A few months ago something surprising happened in the world of oil. A country that barely produces crude oil and that, to date, had not had much luck in exploring its seas and subsoil, announced that it had found one of the largest oil reserves in the world. Last September, Pakistani authorities announced the discovery of a huge oil and gas reserve (speculated to be the fourth largest in the world) after years of drilling and exploration. This has been more than enough for its greatest enemy, in geopolitical terms, has accelerated the search for crude oil in the waters near the Pakistani discovery. This is India’s great bet to find its natural treasure, a large oil deposit under the sea.
Competition (sometimes envy) is one of the engines of the economy. The ‘fight’ to rise in economic terms involves producing more and better goods and services than the neighbor. In the midst of this stressful struggle, economic progress is achieved, both at the individual level (people or companies) and collectively (entire economies). India is seeking to reduce its dependence on foreign oil and he has reasons to do so. On the one hand, the country seeks to achieve greater energy independence and improve the current account balance. But not only that. There are studies that believe that India could have billions of barrels of crude oil in its jurisdiction (waters and land) that are not yet discovered.
Pakistan’s discovery is giving that extra impetus for Indian authorities to do their best in their attempt to find oil in their territory. To understand a little better why the discovery of Pakistan ‘stings’ in India, it is useful to know what the relationship is between both powers. A quote from geography and geopolitics expert Tim Marshall, taken from his latest book, summarizes this very ‘special’ relationship very well: “India and Pakistan only agree on one thing: neither wants the other close”. All this despite having been part of the same ‘country’ or territory for centuries.
Tensions between Hindus and Muslims began to intensify as the independence movement led by figures such as Mahatma Gandhi and Jawaharlal Nehru of the Indian National Congress and Muhammad Ali Jinnah of the Muslim League developed. The separation of India and Pakistan was decided in 1947when the British, weakened after World War II, planned the withdrawal of their colonial control. As independence approached, the Muslim League pushed for the creation of a separate state for Muslims, arguing that peaceful coexistence with Hindus would be unviable in a single country. This idea was crystallized in the “two nation” theory, which held that Hindus and Muslims were two communities with fundamental cultural, religious and social differences that justified the existence of independent states.
After negotiations and growing tensions, partition was approved by Indian and Muslim leaders in 1947. But partition did not end the conflicts by any means. Oil as a possible dispute. These two countries have faced each other in four major wars and carried out important clashes. Relations between India and Pakistan have been tense and marked by territorial conflicts, especially over the Kashmir region, which both countries claim in their entirety.
Now, oil may represent a new point of friction. Both countries are net importers of crude oil and both countries believe that their border waters may contain large quantities of hydrocarbons. India has tremendous oil potential under its waters. The thing is, the exploration has only just begun. Indian Oil Minister Hardeep Singh Puri, has called on international oil majors to step up their involvement in oil and gas exploration in the country to reduce dependence on imports and ensure a sustainable fuel supply.
According to Singh Puri, investment opportunities in the exploration and production sector in India could reach 100 billion dollars by 2030, according to the Financial Times newspaper. Currently, only 10% of the country’s 3.36 million square kilometers of sedimentary basins are under exploration, indicating huge untapped potential.
India’s hidden treasure
According to S&P Global Commodity Insights, four underexplored sedimentary basins in India, such as Mahanadi, Andaman Sea, Bengal and Kerala-Konkan, could contain up to 22 billion barrels of oil, more than what remains in the famous Permian basin. of the United States. “Over the past three to four years, global exploration companies have increasingly ventured into frontier, offshore, deep and ultra-deep water areas in search of big discoveries. Harbor Energy and Mubadala’s recent discoveries in the North Sumatra Basin have made the Andaman Sea a focal point for frontier exploration,” according to S&P Global Commodity Insights.
India already has major discoveries in the Krishna-Godavari, Barmer and Assam basins, but exploration in other areas is proceeding extremely slowly. In the Bay of Bengal, the state-owned ONGC is developing deep water projects with an investment of more than $10 billion. In addition, Oil India, another state company, is processing the start of exploration activities in Nagaland after resolving some local disputes that prevented it, as explained by the specialized media. oilprice. Unlike Pakistan, India has no problem attracting big oil companies given the country’s close relationship with some major firms and the developed world. Despite everything, the country cannot produce more than 500,000 barrels of crude oil per day, an insufficient amount to cover its demand.
The British BP, for example, is exploring opportunities in the country through a joint venture with Reliance Industries.which operates gas stations and is involved in oil and gas production in the Krishna-Godavari basin. Analysts predict that India will become the main driver of global oil demand growth, surpassing China (which has electrified very quickly), in the very short term.
India consumes more and more oil
According to Emma Richards, senior analyst at Fitch Solutions, China’s role as an engine of global demand has slowed in a very short time, while India is positioned as a leader due to its growing population, which has probably already surpassed that of China. , and its continued dependence on traditional fuels. Parsley Ong, JPMorgan’s head of energy and chemicals research in Asia, said: “India was set to overtake China in terms of being the main driver of global demand growth due to demographic factors such as population growth.” India already consumes more than 4.5 million barrels of oil every day, according to Reutersan amount that almost triples, for example, the consumption of Spain. The progression is rapid and it is believed that India will be the global economy in which crude oil consumption will grow the most in the coming decades.
Although India is advancing in the energy transition, its adoption of electric vehicles and clean energy lags behind Chinawhich ensures sustained demand for fossil fuels in the coming years. While Pakistan faces structural challenges in capitalizing on its hydrocarbon discoveries (it has discovered a lot of oil, but has difficulty finding companies to help it extract it), India is strategically positioned to attract international investment and maximize the potential of its vast unexplored resources.
So although Pakistan has taken the lead with its great oil discovery in September and others held recently, this competition is not over yet. India’s economic muscle and its ability to attract investment may end up being vital to finding the assumptions 22,000 million barrels of crude oil hidden in its territory (water and land). What nobody wants is that in the search for ‘black gold’ a new conflict could be generated between the two enemies.
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