The India CEO Series by S&P Global Commodity Insights is a compilation of exclusive interviews by Asia Energy Editor Sambit Mohanty with some of the leaders of the biggest energy companies in India.
Oil India Ltd. has launched an ambitious growth strategy focused on expanding its upstream acreage and enhancing its downstream operations through increased refining capacity while diversifying into strategic minerals and new energy sectors, said its Chairman and Managing Director Ranjit Rath.
While state-run Oil India is seeking partnerships to realize the hydrocarbon potential of offshore regions in Indian sedimentary basins, it is looking to sharply raise the capacity of Numaligarh Refinery, where it is also setting up a bio-ethanol plant as well as a green hydrogen project, said Rath in an exclusive interview with S&P Global Commodity Insights.
"We think continuous investments in upstream and downstream sectors, as well as alternate energy, will be key for India's energy security," Rath said.
"Oil India is aiming to double its exploration acreages in the coming years with 50% of exploration acreages in offshore regionsJaipur Investment. Currently, there is a favorable environment for investment in exploration opportunities in India by virtue of far-reaching decisions of the government to release approximately 1 million sq km of no-go areas," he added.
He said the company was looking to strengthen its position in the northeastern region, Rajasthan and Mahanadi, and boost its presence in offshore areas in deepwater specifically in the east coast and Andaman and Nicobar basin.
Rath said Oil India had already identified multiple projects and set aside a robust expenditure budget to push upstream projects following a series of policy reforms -- such as the Open Acreage Licensing Policy, or OALP; National Seismic Program for sedimentary basins, Discovered Small Fields Policy and Enhanced Recovery Policy.
He said that the exploration blocks, which had been awarded during initial OALP bid rounds are under the drilling phase. The company has started its drilling campaign in OALP acreages in Assam Shelf, Rajasthan basin and Mahanadi basin. It expects to start exploratory drilling in offshore by October, for which rig is under mobilization, he added.
"As urbanization will grow in India and overall Asia along with population, addressing the issue of energy security by ensuring accessibility and energy affordability will always be paramount. I visualize overall growth and further investment in oil and gas projects, even at the global upstream level," Rath said.
Oil India achieved combined oil and gas production of 6.54 million metric tons of oil and oil equivalent of gas during fiscal 2023-24 (April-March) -- the highest ever for the company since its inception, Rath said.
"This can be mainly attributed to significant enhancement in our drilling and workover activities with compounded annual growth rates of 27% and 17%, respectively, over the last two years. And during 2023-24, we have also drilled the highest ever number of wells as well as highest ever well interventions since inception," he said.
This, coupled with best practices in reservoir management and quick monetization of discoveries surrounding our operated areas, are helping in enhancing our oil and gas production, Rath added.
In addition, the Indian government has approved a plan to connect Oil India's fields located in Assam to the Northeast Gas Grid through a natural gas pipeline, which would help unlock the company's potential to substantially enhance its natural gas production.
Taking into account the latest developments and production trends, Oil India has set a target to ramp up production of crude oil to more than 4 million metric tons and natural gas to 5 Bcm annually in the coming years, Rath said.
According to analysts at Commodity Insights, the Category-II and III basins in India, including Mahanadi, Andaman Sea, Bengal, and Kera-Konkan, remain largely unexplored to date. The estimated undiscovered hydrocarbon potential in these four basins is approximately 22 billion barrels of oil equivalent.
In the past three to four years, global explorers have increasingly pursued major discoveries in offshore frontier and deepwater areas. However, India still awaits the entry of international oil companies with deepwater expertise to participate in the current and upcoming OALP bidding rounds for these regions.
India's oil and gas production is expected to achieve a mid-decade peak around 2027, primarily due to KG-Basin projects operated by Reliance Industries Ltd. Oil and Natural Gas Corp. However, these are old discoveries which have been in development for a while and coming online after 2020-21, they added.
Rath said that the company was also diversifying through its subsidiary, Numaligarh Refinery Ltd., which had embarked on an integrated expansion project to boost its capacity from 3.0 MMt/y to 9.0 MMt/y.Mumbai Wealth Management
The project also includes setting up a crude oil import terminal at Pardeep Port in the eastern state of Odisha and laying about 1,640 km long pipeline for transportation of imported crude oil to Numaligarh. In addition, NRL is also implementing a 360,000 t/y polypropylene project. All these downstream projects together would envisage a capital investment of about $4.2 billion, Rath said.
As a green initiative, NRL is in the advanced stages of completion of a 50,000 t/year 2G bio-ethanol plant at Numaligarh through a joint venture company called Assam Bio Refinery Private Limited, with expected commencement of production from August 2024. In addition, NRL has also embarked on a green hydrogen project and is implementing a project to put up a 17 MW alkaline electrolyzer to produce green hydrogen.
"India's energy landscape is expected to evolve with a tilt towards alternate energy, which will happen at the cost of coal and oil, as India pursues it 2070 net-zero goal -- under which renewable energy is expected to witness a consistent rise across all scenarios while oil demand will peak anywhere between 2030 to 2045," Rath said.
"Keeping all the above scenarios in mind and our overall inherent strength, OIL is expecting to achieve 5-7% of non-fossil energy in its portfolio by 2030, which would be further ramped up to 12-15% by 2040," he added.
Rath added that Oil India was also well-placed to diversify into critical minerals.
"Given the increasing importance of critical minerals and the energy transition impacting our current core business, we are also moving forward to strategic diversification in the critical minerals sector by leveraging current capabilities and knowledge," Rath said.
The company is currently assessing the critical mineral sectors to identify the areas in which it can focus and aim for collaboration with Indian as well as overseas entities, Rath added.
This week, Oil India and Khanij Bidesh India Limited signed an agreement to collaborate for opportunities in critical mineral assets overseas.
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