State-run upstream hydrocarbon company ONGC is looking at cost optimisation and profit maximisation, with crude oil prices hovering around a lower range. It is targeting 40 million metric tonnes of oil equivalent (mmtoe) of indigenous oil and gas output in the medium term with production to start in a clutch of new fields, Sushma Rawat, Director (Exploration), told Arunima Bharadwaj in an interview. Excerpts:
What are the company’s plans regarding growth in its exploration & production of oil and gas?
After a slowdown in Covid, we have really started refocusing on acreage acquisition, as well as trying to increase exploratory drilling and data acquisition. Just last year, we acquired more than 32,000 square kilometer new acreages taking our total acreage area to around 1.8 lakh square kilometer. Currently, once the OALP 9th round results are formalised, we will be up to around 2.5 lakh sq km, which is a huge leap in terms of acreage increase. Most of it is going to be offshore.
In terms of data acquisition, we are conducting non seismic as well as seismic surveys. Non seismic, we are keeping for difficult terrain of the Himalayas, or for the northeast. We are planning a lot of gravity, magnetic and aerial, geochemical surveys that have been undertaken earlier also and will be undertaken further.
Coming offshore, we have both shallow water as well as deepwater and ultra-deepwater coming up. In last two years we had several workshops, joint technical studies on potential exploration areas with international oil companies such as Exxonmobil, Chevron, TotalEnergies etc. So the risk mitigation process has already been undertaken. We know which can be the better areas for future exploration and likely discoveries.
For this financial year we are targeting to reverse the production decline and achieve more than 40 mmtoe of indigenous production and drilling around 550 wells.
How do you plan to reverse output decline from mature fields?
The decline in gas production is only momentary. We have a number of discoveries which are underway in terms of field development plans and we are also trying to bring in technology improvement. We are working on partnership for the development of modular solutions such as small LNG plants/mobile LNG or CNG plants etc for stranded discoveries
What is the update on the production from KG basin. Has the company been able to source technical partners for the Deen Dayal field yet?
It is going as per plans and the production is going to increase and by the end of this year itself, by December, we will be seeing some real changes in the numbers towards the higher side. We have just connected 6 of the 20 wells. Once the wells start getting connected, the production definitely is going to go as per the predicted numbers. We want to go a little bit deeper and grow further, because I know definitely there’s going to be oil and gas there.
Deen Dayal field is a totally different ball game. One, it is a tight reservoir, and the other, what we call the HPHT zone, or the high pressure high temperature. In that cutting edge technology is required, otherwise the project will not give you good returns, and also the volume that we might be able to get out of it may not be very high. So we are looking, we are scouting for technological partners in the Deen Dayal field.
What are the new blocks expected to start production and what is the update on their drilling operations?
We are doing something in the Tapti Daman area, new blocks are coming up. And also we are looking for a consortium for the Kutchh field discoveries which we have. In the Mahanadi basin, if we are able to ready the field development plan this year and submit it with the Directorate General of Hydrocarbons (DGH), subsequent to their and the government’s approval we can start operations in Mahanadi in a year or two. In a year’s time, we will be having better numbers of production from the western offshore than what we have today.
How does the company plan to increase overseas E&P operations through its subsidiary ONGC Videsh?
Right now, OVL has become a little bit slow in exploration overseas and is focusing more into asset acquisition. We do have three or four countries, like Colombia, Sudan, Iraq and even Vietnam where we are focusing. The focus is more on equity oil or production sharing for acreages which have already been discovered.
Does the company plan to enter into mining of offshore minerals?
Being in the offshore segment, we map out the entire seabed as well. Right now, we have not really thought of getting into seabed mining. But again, given the expertise on the drilling side, I think that might come in helpful. Especially if it is a government venture, it can be looked into.
Is ONGC looking to tie up with other domestic or international oil companies for exploration of hydrocarbon blocks? How do you think the recent amendment in the Oilfields Regulation and Development Act will help ONGC in its business?
The amendment will bring in easier clearances in terms of approvals for data acquisition as well as project development. The act also looks into different areas where the fiscals can be improved upon. Definitely it will attract operators who have not been that interested because the margins are not so enticing.
The companies are still interested. They were awaiting the ODRA amendment. And with the next round (OALP), we are trying to bring in as many people as possible. We are open to any partners who can bring in some value addition to the proposition that we ourselves are going after.
How do you plan to diversify into the renewable energy segment? When do you plan to list ONGC Green?
That will not take too long but I think some homework needs to be done. But we may come up with an initial public offering by the next fiscal.
We are already doing geothermal. Other than that, we have started mapping the sweet spots in geothermal areas. In addition to solar and wind energy, we have also targeted to set up 25 CBG plants by FY25.
With oil prices trading at $70-74 per barrel and the scrapping of windfall tax, how do you see companies’ financial growth? (ONGC registereda decline of almost 39% in its consolidated net profit for the Q2FY25 at Rs 9,878.44 crore)
The more we produce, the more comfortable we are. For us, crude prices at $75/bbl is the upper limit. Yes, we are still comfortable but we are also looking into cost optimization, maximizing our profits, and improving our project timelines. With the gas prices being good for us, a lot of projects are coming up in gas.
