New Indian Express: Unconventional Resources May Usher in a New Era of Energy

Sudhir Vasudeva, Chairman, Oil & Natural Gas Corporation, feels exploring international regions and unconventional resources is the way forward for India’s energy sector. Excerpts from an interview with Pallavi Rebbapragada:

You have written to the government saying that  disproportionate rise in fuel subsidy burden poses a threat to output growth and international acquisitions. Explain this need for government intervention?

Our net realization in FY13 was as low as $47.85 per barrel and $42.56 per barrel in the first half of FY14, while our cost of production of crude oil in FY13 was $40.10 per barrel. With the absence of a remunerative price, it will be impossible to maintain production level from the ageing brown fields and, in some cases, will lead to negative returns. ONGC also has a series of deep-water and marginal field development projects that would not be feasible at a price less than a net of minimum of $65 per  barrel. Thus, we have been continuously asking the government for a reasonably remunerative price.

ONGC scouts for new areas internationally. What does this achieve?

ONGC Videsh (OVL), ONGC’S overseas arm, strengthens the energy security of the country and reduces dependence on energy imports to a great extent. OVL is participating in 33 projects in 16 countries, including Azerbaijan, Colombia, Iraq, Kazakhstan, Libya, Myanmar, Russia, Syria and Vietnam. It is currently producing 160,000 barrels of oil and oil equivalent gas per day and has total oil and gas reserves of about 433 MMtoe, as on March 31, 2013. In its Perspective Plan 2030, ONGC has set a goal of producing 130 million tonne of oil and oil equivalent gas per year by 2030; OVL is slated to fetch 50 per cent of this. Recently, it has clinched two good deals. First is the acquisition of about 16 per cent stake in Rovuma Offshore fields in Mozambique Area 1 at an envisaged investment of $4.12 billion. Second is a  2.72 per cent participative interest in ACG (Azeri, Chirag and Guneshli) fields in Azerbaijan. MORE