India’s Bright Future In Oil Market? Vedanta To Invest $4.1 Billion In Barmer Oil Block

Natural resources company Vedanta Ltd plans to invest $4.1 billion to boost oil output from its flagship Barmer block, reported Live Mint.

The company targets to raise its oil output to over 4,00,000 barrels per day in 2021, Vedanta Ltd Chairman Anil Agarwal said.

The output from the block would rise from 2,50,000 barrels per day to more than 300,000 barrels per day next year.

"The output from the Barmer block will be 450,000 barrels per day in next two-three years. We are investing about Rs 300 billion to achieve this,” Mint quoted Agarwal.

India ships in 80 per cent of its oil requirements as its domestic output have been stagnated for years. The country produces an average of 7,20,000 barrels of oil per day.

The conglomerate bagged 41 blocks of the 55 blocks offered by India under the new eased rules that provide freedom to bidders to carve out areas for drilling.

The company plans to invest Rs 30-40 billion in the exploration phase for new blocks. Vedanta wants to scale up its operations so that it can contribute at least one per cent to the nation’s planned $5 trillion economy by 2025, said Agrawal. He also urged more players to participate in the aggressive bidding process and said India could be better than foreign markets soon.

Strong economic growth along with a pool of educated young people will remain India's key driver for energy demand growth he said. According to Indian Oil Corp, India’s crude oil demand is forecast to grow to 500 million tonnes per year by 2040.

Agarwal, however said India needs to ease policies further to attract foreign majors towards exploration. India bars exports of crude oil which means producers have limited customers. Currently, India caps prices for domestic oil, which is a less attractive proposition to international players, he added.

Vedanta is currently selling its oil to local refiners at 10-12 per cent discount to global benchmark Brent, he said, adding the company’s current cost of production is $7/barrel.