New Delhi: Indian state-owned exploration and production company Indian Oil Corporation Ltd plans to start producing oil from its Gabon block in the next fiscal year and the construction of wells will be completed in the next few months, two people aware of the development said.
The company holds a 50% stake in the Shakthi-II block in the central African country and will soon issue a tender to local vendors. Indian Oil Corporation and Indian Oil Corporation each hold a 50% stake in the block, with the former being the operator of the block.
“The project is expected to be operational by the next fiscal. It was likely to be launched this year but due to some issues with the local contractor, a new tender had to be issued and will be finalised soon,” said one of the two people cited above, adding that pre-drilling activities are currently underway.
The company will complete drilling of all four planned wells by the end of FY25, the person said.
In the “old PSC” (Production Sharing Contract), oil was discovered in the “Lassa-1” well. In addition, two appraisal wells (Lassa-2 and 3) were drilled in the first phase of the new PSC, according to the annual report for the fiscal year 2024. The consortium has conducted 1,213.04 LKM (Line Kilometers) of new 2D seismic data acquisition, processing and interpretation (API) to evaluate the prospectivity of the remaining part of the block.
Currently, the consortium has committed to drill two more exploration wells in the block. “This block in Gabon is a major asset with huge potential and Indian companies are seriously vying for it,” said another person familiar with the matter.
A query mailed to Indian Oil Corporation Ltd remained unanswered till press time.
Energy procurement delays
The project has been affected by regulatory delays and the coronavirus pandemic. The development is significant given the setbacks faced by state-owned companies including Indian Oil Corp. in overseas equity energy assets. The latest example is India’s growing wait for liquefied natural gas (LNG) supplies from a $20 billion mega project in Mozambique, where Indian Oil Corp. is also a shareholder in the Rovuma Area-1 block offshore Mozambique.
The company’s overseas exploration and production (E&P) portfolio spans seven countries: Russia, Venezuela, Mozambique, Nigeria, Bangladesh, Libya and Gabon.
The consortium acquired exploration rights to the block in 2006. The project has been affected by its landlocked location, regulatory delays and the COVID-19 pandemic.
The development is significant given the setbacks faced by state-owned companies such as Indian Oil Corp. in overseas equity energy assets, the latest being India’s growing wait for liquefied natural gas (LNG) supplies from a $20 billion mega project in Mozambique, where Indian Oil Corp. is also a shareholder in the Rovuma Area-1 block offshore Mozambique.
The possibility of the Gabon block coming on stream next year is also important as India has been working to leverage international assets and sign long-term oil and gas supply deals to ensure energy security. Energy prices surged to multi-year highs in 2022 after Russia invaded Ukraine and the Russian-Ukraine war gained momentum during that war.
India is the third largest oil importer, with imports accounting for about 85% of its total energy needs. In FY24, India imported 233.1 million tonnes of crude oil, compared to 232.7 million tonnes in the previous fiscal year.
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