By R. Sasankan

Back in 1981, I had just started to report on the petroleum sector. Time, the American weekly magazine, created a stir by publishing a sensational report that claimed India's Godavari offshore basin was floating on oil. The report had a tremendous impact on the political leadership and sparked a buzz of activity in the bureaucratic corridors. Back then, western publications enjoyed greater credibility in India than they do today.

A couple of months after the report appeared, there was a furious debate in the Lok Sabha, the lower house of Indian parliament, during which the ruling party headed by Mrs Indira Gandhi came under attack from the opposition for seeking a structural adjustment loan from the International Monetary Fund which came with stiff conditionalities. The loan had been sought to tide over an acute balance of payments crisis that had erupted because of the sharp surge in oil prices in 1979-80.

Replying to the debate, the then finance minister R. Venkataraman, who was widely regarded as a sensible politician, defended the decision to tap the IMF and then added that the government would pre-pay the IMF loan "if the Godavari blesses us".

Venkataraman's successor, Pranab Mukherjee, said in his budget speech on March 1, 1982 that the SDR 5 billion Extended Fund Facility from the IMF was "necessary to avoid the disruption of our economy for want of essential imports and to gain time for readjustment to a new situation."

In the end, the government chose not to wait to see whether the augury about Godavari oil would turn into reality. India drew down only SDR 3.9 million out of the sanctioned SDR 5 million and repaid the loan by May 1984.

But we have still not completely exorcised the extended myth surrounding Godavari oil. Over the next few decades, there have been many forecasts that have been made about the reserves lying at great depths in the Godavari but few have ventured to tap it and go on to prove that the Time's oracle was right.

But the speculation around the riches lurking in the Godavari basin linger on.

What was the basis for the Time magazine's prediction? I started to dig around for answers to find out who was the mastermind behind the so-called Godavari theory. For starters, had the Time magazine's correspondent consulted any geologists associated with Indian upstream companies such as ONGC, Oil India or any foreign oil company familiar with the Indian scene? I discovered that he had met only one person in India: Dr G. Ramaswamy, a former Member of ONGC (in those days, the public sector giant was a Commission and its directors were called Members). Ramaswamy has maintained that he was not the author of the idea.

The Godavari enigma arose at a time when India's upstream sector had already turned euphoric over the prospects of extracting oil in huge quantities from Bombay High in the western offshore. By the mid-1980s, the ONGC experts had adopted an accelerated production plan and, as a result, domestic crude production surged to a level where it was sufficient to meet 80 per cent of the country's demand for energy at that time.

But trouble was just round the corner. The accelerated production plan severely affected the Bombay High reservoir, pushing up the field's gas-oil ratio. The normal life of an oil field is 20 years. Thanks to the lapses in the production plan, the reserves in the field could not be properly extracted. It survives today with a low output rate and one is only thankful that it did not sink to zero.

Since the Bombay High misadventure, nothing seems to have gone right for ONGC. It has drilled quite a few wells in the Godavari offshore in its quest for the elusive oil that the basin supposedly contains.

Reliance discovered a few small fields in its KG-D6 block in the deep waters of the Godavari. ONGC has one production project. Barring these two relatively small production projects, the Godavari has not yielded anything big so far. But the experts continue to live on hope; surprises can never be completely ruled out in oil exploration.

India is now facing a situation where its domestic oil and gas production is shrinking and it is becoming more and more dependent on imports to sustain an economy that is rated to be the fastest-growing major economy.

Forecasters are busy making predictions about the surging energy demand in the Indian economy. One estimate suggests that India could account for around 25% of global oil consumption growth over the next couple of years, with a projected increase of roughly 330,000 barrels per day in 2025 alone.

 India, they say, currently consumes around 5.05 million barrels of oil per day, making it the third largest oil consumer globally, accounting for approximately 5% of the world's total oil consumption. According to the IEA (India Energy Outlook 2021), primary energy demand is expected to nearly double to 1,123 million tonnes of oil equivalent as India's Gross Domestic Product (GDP) is expected to increase to US$ 8.6 trillion by 2040.

I do not want to bore the readers with various forecasts. India wants to be a developed country and it is moving towards that with deliberate speed. This is possible only if the country's oil consumption goes up by three times from current levels.

India's oil imports have already crossed 85 per cent of the domestic demand and it is expected to cross 90 per cent by 2030.

One thing is pretty obvious: the domestic sedimentary basins are unlikely to yield significant quantities of oil and gas and overturn the dependence on imports. This is precisely why foreign oil companies have been shying away from participating in the country's exploration acreages. The latest exploration acreage known as Open Acreage Licensing Policy permits the bidders to choose the blocks where they could hunt for oil. Not a single foreign bidder has participated in the various auction rounds. Meanwhile, domestic oil companies are spudding dry wells. In a year or two, India will be ranked as the driller with the largest number of dry wells in the world.