This month the possible start of production at the Johan
Sverdrup oilfield off the Norwegian shore was cheered in the International
press. In 2010, the Swedish Lundin Petroleum had announced that year’s biggest
discovery here. Significantly enough, Lundin found oil less than three meters
from where the French explorer Elf Aquitaine, now part of total, had drilled
but failed miserably in 1971. We recall something similar happening with Cairn
in Barmer, Rajasthan some years ago.
Success after repeating failure is no stranger for gas and
oil Industry. If companies ready to taste the risk of successive failure and
investing millions of dollars tirelessly to make discoveries that only bear
fruit eight to ten years later, it is because success when it comes brings the promise
of untold fortune. With deep water wells costing over 70 million dollars each,
it is only this kind of success that will drive a company to take extreme risks
involved. These are important lessons for policy makers in India for the public
to notice.
Physical characteristics apart, most of the resource in the
US is in areas with very low intensity of land use – the US has the luxury of
the Appalachians. In India, shale resources are found in agriculture intensive
areas. In any case, unlike the US where all mineral rights vest with the
property owner, we know Indian Laws pertaining to ownership of below ground
resources lend themselves to inevitable conflicts between land owners, the state
and mining companies.
Water stress in shale areas in India, on the other hand, is
bound to end in an intense battle for both water and land resources. Add to
these the Kafkaesque maze of multiple agencies with fickle guidelines which cannot
match the fast track procedures approvals that have led to the shale gale in
the US. When we put our years to the ground, we sense a policy environment in a
turmoil of seismic proportions. A government battered and bludgeoned by the CAG
frenetically goes about setting up committee after committee to revisit and
revise exploration policies. Meanwhile, as first oil and now gas imports mount,
a skyrocketing current account deficit all but threatens to push the country
back to the early nineties.