Samudra Manthan push may boost exploration but won’t end energy import dependence—S&P Global director

India needs to strengthen energy options across crude, LPG and LNG as geopolitical disruptions expose vulnerabilities, says S&P Global Director Rajeev Lala.

Rajeev Lala, Director of Upstream Strategies and Transformation at S&P Global Energy | LinkedIn

New Delhi: India’s Samudra Manthan scheme could make the country more attractive for oil and gas exploration by reducing companies’ upfront risks, but new discoveries alone are unlikely to significantly cut its dependence on energy imports, Rajeev Lala, Director of Upstream Strategies and Transformation at S&P Global Energy, told ThePrint in an exclusive interview.

India has a long history of upstream exploration but has struggled to find commercially viable discoveries that can be scaled up, Lala said on Wednesday. The new initiative could attract more companies and fresh approaches to exploring existing and underexplored basins.

“What the Samudra Manthan scheme does is it incentivises exploration activity by taking the risk at the front end,” he said, referring to the substantial upfront expenditure oil and gas companies incur before making a discovery.

The government’s deep-water exploration scheme aims to encourage exploration oil and gas companies to explore India’s offshore areas by reducing the upfront risk and investment burden involved in exploration.

However, India faces competition from several countries seeking exploration investment. More than 40 countries have launched or are preparing to launch bidding rounds for companies to invest in exploration acreage over the next year or so, Lala said. As companies weigh opportunities across jurisdictions, India’s ability to attract investment will depend on how its prospects compare with those elsewhere.

New entrants could be particularly valuable in India’s underexplored western and eastern offshore basins, bringing fresh approaches to both established and untapped areas, he added.

However, even if the exploration push results in significant discoveries, India’s import dependence is unlikely to disappear because domestic energy demand will continue to rise, Lala said.

“The import bill will see a marginal gain and that does matter,” he said, adding that higher domestic production would also boost economic activity, create jobs and strengthen India’s engineering capabilities.

The time required to bring discoveries into production will vary by basin. Near-field exploration, where existing infrastructure is already available, can deliver results faster, while frontier exploration in underexplored areas typically takes much longer.

India needs broader energy ‘optionality’

The current geopolitical crisis triggered by the US-Iran war has underscored the need for India to strengthen energy security across the value chain rather than focus solely on crude oil, Lala said.

India should “retain and strengthen optionality” by diversifying suppliers, expanding strategic petroleum reserves (SPR) and continuing to invest across the energy value chain, he said.

The country’s large refining capacity is a key source of flexibility, allowing it to process crude from different suppliers for domestic consumption and export. This helps India adjust when supplies from a particular source are disrupted or become less economical.

“There’s basically very few energy systems globally that can absorb large volumes and then also transmit those volumes to other parts of the world,” Lala said, referring to India’s refining and export capacity.

On India’s increased reliance on Russian crude, he said the country retained flexibility in sourcing and could switch between suppliers depending on availability and prices. A temporary concentration of imports from one country, he added, did not necessarily amount to permanent strategic dependence.

“It’s not as if India has a strategy for a particular country or against another country,” he said.

India’s import of Russian oil has been under scrutiny after the US passed a legislation to impose tariffs of up to 100 percent on countries that purchase Russian crude.

India’s role as a refined-products exporter also makes it an important link in the global energy system, giving international suppliers an additional reason to continue serving the Indian market, Lala said.

LPG, LNG vulnerabilities exposed

The current crisis has also shown why India’s energy security cannot be assessed through crude oil alone, Lala said.

In the case of liquefied petroleum gas (LPG), he said that the increased output from domestic refineries during the initial months of the US-Iran conflict helped offset part of the shortage but could not eliminate the need for imports.

“We will certainly continue to be importers,” he said, describing the LPG challenge as more a matter of management than an outright supply shortage.

India’s access to open oceans offers some logistical flexibility, although the Strait of Hormuz remains a critical choke point. Strengthening shipping logistics and managing costs will therefore remain important to securing supplies, he said.

For liquefied natural gas (LNG), Lala said the immediate challenge is disruption to existing long-term contracts with suppliers such as Qatar, rather than an anticipated global shortage.

Lala said the disruption in the Strait of Hormuz and physical damage to some facilities in Qatar had affected India’s long-term contracts with Qatar. However, S&P Global Energy expects substantial volumes of LNG to enter the global market over the next decade.

Venezuela has potential, but ramp-up will take time

Venezuela could become a larger source of crude for India, but significantly increasing its output will take time and require overcoming several hurdles, Lala said.

Companies with experience operating in Venezuela, including some Indian national oil companies, are already familiar with the market. Chevron and state-owned Petróleos de Venezuela, S.A. (PDVSA) are also among the major players.

Expanding production will require equipment and personnel, while payment difficulties and outstanding claims pose additional challenges for companies. “There is already a queue of existing companies that are looking to get paid for past use,” Lala said.

Efforts are underway to resolve these issues, but progress is unlikely to be quick, he added.

For India, the broader lesson from the crisis is the need to build resilience across the energy system rather than rely on any single source or reserve. Lala said the traditional concept of strategic petroleum reserves should be broadened to cover critical supplies such as LPG and LNG, alongside crude oil.

India should also identify domestic choke points that could disrupt the movement of energy within the country, he said.

(Edited by Chingkheinganbi Mayengbam)