Part II of V | India’s Energy Security Series
If India’s energy dependence is the symptom, the Krishna–Godavari basin was once projected as part of the cure.
By Vivek Bhavsar, Editor-in-Chief, TheNews21
Mumbai:There was a moment in India’s recent economic history when the Krishna–Godavari (KG) basin was not just another hydrocarbon discovery. It was seen as a turning point. A signal that India, long dependent on imported fuel, might finally begin to reduce its vulnerability. That moment did not last.
In the mid-2000s, the KG-D6 block, operated by Reliance Industries, was projected to produce nearly 80 million metric standard cubic metres per day (MMSCMD) of natural gas. The expectations were ambitious. Policy planners, industry experts, and markets all believed that domestic gas production would rise significantly, reducing LNG imports and strengthening India’s energy security.
Reality unfolded differently.
Production peaked briefly, then declined sharply. Within a few years, output from KG-D6 fell well below projections, at one point dropping to less than a quarter of expected capacity. The gap between promise and performance became too large to ignore.
But reducing the story to a “failure” would be simplistic. The KG Basin did not collapse under one reason. It weakened under multiple pressures — geological, technological, regulatory, and economic.
The first challenge was geological complexity. Unlike the relatively simpler onshore fields of the past, KG Basin is a deepwater asset. Extracting gas from such depths requires advanced technology, high capital investment, and precise reservoir understanding. Initial estimates of recoverable reserves, in hindsight, appear to have been optimistic. As production progressed, the actual behaviour of the reservoir did not match early expectations.
The second issue was cost. Deepwater exploration is expensive anywhere in the world. In India, this was further complicated by pricing uncertainty. For years, the price at which gas could be sold remained a contentious issue between the government and private operators. When pricing does not reflect the cost and risk of extraction, investment slows. In the case of KG Basin, disputes over gas pricing created hesitation at critical stages of development.
The third factor was regulatory friction. Contracts, approvals, cost recovery mechanisms, and audits — all became points of contention. Instead of creating a stable, predictable environment for long-term investment, the ecosystem often appeared uncertain. For a sector that requires billions of dollars upfront with returns spread over decades, this uncertainty had consequences.
The result was visible in the data.
India’s overall natural gas production did not rise in line with earlier expectations. Despite new developments and additional blocks, domestic output continued to meet only about half of national demand. LNG imports filled the gap, increasing India’s exposure to global price fluctuations.
The KG Basin, instead of becoming a pillar of energy independence, became a reminder of how difficult that journey actually is.
At the same time, it would be unfair to place the entire burden on private operators. Public sector companies, particularly ONGC, have faced similar challenges. Their offshore projects, including those in the KG basin, have also dealt with delays, cost escalations, and lower-than-expected output.
This points to a larger structural issue.
India’s upstream energy sector — whether public or private — has struggled to convert potential into sustained production.
Exploration has not delivered discoveries on the scale required. Existing fields are ageing. New projects take time. And when they do come online, they often face pricing and regulatory constraints.
In this context, KG Basin becomes less of an isolated story and more of a case study in systemic limitations.
But if Part II ends only with diagnosis, it would repeat the same pattern you wanted to avoid — identifying problems without offering direction.
So where does the solution lie?
First, India needs to accept that deepwater energy is not cheap energy. If the country wants domestic production to rise, pricing mechanisms must reflect economic realities. This does not mean unchecked pricing, but it does require a framework that balances consumer interest with investor viability.
Second, regulatory stability is non-negotiable. Exploration and production projects operate on long timelines. Frequent policy changes or disputes discourage both domestic and global players. India’s Hydrocarbon Exploration and Licensing Policy (HELP) and Open Acreage Licensing Policy (OALP) were steps in the right direction, but their effectiveness depends on consistent implementation.
Third, technology partnerships must be strengthened. Deepwater exploration demands expertise that few countries possess independently. Collaborations with global energy firms, not just as contractors but as long-term partners, can improve efficiency and outcomes.
Fourth, data transparency needs improvement. Accurate assessment of reserves, realistic production targets, and timely disclosure can prevent the kind of expectation gaps that defined KG-D6.
Finally, KG Basin must be seen not as a disappointment, but as a lesson.
Because the real risk for India is not that one basin underperformed. The real risk is that the country does not learn from it.
India’s energy future cannot depend solely on imports, nor can it rely entirely on uncertain domestic discoveries. It must be built on a combination of both — with stronger domestic capability reducing external vulnerability.
The KG Basin showed what is possible. It also showed what can go wrong.
Between those two lies the path forward.
Next in the Series
Part III: PSUs and India’s Energy Future — Running on Legacy Fields or Building New Capacity?
Author Signature
Vivek Bhavsar is Editor-in-Chief of TheNews21. He writes on power, policy and the structural risks shaping India’s economic and strategic future.
