The government wants India’s crude oil imports, which stood at 189.43 million tonnes, worth $112.74 billion, in FY15, to be reduced by 10% by 2022 and make it half by 2030. In order to achieve this ambitious target, ONGC Videsh Ltd (OVL), the overseas subsidiary of ONGC, would have to play a pivotal role. OVL, which has so far invested more than $23.6 billion in hydrocarbon assets overseas, has 36 projects in 17 countries under its ambit. Of this, 13 are producing projects, another four are at development stage, while exploration programme are going on in 17. The state-owned firm contributes nearly 14% to India’s oil and 12% of natural gas production. In the past two-and-a-half years, OVL has made new acquisitions to the tune of $ 4 billion. On August 1, Sudhir Sharma took over as director (exploration) of ONGC Videsh. Sharma, who was previously country manager and legal representative for OVL in Colombia, has a challenging road ahead to ramp up the output at existing projects and at the same time expand the explorer’s portfolio. In an interview, Sharma discusses the company’s plans with FE’s Siddhartha P Saikia. Edited excerpts:
How do you see the road ahead for OVL in increasing the country’s hydrocarbon output?
ONGC Videsh has a judicious mix of assets under various stages of exploration, development and production in its portfolio. The company has a two-pronged strategy where we look at acquiring assets that are producing or nearing production stage, and for long-term growth; we look at prolific exploration projects. Following this strategy, in the recent years OVL has bought stakes in the Azeri, Chirag and Guneshli fields in the Azerbaijan; additional 12% in Block BC-10 at Campos Basin in Brazil; 6% stake in the Rovuma Area 1 offshore block in Mozambique from Videocon and direct 10% stake in the same Rovuma Area 1 from Anadarko. These assets would help ONGC Videsh in increasing the output.
OVL has forayed into newer areas recently. How do those projects add to the company’s portfolio?
We have won exploration blocks in Bangladesh, Myanmar and New Zea-land in the last two years through bid rounds. OVL manages its portfolio efficiently and has exited some assets in the past such as in Cuba and Nigeria, since we did not get positive results but continue to hold on to our portfolio in countries where the projects are expected to have substantial potential and are commercially beneficial.
OVL has found prolific gas reserves in the Farzad-B field of Iran. Where do we stand now?
Iran is a changed story now. Sanctions are expected to be lifted in due course.
Crude prices have fallen drastically from mid-2014. Do you think it is the right time to buy equity in hydrocarbon assets?
It is a misconception that when oil prices are low, assets are freely available at cheaper valuations for sale. Below a certain threshold of the prices the global economy starts getting adversely affected, which discourages M&A deals.