OIL AND GAS: THE CALGARY–INDIA SUCCESS STORY
India is now California 1848

On February 3, 2005, the Conference Room at the Hotel Hyatt Regency in Calgary, where the Indian Minister for Petroleum and Natural Gas, the Hon’ble Mani Shankar Aiyar, was to speak and field questions at the roadshow for the New Exploration Licensing Policy-V (NELP-V), was full to capacity. The crème de la crème of the petroleum elite of Calgary, a city by now well established as the oil capital of Canada, if not of the whole of North America, had turned out in strength. This was something of a pleasant change from the earlier NELP sessions held in the previous years in Calgary, in that practically everyone of the oil and gas players from all over the province of Alberta was there, plus a few from as far away as Toronto, and in fact some from across the border with the US as well.

The Canadian response to NELP-V was no flash in the pan. The scene in Houston, where Minister Aiyar had made a similar presentation a couple of days earlier, had been similar, with the big guys from the US oil industry - Chevron, Texaco, Shell, Unocal, Conoco Philips, and Exxon Mobil plus some 20 other US oil giants – coming to hear him and brief themselves in detail about the prospects for striking it rich with oil and natural gas in India.  In previous years, the level of enthusiasm for India from American Big Oil had been much lower. 

London, which had been the Minister’s pit stop before Houston, had produced, , as he himself put it,  a similarly “startling response” - with British Gas, BP Exploration, Burren Energy, Cairn Energy, ENI, Statoil, Total Elf, Premier, all crowding in response to invitations to NELP-V.  Nor had things been any different in Dubai.

India, with barely 18% of a total 3.14 million square kilometers of potentially oil and gas bearing areas explored so far, offers tremendous scope for oil and gas companies. It is no longer a hydrocarbon poor country.  In fact, with a hydrocarbon base of about 33 billion tonnes, or 225 billion barrels of oil, it is clearly an oil bonanza waiting to be discovered.  However, it was the tremendous success achieved in India in 2002  by an Alberta firm, Niko Resources of Calgary, that triggered the burst of enthusiasm for Indian oil and gas prospects that filled the conference halls for NELP-V in London, Houston and Calgary.

Niko Resources had, in partnership with the giant Reliance industrial conglomerate of India, literally struck gold with the very first well that they drilled, to a depth of 760 meters in the sea, offshore of the Krishna-Godavari basin in south-eastern India, The Niko Reliance gas find, now estimated at 14 trillion cubic feet, was the largest in the world in that year.  Even more encouraging was the fact that the 13 subsequent wells drilled in the same location all produced gas.  Niko, a medium sized Calgary oil firm, which then saw its market capitalization shoot upwards to five times the earlier figure, and Reliance, for whom it was the first in the oil and gas field, were in clover.  And the rest of the world sat up sharply and took notice. 

Subsequently, Niko has also, very recently, struck oil on the other side of India, in the Hazira oil field in Gujarat in western India. 

Nor was Niko the sole Albertan, or to be more precise Calgary success story in India.  Canoro Resources has also been strikingly successful in north eastern India, in the State of Assam, where they have struck oil in two locations and are drilling for more. 

Recently, there have been other dramatic oil finds in India that are now talked about in global oil circles. One such is that of a Scottish firm, Cairn Energy, which, in 2003,  struck it rich in the north western Indian state of Rajasthan, at a site from which a global oil major had withdrawn in despair just a year earlier.  But it has been the Calgary success stories that have stood out, and have dramatically captured the attention of oil companies the world over.

As Minister Aiyar clarified at each of the four NELP-V meetings, the entire process of bidding, processing, evaluation and contract signing for the 20 exploration blocs being offered in this fifth round will be completely transparent, above board and time bound, using a single window system for clearing any doubts or grievances.  Details of the production sharing arrangements under any of the over 140 contracts signed earlier with foreign oil companies will be made freely available to potential bidders.  The geological data package for these 20 blocs, obtained with the help of the latest techniques,  indicates that they all have significant prospects.  Both the investment climate in India and the fiscal package offered for NELP-V match the best in the world.  It is now for the foreign oil and gas firms – from the small through the medium to the majors - to take advantage of a potentially golden opportunity.

If Canadian Big Oil does not take the lead in this, it will not be for want of local persuasion of the most credible kind. At Calgary, on February 3, 2005, more even that the Indian Minister and his senior officials, it was the CEOs of Niko Resources and Canoro who spoke most eloquently and convincingly to answer the question “Why India?”.  One cannot do better than to let them speak in their own words.