Abstract
This thesis provides the background to and an analysis of the economics of exploring for and developing oil and
gas discoveries in India. It is aimed at helping the oil and gas industry assess the financial attractiveness of
investment in that country. The thesis describes the geography, climate, infrastructure, and energy market
with an emphasis on how these affect upstream oil and gas industry investment. A detailed description and
analysis is given of the petroleum production sharing contract ("PSC") terms embodied in India's New
Exploration Licensing Policy ("NELP"), and demonstrates that, depending on negotiations, Government Take
under NELP terms is likely to be in the range 50% to 60% for a stand-alone petroleum development. However,
PSC terms are regressive for marginal discoveries. In particular, State royalties might hinder the development
of small or marginal discoveries and render them uneconomic. As an illustration, depending on the oil price, up
to 6 MMbbls of oil in otherwise economically viable small fields in a geological basin might be made
uneconomic and left stranded because of the effect of royalties. The thesis also analyses the economics of
developing a sample of actual Indian oil and gas fields offshore the east and west coasts of the country in
shallow and deep water. Onshore field developments are not analysed because of lack of data. All of the
offshore developments analysed are profitable based on past and current economic conditions and knowledge.
The majority are also relatively low-risk investments. Finally, the thesis evaluates the profitability of new oil
and gas exploration and development offshore the east and west coasts of India. The required minimum size of
new exploration prospects are in the range 10 to 17 MMbbls for oil prospects and 138 to 1,100 Bcf for gas
prospects assuming a low probability of success. Once a new discovery is made, the required minimum
economically developable reserves are 4 to 12 MMbbls for oil discoveries and 63 to 1,400 Bcf for gas
discoveries.