Our growth engine will be exploration overseas

ONGC´s CMD Sudhir Vasudeva is a man in demand even ministers would like him to stay awhile in his chair. In a freewheeling interview with Shashidhar Nanjundaiah, Vasudeva looks back in satisfaction at the accomplishments of his top-ranked PSU, and tells us what to expect.

Let´s start with your super-aggressive acquisition plans overseas. ONGC Videsh Ltd (OVL) has sealed an additional 12 per cent participating interest in block BC-10 in Brazil, and you´ve also been aggressive in Myanmar. Where will this growth take ONGC in the next couple of decades?
These activities are a part of our Corporate Vision of 2001, which has envisioned to have 20 million tonne (mt) of oil by 2020. Historically, we have grown at a rate of 2 per cent. By 2011, when we reviewed the vision vis-a-vis the nation´s requirements, we decided to achieve that target by 2018. Then, in 2012, we drew up a Perspective Plan 2030ùa detailed and comprehensive document whose preparation entailed five months and a team of ONGC´s middle-level officers, supervised by key executives and finally overseen by the Board of Directors. This document has sketched out a roadmap of what we want to be in 2030 and how to reach there.

Starting with 2,000 barrels, now we have reached 26 mt in 2013,18 mt of gas put together about 46 mt of oil and gas from ONGC, about 5 mt from our share of joint ventures, and about 8 mt from OVL adding up to 60 mt.

We would like to reach 130 mt by 2030. We contribute 69 per cent of the country´s oil production and 62 per cent of country´s gas production, but only meet 22 per cent of our country´s requirement. While maintaining our position of leadership and relevance, we would like to escalate our contribution to 30 per cent of the country´s demand, which has been projected to be in the range of 450-500 mt in 2030. That means our production needs to reach that 130 mt mark. Our 2 per cent growth needs to double to 4 per cent, going forward.

This means we will need to double our pace of acquisition and production. It will be possible to produce only about 70 mt per annum from other sources in the country. The main reason is that much of the oil we produce is from old fields, and maintaining old fields is very difficult. Production will resultantly fall, so taking it from 46 to 70 mt will take a lot of efforts. The balance will need to come from OVL. Currently, OVL´s contribution is only 8 mt, and taking 8 mt to 16 mt requires nearly 14 per cent of CAGR from now onwards.

This is no easy task. We have looked at 100 properties last year and succeeded only in two. Kashegan, our biggest loss, went to the Chinese. We´re happy we beat the Chinese in the case of Brazil [more recently] the first right of refusal. So aggression is definitely required, and our growth engine will be OVL.

Are you confident that this 14 per cent growth is achievable by aggression and you know that there is that much availability of oil and gas that is up for grabs?
We are present across all the continents accept in North America. So there is no death of resources, albeit more so in unconventional spaces now including difficult terrains such as deep waters or shale.

My question was also stemming from the angle of the increasing global environmental concerns. Wouldn´t that be a stymieing factor and ´uncertainty factor´for the growth plans you have, especially in oil?
We are truly conscious of this. The kind of disruptive technology that shale has brought about in the US hydrocarbon space, we are preparing ourselves for such a technology as well. These are very important components of our prospective planù30 per cent of our topline will come from our non-exploration and pro¡duction (E and P) business: about 6.5 GW of power, 1.5 GW from solar, 2 GW from wind and about 3 GW from nuclear.

How do you foresee the availability of gas domestically? What prospects have you factored in?
Yes. We have identified six important and highly specialised areas besides conventional exploration. About 450 mt of oil is located in deep waters, offshore and high-pressure, high-temperature environments.

Does ONGC have the specific expertise needed to explore shale gas?
We have the expertise in digging horizontal wells, as in Mumbai High. We have also done hundreds of hydrofractures onshore and offshore. However, multi-stage hydrofracturing is not something we have done in many numbers, but will seek companies that have that expertise and gear ourselves up for future exploration.

Why hasn´t shale exploration been opened up to the private sector?
There are issues. This is a nomination exploration. It will be opened up through the bidding route later. In NELP, it has worked on a profit-sharing model.

Pipeline risks are said to be the bane of the oil and gas distributor´s, they can be deliberate sabotage is happening, what has been your experience and how do you address it?
We have 5,000 km of pipelines subsea and more than 12,000 km of pipeline on-land. Even with all the problems, pipelines are still best most efficient and cheapest mode of transporting oil and gas.

What new technologies in pipelines are available, such as monitoring systems, and what is the level of adoption?
We were probably the first ones to adopt intelligent pigging of pipelines with which we understand the internal health of pipeline, from point to point they keep on measuring the ovalness of the pipeline, corrosion levels, size and diameter. Similarly, internally coated pipelines have come into use we now use polymer instead of enamel. The method of laying pipeline has changed. SCADA, fibre optic cables, etc have emerged as well. As the industry evolves, we are probably the first to adopt the change.

How hopeful are you of the Iran-India pipeline? Does it appear in your 2030 plan?
The requirement of gas today is 197 million cu m per day, and will become 467 million cu m per day by 2030ùa CAGR growth of hydrocarbon demand between 3.5 per cent to 6 per cent, as against the world demand of 1.5 per cent CAGR. The TAPI pipeline is going to give us 38 million, even if it all Iran pipeline comes, how much will that give us?

There have seen some serious interest in Myanmar. Is there a pipeline in the offing between Myanmar and India?
It has been attempted before, and hasn´t happened, but the possibility always exists.

The Foreign Hand
Oil and Natural Gas Corporation (ONGC) is the top performer among Central public sector units.

Lately, ONGC Videsh Ltd (OVL), the PSU´s overseas E&P arm, has been in the news for its aggression in Brazil, Ecuador, Russia and fields in other countries, competing chiefly with China. OVL has set its eyes now in Vietnam for exploration of crude oil.