India with its high economic growth rate and with over 15 percent of the world’s population has become a significant consumer of energy resources, especially Oil and Gas. To be able to cater to this demand, our ability to secure a reliable supply of energy resources at affordable prices will be one of the most important factors in shaping its future energy demand.

The Government has approved an investment Plan of Rs 2.3 trillion ($57.3 billion) for the state-owned oil and gas companies in the 11th Five-Year Plan (2007-12). By the end of the 11th Plan, the domestic crude oil production is estimated to increase to 206.76 million tonnes from the previous Plan production of 166.56 million tonnes. In the same period, domestic natural gas production is estimated at 255.76 billion cubic metres (BCM), as compared to 158.86 BCM in the preceding plan. The refining capacity is projected to go up to 240.96 million tonnes per annum (MTPA) in the terminal year of the current Plan as against 148.97 MTPA at the end of the last Plan.

Time and cost overruns have been a major problem affecting central sector projects i.e. projects sponsored by the Central Government. Out of the 925 projects monitored by the Ministry of Statistics and Program Implementation (MOSPI), 445 projects are delayed with respect to original schedule and 311 have overshot their budgets. The overall percentage cost overrun is reported to be 13.45%.

There are currently 122 major projects ranging from Rs 120 crore to Rs 3000 crore at different stages of implementation by the Oil Companies in the Upstream, Downstream and Midstream sectors. While completion of these projects will help intensify exploration and production activities, increase refining and petrochemical capacity and augment the pipeline network in the country, one would need to ensure that the projects are completed within time, allocated budgets and meet the quality expectations.

By 2010, public sector oil companies will spend close to $11.33 billion on expanding supplies and building new transportation networks for oil and gas. The Ministry of Petroleum also expects the demand to increase from the 176.4 million of oil equivalent (mmtoe) in 2007-08 to 233.6 mmtoe in 2011-12. This makes it critical to ensure that challenges in implementing these major projects are identified and overcome; risks pre-empted and mitigated to avoid surprises in the future.