Cairn Oil and Gas of the Vedanta Group is planning to spend around $3-4 billion in the three to four years in the upstream sector to expand its business and fuel growth, the company’s Chief Financial Officer, Hitesh Vaid told FE in an interview on the sidelines of the India Energy Week.
“Last year we invested around $400 million on our fields, wells, our expansion, and everything else. Now with so many things lined up like ASP (Alkaline-Surfactant-Polymer) flooding expansion, tight oil expansion, deepwater, and shale. I think over the next three four years, we are looking at a $3-4 billion investment,” Vaid said.
The company, which has a fairly good number of onshore blocks under its portfolio, is also focusing on expanding its acreage in the offshore regions and acquiring more deepwater blocks.
“Our vision is to contribute 50% of India’s domestic energy production. Currently we contribute to 25% of the country’s total production and now we need to double it and acquire acreages,” Vaid said. Presently, the company has 62 blocks spread over an area of 60,000 square kilometers. Of the total blocks, five are under production while the remaining are under exploration stage.
Speaking on the company’s plans to demerge from its group company Vedanta and get separately listed on the exchanges, Vaid said the company is in the demerging process and is self-funded. “From the group (company’s) point of view, we feel that oil and gas businesses are a sizable business and should be separately listed as a pure play business rather than as part of the larger group,” the CFO said. Presently, of Vedanta’s total capex, a sizable portion of sound 40% goes to Cairn.
Other than its already producing blocks in Rajasthan, Gujarat, and Andhra Pradesh, the company will be focusing on the Northeast region with potential of huge value creation.
“Northeast is also a big opportunity for us where we have identified a lot of blocks. We are producing from a small area in Hazarigaon, but we think that in our onshore portfolio this is the place where the biggest value creation could happen,” Vaid said. Cairn now expects at least two to three wells in the Northeast region to start production in the upcoming fiscal year 2025-26.
Furthermore, with the latest amendments in the Oilfields Regulation and Development Act, the company expects more foreign players to enter the Indian upstream market and partner for its hydrocarbon blocks as service providers.
In addition to production from new wells, the company is also focusing on registering output decline from its matured fields. Vaid noted that the company hopes the declining trajectory changes next year, showcasing growth on an annual as well as quarterly basis.
“The biggest area of attraction for us is in our existing producing field, especially Rajasthan, where we have already produced around 800 million barrels. But the way to look at it is, what is there below the ground? So our key fields have a size of around 2.2 billion barrels. Any globally best company from a benchmark point will produce 50% of it, because after that it will become marginal and it will not be more economical. So best in class is 50%, we are fully confident that we will produce 50-55%,” the CFO said.
Apart from its core business in the oil and gas, the company is also expanding to exploration of coal bed methane. The company has acquired one CBM block and plans to start its operations there in the next eight to ten months.