Joshi's get-well prescription for India upstream

Vol 6, PW 13 (28 Aug 02) Exploration & Production

JOSHI SUGGESTS a simple formula to put right the Indian upstream sector.

He suggests economies of scale, improved efficiencies and lower import tariffs. Joshi argues this will reduce operating costs and increase oil production.

He wants the number of wells drilled in India each year to increase from the current 350 to 1,000 over the next four years. He also believes private operators should be allowed to use each other's equipment without government permission and without paying crippling import duties.

Any extra revenue earned can be included as part of profit oil for the government. Joshi's other suggestions are detailed below: ONGC can provide drilling and other field services (stimulation, nitrogen, cementing and logging) to private operators at competitive prices.

ONGC owns the second largest number of onshore rigs in the world. ONGC's 75 onshore rigs drill 300 wells a year.

In the US about 900 onshore rigs drill 25,000 wells a year ONGC's current system of working out costs makes the drilling rig cost and service cost too expensive. If ONGC uses international methods (current depreciated equipment cost, rather than the equipment replacement cost) then it canoffer drilling and services at affordable prices to small operators Remove import duty on new and used oilfield equipment brought in by operators as well as service companies Remove tendering for equipment and contracts for any single item for up to 15% of the well cost or $100,000 whichever is higher.

This will reduce paperwork and also enable quick development of projects Current policy of obtaining right of way for laying natural gas pipelines is very cumbersome and time wasting. Reform this policy by giving high priority to land acquisition for oil and gas pipelines Introduce a single window system for all clearances required for oil and gas operations.

This will free up time for the operator to produce more oil rather than chase files