By R. Sasankan 

India has built a lot of heft in the global petroleum market over the years with its pre-eminence founded on the fact that it is the world's third largest importer of crude oil. But the question that has haunted energy experts is whether it can now further buttress its position by turning into a major seller of products or services that the global oil industry will in time recognise as a formidable player.

The short answer is: maybe.

One area that the country could seriously explore is the oilfield services business. India has very long experience with all facets of oil exploration and production in the country. Over the time, the country has developed a gravy train of quality domestic suppliers of goods, equipment and services. It is this cohort that can try and carve out a sizable share of the burgeoning global oilfield services business, thereby developing a new value-added revenue stream to the existing gush of earnings from exploration and production operations overseas. Several Indian engineering industries, shipyards, and offshore service providers have made significant advancements in fabrication, installation, inspection and maintenance of onshore and offshore structures, pipelines and top side facilities.

Estimates show that the world oilfield services market is expected to grow from US$ 305 billion in 2023 to US$ 556 billion in 2032. Some other estimates project over revenues of US$ 482 billion in 2032, which is also a very high figure. In 2013, pressure pumping services (fracturing for shale gas/oil and tight reservoirs, cementing etc.) accounted for a 37% share of the market, followed by oil country tubular goods (26%) and wire line services (11%). North America, Asia-Pacific and Europe were the largest markets in 2013 with shares of 52%, 21% and 9% respectively. It is also predicted that African and Asia Pacific regions would experience the highest revenue growth for oilfield services requirement in the next five years. In 2013, the top 10 service providers of the world had revenues of US$ 113 billion, leaving a wide swathe of opportunities for other players.

Clearly, Indian players should be excited about the possibility of sussing out opportunities in what promises to be a booming sector. But this is where the country's upstream oil behemoths like ONGC and Oil India Ltd can lend a helping hand. ONGC has been expanding its international operations and the large retinue of India suppliers of goods, equipment and services can hitch hike a ride.

Piggybacking a monolith is really par for the course. Take China Oilfield Services Ltd (COSL) which has leapfrogged to the 10th spot in the global oilfield services rankings by providing services in drilling, well servicing, shipping, and geophysical surveys. The company, which was founded in 1967, is reportedly eyeing the Middle Eastern market and also aiming to grow its business through acquisition. It is also a fact that COSL rapidly established its presence by teaming up with China National Petroleum Corporation (CNPC), the world's third largest oil company.

ONGC can play a significant role as a catalyst for the growth of Indian oilfield service companies. The state-owned giant has multiple ventures overseas through ONGC Videsh Ltd (OVL). Oil India has also been spreading its wings. It is only natural to expect that these two players take the lead in promoting Indian oilfield services and supply companies. Initially, they could co-opt them into their overseas operations (to the extent permissible). Once these fledglings find their feet, they could push the boundaries of their ambitions on their own.

It must be recognized that India's oil and gas operators will accord top priority to exploring new frontiers, mainly deep waters and tight reservoirs, non-conventional hydrocarbons and reservoir management to squeeze more and more out of the existing fields. ONGC and OIL will also attach high importance to these aspects in their domestic operations. They will need to harness cost-effective state-of-the-art technologies. And so the oil and gas giants will increasingly turn to the suppliers of materials, equipment and services to usher in new technologies. The Indian service companies will, therefore, have to place strong emphasis on continuous improvements in new and cost-effective technologies, possibly in collaboration with reputed international service companies.

There are some areas where such alliances will work rather well. These include API of seismic studies through boulder beds, trap covered areas, salt domes, tectonically complex terrains etc., manufacture/services of light duty rigs for non-conventional hydrocarbons, services for underbalanced drilling and fracturing with non-water based fluids (e.g. CO2, N2, propane etc.), improving flooding mechanism in depleted reservoirs to optimize sweep efficiency, and application of AI in all facets of E&P operations.  

This is where ONGC and OIL can help quality Indian services and supply companies to collaborate with quality foreign manufacturing and services companies to set up manufacturing and services bases in India. Initially, they could opt to focus on meeting a part of the expected high demand growth in African and Asia Pacific regions. The Government of India must also play an enabling role by providing necessary dispensations/empowerment to ONGC and OIL to promote Indian suppliers of materials, equipment and services both within and outside the country. The need of the hour is a coalescing of objectives that should be achieved through a coalition of forces.