oil and gas opportunities deep beneath India’s seas and jointly look at sourcing LNG for the country.
What’s going on: the two companies could jointly bid for offshore oil and gas blocks being offered under the government’s OALP Rounds X and XI, as well as future auctions.
In simple words: ONGC can bring Shell into an existing oil and gas block and share the cost, risk and potentially the rewards of finding oil or gas.
The why: drilling kilometres below the sea isn't cheap or easy. One deepwater exploration well can cost around $125-150 million. It also takes 5-10 years from getting an exploration block to actually producing oil or gas.
That's where Shell comes in. It brings decades of global deepwater exploration experience, while ONGC brings its existing Indian offshore blocks and local operating experience.
And ONGC needs to keep finding new fields. India's existing oil and gas fields naturally see production decline by around 6-7% every year, according to the government.
Zoom out: earlier this month, the government approved Samudra Manthan, officially called the National Offshore Exploration Scheme, with a massive ₹84,084 crore outlay through FY31.
The basic idea is for the country to find more of its own oil and gas underneath the sea instead of relying so heavily on imports. And there's a big reason for that. India is the world's third-largest crude oil consumer, with an annual crude import bill of nearly $144 billion, or roughly ₹13 lakh crore.
But deep-sea exploration is extremely expensive and risky. So the government is stepping in to share some of that risk.
