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OIL INDUSTRY CHASING THE DREAM OF THE VISIONARY 2017 2022 2010 E&P Strategies to Cut Oil Import by 10% by 2022 August 12, 2017 Gulmohar Hall, India Habitat Centre, Lodhi Road, New Delhi Supported by A Seminar Organized by Ex-ONGC Executives Welfare Association, New Delhi
Foreword Jauhari Lal President Ex-ONGC Executives Welfare Association It gives me great pleasure in greeting all the delegates, invited guests, chairpersons and Speakers of this Seminar on E&P Strategies to cut oil import by 10% by 2022 on 12th August, 2017. It is for the 1st time that Ex-ONGC Executives Welfare Association has organized such a program on this critical issue. It is said that “Once ONGCian will always remain ONGCian” i.e. even after retirement from the service, they do not lose touch from Oil industry but watch very closely the development taking place in the Industry. Call given by the Honorable Prime Minister Shri. Narendra Modi ji at Urja Sangam at Vigyan Bhawan on 27th march, 2015 to cut Oil import by 10% by 2022 has become a sacred goal to achieve by all concerned. In order to achieve this target, apart from Oil Industry other agencies engaged in service sector and non conventional energy sector have also geared up. India is importing about 80% of Oil to meet its domestic requirements and its financial implications had been the focus of Government many times in formulations of its Annual Budget. Government had not left to the Oil companies and others to achieve this goal but they have also prepared strategies as to how to facilitate to achieve this by way of formulating new policies and other initiatives. Minister of state, in charge of Petroleum and Natural Gas Shri. Dharmendra Pradhan while chairing a min- isterial session on current economic strategies in Indian oil and Gas sector at the 22nd World Petroleum Congress at Istanbul, Turkey pointed out that the energy consumption is expected to grow to almost double by 2035 and India is the only country where the demand continuously rises for more than a decade. He further mentioned the resolve of Prime Minister to cut oil import dependence by 10% by 2022. India is the 3rd largest consumer of Oil and Petroleum products. I am confident that Articles contained in the Souvenir will be quiet informative, educative and interesting. I would like to convey my thanks on behalf of Association to ONGC, OIL, OVL and other companies who have supported this Seminar and publication of this Souvenir. Though all the members of our Executive commit- tee had played their part for the success of the Seminar, I am personally thankful to Mr. Ashok Varma, Vice President of the Association and Convener of this Seminar for involving himself from beginning to end to ensure that each and every aspect is taken care properly for success of Seminar and also publications. Jauhari Lal
Contents Sl. Description Page No Ex-ONGC Executives Welfare Association 1. Message Executive Committee D K Sarraf................................................................................................ 7 Utpal Bora................................................................................................ 8 • Dr. Jauhari Lal Ex- Member / Director (HR) S K Manglik.............................................................................................. 9 President B C Bora................................................................................................ 10 • A K Hazarika R S Sharma............................................................................................11 Ex Director (On-shore) 2. Program Schedule................................................................................. 13 Vice President • Ashok Varma 3. Strategies of ONGC to cut import by 10% - Roadmap for future Ex Director (On-shore) (By Dinesh K Sarraf)............................................................................. 14 Vice President • K C Gupta 4. Towards reduction of import dependency of Oil and Gas by the year Ex-GGM (F&A) 2022: OIL’s roadmap General Secretary (By Utpal Bora)...................................................................................... 19 • Ranjit Singh 5. Low Oil Price and India’s Import Reduction Ex-Chief Engg. ( Drilling) (By Narendra K Verma)......................................................................... 22 Joint Secretary • Shiv Dayal 6. Experience and future plans for 98/2 Ex-DY. Manager (F) (By Alok Nandan)................................................................................... 26 Treasurer • Kanchan Kumar 7. Journey 2022 - Key Milestones to Cross By Ex-E.D. (Finance) (P Elango).............................................................................................. 27 Chief Editor 8. Presenters............................................................................................. 28 Executive Members 9. Session Chairs & Panelists .................................................................. 30 10. Enhancing Oil and Gas Exploration in NE India • B S Talwar Ex-ED (MM) (By B C Bora)......................................................................................... 32 • K N Khan 11. E&P Strategies to cut down the oil import by 10% by 2022 Ex-Dy GM (Geol.) (By C R Prasad)..................................................................................... 34 • S K Bakshi Ex GM (Logistics) 12. Strategies for E&P to Reduce India’s Import Dependence • Jaswant Singh (By R S Sharma).................................................................................... 39 Ex-Manager (P& A) • R K Mehta 13. E&P Strategy to cut oil imports by 10% by 2022: ONGC’s Imperatives Ex-Chief Manager (HR) (By T K Sengupta)................................................................................. 42 • H S Chauhan 14. Comments on draft National Energy Policy Ex-Chief Manager (HR) (By M R Pasrija)..................................................................................... 47 • Mrs Meena Kapoor Ex-Manager (HR) 15. Maximizing the domestic production of oil and gas and supplementing the energy requirement of the country from other resources Views expressed in this publication (By D N Awasthi).................................................................................... 49 are those of the authors
Message Dinesh K Sarraf CMD, ONGC At the very outset, I must congratulate the Ex-ONGC Executives’ Welfare Association for bringing out a timely publication focused on the one of the most relevant topic in the domestic hydrocarbon sector in recent times - that of import reduction. It is further encouraging to know that seminar dedicated to the same issue is also being organized for the larger benefit of the energy industry professionals. Our country today is positioned at a crucial juncture as what we decide today and how we act subse- quently on those decisions will have a lasting impact on the growth that the country will witness in the years to come. The political for growth that the country possesses is enormous and, arguably, next to none in the global arena in terms of human resources pool, talent and resourcefulness. In this context, the country’s high degree of import dependence, particularly in respect of crude oil, becomes a matter of serious concern as it has the potential to constrain our development efforts. Fo- rex outgo on crude oil over the last 10 years cumulatively stands at close a trillion dollars. Imports of natural gas is also on the rise. Even accounting for the steady growth of renewables and improvement in fuel or energy efficiency, demand for both oil and gas will register strong gains year on year, at least in the medium term. The Hon’ble Prime Minister’s call to achieve a 10% reduction in hydrocarbon imports by 2022 is a landmark announcement and depicts a proactive and direct approach to addressing a longstanding problem. ONGC is congnizant of its responsibility in this mission and, toward that end, has devised a roadmap to align its short, medium and long term production strategies with the 10% import reduc- tion initiative of the Government. I think the next few years in the domestic oil and gas sector are going to be quite exciting and full of possibilities. Even with the persistence of low oil and gas prices the sector remains buoyant and, unlike globally, investment has not slowed down. The Hon’ble PM’s vision of 10 percent import reduction provides a further shot of motivation and drive to the industry as a whole. I am certain the Seminar will be well attended and prove to be immensely useful to all the participants. I wish it will all the very best. Dinesh K Sarraf 9
Message Utpal Bora CMD, Oil India Ltd. It gives me immense pleasure to learn that the Ex ONGC Executive Welfare Association (EOEWA), Delhi is holding a seminar with the theme ‘E&P Strategies to cut down Oil import by 10% by 2022 at New Delhi on 12th August 2017. The Seminar will address an extremely relevant topic of national priority and will involve interaction and sharing of views of oil and gas sector professionals, past and present. The experience and expertise of members of EOEWA who, over the years, have contributed significantly to the growth of ONGC as well as the country’s oil industry, will be one of the key feature in the deliberations. It is also hertwarming to know that EOEWA would be commenmorating the occassion with the publication of a souvenir. My compliments to EOEWA Delhi in their endeavor and an confident that the event will witness very productive interaction and exchange of ideas. I wish the seminar all the success. Utpal Bora 10
Message S K Manglik Former CMD, ONGC I am glad to know that Ex-ONGC Executives Welfare Association is organising a seminar on E&P Strategies to cut oil import by 10% by 2022. E&P companies in India are striving hard to increase production of oil and gas. Improving recovery factors is an area of focus. Technological improvements in drilling and subsurface technology have enabled E&P industries to locate and produce bypassed oil . It is now time for India to focus on oil production from non-conventional resources . In addition, there is need for E&P companies to also focus on energy resources other than above. Some of these would possibly be discussed during the seminar. My good wishes to the organisers and participants. S K Manglik 11
Message B C Bora Former CMD, ONGC I compliment EOEWA for organizing an one day workshop on 12th August 2017 on the theme, “E&P Strategy to cut down oil imports by 10 percent by 2022”, and for bringing out a Souvenir on the same theme for the Annual Day function of the Association scheduled for 19th August 2017. With the 5 to 6 percent projected future annual growth in demand for oil in the business as usual scenario, achievement of this ambitious target will necessarily require a multi di- mensional strategy with strict, well defined and measurable mile stones extending to all the components, such as conservation, efficiency improvements, conversions, renewable energy enhancement and increased domestic production of oil and gas, amongst others. These efforts, which obviously have to be fine tuned from time to time as we go along, have very high significance, as very appropriately indicated by prime ministerModiji, in defining the possible road map to achieve 50 percent reduction in imports by 2030. I am more than sure that the workshop and the publications in the souvenir will help to provide useful inputs to the government to have a re-look at the strategy to plug the loop holes, if any. I convey my best wishes to the organizers. B C Bora 12
Message R S Sharma Former CMD, ONGC I am glad to learn that Ex-ONGC Executives’ Welfare Association is bringing out a special issue of its Souvenir on the occasion of 61st ONGC Day. I am further delighted that taking a national call for reducing import dependency for Oil & Gas, they are also organizing a one day seminar on the subject on 12 Aug-17. I am sure this forum will generate thought provoking deliberations and get views of eminent industry officials and experts to find optimal solutions to enable the national economy to meet its energy needs and grow constantly at the intended GDP growth rate in two digits. I am pleased to convey my greetings and best wishes to the Association for all these laud- able endeavors. R S Sharma 13
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E&P strategies to cut oil import by 10% by 2022 Seminar by Ex-ONGC Executives Welfare Association India Habitat Centre, Lodhi Road, New Delhi Saturday, August 12, 2017 PROGRAM 0900 - 0930 Registration & Tea 0930– 1100 Inaugural session 0930– 0935 Welcome Address - Dr. Jauhari Lal, President of Association 0935– 0950 Presentation on the theme–Shri R K Sinha, Chief Executive and Technical Officer to DGH 0950– 1010 Plans and Strategy of OVL Address –Shri N K Verma, MD OVL 1010– 1030 Plans and Strategy of OIL Address –Shri Utpal Bora, CMD-OIL 1030– 1050 Inaugural Address –Shri D K Sarraf, CMD-ONGC, Chief Guest 1050– 1100 Vote of Thanks –Shri A K Hazarika, Vice President of Association. 1100– 1130 Tea 1130 – 1300 1st Technical Session - Chair Person: Shri V P Mahawar, Director (Onshore) ONGC Ltd. 1130– 1150 Strategies and new technologies adopted –Shri Sudhir Mathur, CEO Cairn India 1150– 1210 Plans and Prospects of HOEC–Shri P. Elango MD, HOEC 1210– 1230 Enhanced Oil Recovery–Shri Garud Sridhar, Schlumberger 1230– 1240 Questions and Answers 1240– 1300 Chair person’s observations and remarks 1300 – 1400 Lunch 1400 – 1530 2nd Technical Session – Chair Person : Shri T K Sengupta, Director (Offshore ) ONGC Ltd. 1400 – 1420 Experience and future plans for 98/2– Shri Alok Nandan Executive Director, ONGC 1420 – 1440 Deep water technologies and strategies –Shri Ravi Addala, Baker Hughes - GE 1440 – 1500 Why India would not regret oil import in the long run–Shri Deepak Mahurkar, PWC 1500 – 1510 Questions and Answers 1510 – 1525 Chair Person’s observations and remarks 1525-1550 Tea 1550 – 1700 3rd Technical Session: Chair Person : Shri Shashi Shankar, Director (T&FS) ONGC Ltd. 1550 – 1605 Shri Ajay Kumar, MD BPRL 1605 – 1620 Shri Chandra Shekhar, Director OIL 1620 – 1635 Shri Amit Khera, Partner, Mckinsey & Co. 1635 – 1645 Questions and Answers 1645 – 1700 Chair Person’s observations and remarks 1700 – 1800 Panel Discussion - Chair Person Shri S K Manglik,Former CMD, ONGC 1700 – 1710 Shri B C Bora, Former CMD, ONGC & OIL 1710 – 1720 Shri C R Prasad, Former CMD, GAIL 1720 – 1730 Shri R S Sharma, Former CMD, ONGC 1730 – 1740 Shri Atul Chandra, Former MD, OVL 1740 – 1750 Shri R S Butola, Former CMD, IOC. 1750 – 1800 Chair Person’s observations and remarks 1800 Vote of Thanks Ashok Varma Vice-President of Association 13
Strategies of ONGC to cut import by 10% - Roadmap for future By Dinesh K Sarraf He has experience of over three of extra ordinary growth of com- and half decades in the oil and pany and strategic approach to oil gas industry, having started his oil and gas exploration and produc- Dinesh K Sarraf and gas career in Oil India Ltd. He tion. In the present environment CMD, ONGC joined ONGC in 1991 and handled when global oil and gas prices various key assignments at corpo- have plummeted, ONGC under his Dinesh K Sarraf, 59, is the Chairman & rate offices. He was elevated to the leadership is strongly emphasising Managing Director of Oil and Natural post of Director (Finance) in ONGC on adoption of the best operation- Gas Corporation Ltd (ONGC), India’s Videsh in 2005 where he served till al & cost practices and appropri- most valuable Maharatna public 2007. During this period, ONGC ate oil and gas technologies, for sector enterprise and one of the most Videsh made significant acqui- realisation of greater operational premier E&P companies in the world. sitions in Syria, Brazil, Colombia, efficiencies. As Chairman, ONGC ONGC is one of the most valuable Venezuela, Cuba, Egypt and Myan- Group of Companies, he primarily companies of India andone of the mar. In December 2007, he joined focused on building a diversified Fortune’s Most Admired companies in back ONGC as Director (Finance). group portfolio of Oil and Gas the world. Exploration, Production, Refining, In 2011, Mr. Sarraf went back Pipelines, Petrochemicals, Power, Mr. Sarraf is also the Chairman of to ONGC Videsh assuming the Renewables and Infrastructure ONGC Videsh Ltd, operating across charge of Managing Director. As development. With a focussed ap- 17 countries, Chairman of Manga- MD he transformed ONGC Videsh proach, ONGC’s all first integration lore Refinery & Petrochemicals Ltd into an aggressive growth engine projects have been commissioned (MRPL) and four other ONGC Group for ONGC Group by clinching and are performing remarkably companies (OPaL- ONGC Petro-addi- many high value deals within well. tions Ltd, OMPL – ONGC Mangalore a short span of time. He was Petrochemicals Ltd, MSEZ- Mangalore instrumental in several oil and Under his leadership, ONGC has SEZ Ltd, and OTPC- ONGC Tripura gas acquisitions in Mozambique, committed itself to the develop- Power Company Ltd). Brazil and Azerbaijan by ONGC ment of the country’s deepwater oil Videsh to ensure energy security and gas resources with an invest- Mr. Sarraf graduated in Commerce for the country. In March, 2014, he ment of over $5 billion, a testament from Shri Ram College of Com- joined back ONGC as its Chairman to his strategic decision-making in merce of Delhi University and did & Managing Director. As CMD, pursuit of domestic energy security. his post-graduation from the same ONGC he has been focussing ONGC’s foray into the deepwaters University. He is an associate member primarily on augmentation of Oil is all set to considerably reduce of the Institute of Cost and Works and Gas production from domestic hydrocarbon import dependence Accountants of India and the Institute assets. and help the nation move closer to of Company Secretaries of India. Mr. D K Sarraf, is the driving force being a gas based economy. 1. Energy Demand - India mover of growth, the country’s en- mestically produced crude oil, our ergy demand has also registered an imports have risen, and at a great- Energy is a vital input to any coun- annual increase of 5.9 percent dur- er pace (CAGR 7.4 percent), in the try’s developmental goals and eco- ing last 10 years. same time-period. As a result, our nomic aspirations. Indian economy import dependency for petroleum has grown faster than any other In terms of oil requirements, con- has been increasing with the rate big economy of the world during sumption of petroleum products of growth of the economy we are last few years. Its rate of growth has recorded an annualised 5 per- aspiring, Make-in-India initiative of has been 7% average during last 10 cent demand growth. However, on the Hon’ble Prime Minister of India years. Energy being the basic prime account of limited availability of do- and our country’s per-capita energy
consumption being less than one- 4. Promoting alternate fuels/ re- mid-2014 and the emergence of a third of the global average, India’s newables consensus of a ‘lower for longer’ hydrocarbon demand in the dec- 5. Improvement in Refinery pro- outlook on oil prices at least in the ades to come is slated to increase cesses medium term, ONGC has adopt- even at a faster pace. But the development of this unique ed a counter-cyclical approach to chapter in our domestic oil and gas projects and investment plans. Not 2. Call for 10% import landscape has taken place even as only has it sustained its capex lev- reduction the oil and gas markets are reeling els at around the same levels (Rs from a persistent period of low oil 28k-30k Cr) for the last three years, The growing concern around this prices. Global oil and gas compa- it has also embarked upon, argua- increasing dependence on ener- nies have responded to this sus- bly, one of its most aggressive and gy imports found articulation dur- tained bear market through deep focused period of portfolio consol- ing the Urja Sangam held on 27th capex cuts, aggressive layoffs and idation through significant project March, 2015 at New Delhi, when the portfolio optimization through di- decisions. Hon’ble Prime Minister of our coun- vestment of non- core assets. As per try set a target of 10 percent reduc- certain estimates, total capex cuts It must be noted that most of tion in our hydrocarbon imports on account of this depressed mar- ONGC’s domestic production dependence by 2022. It marks a ket is to the tune of a trillion dollars comes from a mature portfolio of remarkable shift in attitude towards over a period of 5 years. A period of fields that are of at least 30 years a longstanding problem of the do- low oil prices bodes well for an im- vintage. These fields have crossed mestic energy landscape – from port-dependent country like ours: their plateau and entered the natu- reactive to proactive. It was impor- forex outgo on account of crude ral decline phase since past several tant that higher reliance on external imports dropped by over 50% from years which is a natural phenome- energy sources seriously imperils around $143 bn in FY’2013-14 to non in the producing life of oil & the country’s energy security which under $70 bn in FY’2016-17. How- gas fields. A proactive approach to consequently constrains and affects ever, when it comes to bolstering targeting production enhancement our growth outlook as well. energy security there is no replace- was the need of the hour – one ment for higher indigenous sup- that not only ensures the relevance In order to take this vision forward, plies as it mitigates to a great extent and preeminent stature of ONGC Hon’ble Minister of Petroleum & the vulnerabilities that arise out of is maintained in the future energy Natural Gas constituted a com- the country’s exposure to volatility landscape of the country but also mittee under the Chairmanship of in the external or international mar- caters to the larger goal of deliver- Additional Secretary, MoPNG on kets. This makes the Hon’ble PM’s ing on the OM’s goal of 10 percent “Preparing a roadmap to reduce vision statement of import reduc- import reduction. import dependency in energy by tion, or greater self-sufficiency in 10% by 2021-22”.Subsequently, Re- hydrocarbon, a remarkably fore- Hence, a two pronged strategy has port of the Committee on Roadm- sighted one – one that looks factors been chalked out by ONGC man- ap to reduce import dependency in the larger picture even as market agement not only to sustain but in Energy by 10% by 2021-22 was conditions did not necessarily war- also increase production of crude prepared in consultation with vari- rant such a mission. oil and natural gas i.e through rede- ous stakeholders and circulated in velopment of existing brown fields end – 2016.The committee estimat- 3. Roadmap of ONGC – and monetisation of new reserves ed that India’s import dependency Augmentation of Oil and through development of new fields. on oil and gas can be reduced by Gas production 10% by 2021-22 as compared to 4. Projects for monetisation the business-as-usual scenario by As the country’s premier Oil and of reserves – a snapshot following a five-pronged strategy Gas Company and a Maharatna on reduction of imports if the as- PSU, ONGC is well seized of the 4.1 During last three financial sociated initiatives required to be priorities of the domestic energy years (FY’15 to FY’17), a total taken are implemented timely and scenario and the urgency required of 15 mega development pro- required inter-ministerial synergy is to address the issue of stagnating jects (including 8 brownfield accomplished effectively. The five- domestic output, grossly insuffi- re-development projects and pronged strategy encapsulates, cient in the face of our rapid energy 7 greenfield development 1. Increasing production of domes- demand growth. IEA projects more projects), were completed tic crude oil and natural gas than doubling of the country oil re- with a total investment of Rs. 2. Enhancing energy efficiency and quirements and more than tripling 54,373 Crore. The envisaged conservation of its gas needs by the year 2040. production from these pro- 3. Demand substitution Despite the crash in oil prices in jects is expected to be around 15
(gas), while first oil is project- ed to realize in mid-2020. 4.4 Although approving all these projects at a time when the oil and gas prices are so low was quite challenging but it was possible with the support of all the stakeholders. ONGC is of the view that this is the best time for developing oil and gas projects for long term sustainability. The price of oil field services, equipment, LSTK costs are low due to lower development activities globally in E&P. At the same time, more reliable vendors are now willing to implement ONGC’s major offshore pro- jects ensuring faster project implementation with lower 87 MMT of oil and 56 BCM of the Board with a budget of risk of time over-runs. It is also gas. over 34,000 Crore. This is the expected that that Govern- highest-ever investment in a ment would review gas prices These projects contributed single project in the history and would eventually dereg- about 22% to ONGC’s oil and of ONGC. This decision was ulate gas pricing and market- 16% to ONGC gas production taken at a time when most of ing. Government now fully from nominated blocks dur- the global major E&P compa- understands that the current ing FY’17(Oil 4.985 MMT, Gas nies were cutting Capex on gas prices are not viable and 3.537 BCM). new projects due to subdued ONGC incurs significant un- oil and gas prices. Once op- der-recoveries in its gas busi- 4.2 Besides above, 17 more de- erational, this project will not ness. velopment projects with a only significantly bolster the capital investment of over Rs. country’s energy security but 4.5 Some of the projects have 76,000 Crore were approved would also have a compound- already started giving pro- during last three years which ing effect in terms of contri- duction, increasing our gas are under various stages of bution to Indian exchequer, production by about 5% in execution.These projects employment generation, 2016-17 over the past year would enable monetisation technological breakthrough and gas production is expect- of about 69.24 million tonnes and opening a new avenue to ed to go up by another 10% of crude oil and 118.44 BCM Deep water production in In- during 2017-18. As a result of natural gas. The collective dian waters. of progressive completion of production from these pro- various projects, significant jects is expected to be 22.24 This project would monetise jump of 11% in Gas produc- MMT of O+OEG during the 45.49 MMT of crude oil and tion has already been seen financial year 2020-21.This 25.87 BCM of natural gas with during Q1 of FY’18 vis-à-vis amounts to 50% of crude oil annual peak production of Q1 of FY’17 . and natural gas production 15.57 million cubic meter of of ONGC from its nomination gas per day (MMSCMD) and 4.6 The company is also now ac- blocks during FY’17. 78,000 barrels of crude oil per tively working on monetising day, which is about 24% and the Kutch-Saurashtra discov- 4.3 Most significant among these 17% of ONGC’s current (FY’17) eries where we have made projects is the development gas and crude production re- significant progress in terms of fields under Cluster 2 of spectively from the nominat- of accumulating several dis- our deepwater block in east- ed blocks. Production from coveries to gather confidence ern offshore – KG-DWN 98/2 the project is expected to that these can be monetised – which was approved by commence from March 2020 in a clustered approach. We 16
expect this to initiate pro- duction in next 3 years. This would be the eighth basin of India to start production. Cauvery basin was the sev- enth (last) to start production, more than 30 years back. 5. Project strategy aimed towards 10% import reduction To achieve the goal of 10 percent import reduction, ONGC, on its part, has devised a roadmap to align its short, medium and long term production strategies with the 10% import reduction initiative of the Government. Adopting a more proactive approach, the Long Term Oil and Gas Profile (LTOGP) of the company has been revisedto align with the primary target of reducing the country’s import dependence. “Long-Term Oil and Gas Profiles – 2017 (LTOGP-2017)”, have been derived out of an exhaustive re- view of all current operations and future plans for ONGC owned and operated fields in keeping with the present production scenario and as per the predicted/ envisaged profile. Strong focus is now accorded to all past un-monetized discoveries, current exploration successes, on- going projects and upcoming plans of development in terms of their contribution to meeting the target proval on these hydrocarbon production potential is being es- of import reduction. discoveries is already taken and timated along with formulation Oil & Gas profile in this category of the conceptual development ONGC has 577 hydrocarbon discov- is generated based on ongoing/ plan/ feasibility. It is expected eries as on 1st October, 2016. Most approved schemes and released that investment approvals would of these are already in production locations. be obtained in respect of these and action to monetize the remain- c. Concept-1: Discoveries where discoveries generally by 2019. ing discoveries are at different stag- scheme/ investment is under A time frame has been fixed for es of implementation depending approval and it is expected that approval of development plan for on the nature of discovery. investment approval in respect each un-monetized discovery. The These discoveries have now been of these schemes would be ob- exercise has addressed monetiza- classified into various categories, as tained within calendar year 2017. tion plan of all the discoveries of stated below, d. Concept-2: Discoveries where ONGC, barring about 42 discoveries a. Base profile: Already monetised scheme/ investment is under which are isolated/far from existing and in production discoveries conceptualization and it is ex- infrastructure, or have very low vol- and production profile is gen- pected that investment approv- umes or are located in difficult ar- erated on existing hydrocarbon al in respect of these schemes eas. These are categorized under wells inventory, as on 01.04.2016. would be obtained by 2018. Concept-3. Further, efforts are un- b. Firm Activity: Investment ap- e. Concept-3: Discoveries for which derway to explore the possibility of 17
moving Concept-3 fields into high- represents production from our and more complex. ONGC like oth- er categories. legacy and existing streams – base er global majors is managing sever- – with the rest depicting new oil al projects at a time which need to Once on stream, projects under and gas additions). be prioritised not only on financial Concept 1, 2 & 3 would produce oil goals and risks but also increasingly and gas with peak oil of 6.5 MMT It is pertinent to mention here based on the availability of scarce during 2023-24 and 18.3 BCM gas that work along these formulated resources like engineering talent. during 2025-26. pathways must also move expe- To overcome this, ONGC has set up ditiously in order to capitalize on a dedicated Project Monitoring Of- As per the envisaged plan of pro- the reduction in the service and fice (PMO) with modern tools and ject advancement through the operating costs prevailing as a re- hardware to monitor projects across five year period of 2017-22 tar- sult of the cost deflation in the oil- organisation based on Stage Gate geting the overarching goal of field services in the downturn. The concept. Decision checkpoints, or minimizing the country’s import window to do the same is brief. stage gates, mark the end of formal dependence, ONGC’s oil and gas Eventually, once accomplished, project phases and to move from production in the terminal year these projects will testify what we one stage to the next. 2021-22 stands at 27.12 MMT and have always championed – that 42.71 BCM respectively, of which the long-term gains from a prom- Diversified portfolio of oil and gas contribution from new oil and gas ising oil projects will finally always projects coupled with value addi- accruing from ongoing develop- outweigh the short-term pains of tion projects with a focus on mission ment schemes and planned/pro- a downcycle. of “Make-in-India” would not only posed projects contribute 52% bring constant revenue streams to and 69% respectively. Projected As activity ramps up and more oil the balance sheet of the company production of our future domestic and gas production moves to fron- but would also position ONGC as a oil and gas portfolio is also rep- tier and unconventional resource Major Integrated Energy company resented for reference (sea-blue areas, projects are becoming larger in near future. Make in India - Oil and Gas Sector 18
Towards reduction of import dependency of Oil and Gas by the year 2022: OIL’s roadmap By Utpal Bora The nation has been relentlessly ited(OIL) is mandated to play a piv- pursuing E&P efforts towards find- otal role in achieving this target by ing and developing hydrocarbon the strategy of increasing domestic within the country for reducing its oil &gas production.As part of the dependency on imported oil and strategy OIL has prepared a road Utpal Bora gas. Further impetus to these ef- map with its present portfolio of CMD, (OIL) forts was received when, during existing domestic fields/assets by the inauguration of ‘Urja Sangam adopting a number of key initiatives Sri Utpal Borais the Chairman and 2015’, Hon’ble Prime Minister high- for achieving the goal of reducing Managing Director of Oil India lighted the current import depend- the dependency on import in ener- Limited (OIL), India’s second largest ency of the nation and emphasized gy by 10% by 2021-22. National E&P Company. on working together to achieve energy security of the country. All History of Oil India Limited Prior to taking up leadership of stakeholders were urged to in- OIL, Sri Bora has had a rich and crease the domestic production OIL’s legacy is deeply rooted to varied experience of over 33 of oil and gas to reduce import the pioneering efforts of oil ex- years in the E&P Sector. Sri Bora dependence by 10% by the year ploration in India- dating back to has served in various capacities 2022, when India celebrates its 75 the 19th century - in the dense at ONGC Ltd. including OVL,the years of independence. By achiev- jungles of Upper Assam in the ex- international branch of ONGC. He ing the target, the citizens would tremenorth-eastern cornerof our had been Executive Director- As- pay a true homage to the freedom country. The first commercial dis- set Manager of ONGC’s Mehsana fighters who sacrificed their lives covery of crude oil in the country Asset and is credited with turning for the sake of the country. was made in 1889 at Digboi, by around ONGC’s highest produc- the Assam Railway and Trading Co. ing onshore Asset and steering it For taking this vision forward in a Ltd. Albeit with a very low produc- towards newer heights. Under his highly focussed way, a committee tion, Digboi still retains the dis- leadership the Asset received the on “Preparing a roadmap to reduce tinction of being the world’s oldest Best Onshore Award of ONGC in the dependency on import in ener- continuously producing oilfield. 2015. At OVL he was specifical- gy by 10% by 2021-22” was consti- Subsequently the AOC (Assam Oil ly engaged in framing of policy tuted by Hon‘ble Minister of State Company) was formed in 1899 to directives and its implementation, (I/C), P&NG.The committee has look after the running of the oil co-ordination with the NOC of alreadychalked out a five-pronged business in this area. In 1953, the Venezuela, PDVSA, under projects strategyto achieve this goal which- first oil discovery of independent like PetroCarabobo and San broadly comprises of increasing India was made at Nahorkatiya in Cristobal. domestic production of oil and the state of Assam,very near to gas, promoting energy efficiency Digboi,which was followed bydis- Sri Bora holds a degree of Bache- and conservation measures, giv- covery of oil at Moran in1956. In lor of Technology in Petroleum En- ing thrust on demand substitution, order to ensure systematic devel- gineering from the prestigious ISM, capitalizing untapped potential opment and production of the dis- Dhanbad, an Advanced Manage- in biofuels and other alternate fu- covered prospects of Nahorkatiya ment Certificate from IIM, Lucknow els/ renewables and implementing and Moran and to increase the and has completed a Leadership measures for refinery process im- pace of exploration in northeast- Development Programme from provements. ern India, Oil India Private Ltd. was ISB, Hyderabad. Besides being an incorporated in 1959. It was reg- avid reader, Sri Bora enjoys cricket Being a major E&P player in the In- istered as a Rupee Company with and movies. dia’s upstream sector, Oil India Lim- two-third shares owned by Assam
Oil Company (AOC) / Burmah Oil ya, Mozambique, Nigeria, Myanmar a massive development drilling Company (BOC) and one-third by and Bangladesh. campaign in newly discovered the Government of India (GOI). By prospectsand infill drilling under a subsequent agreement in 1961, OIL’s Presence in the Do- its plans for systematicredevelop- GOI and BOC transformed OIL to mesticUpstream Sector ment of its mature fields. Addition- a Joint Venture Company (JVC) ally, OIL has been steadily making with equal partnership.In 1981, OIL OIL acreage in the Northeast com- new discoveries in its operational became a wholly owned Govern- prises of twenty nominated PMLs area. During the period 2009-10 to ment of India enterprise and the and threenominated PELs.Though 2015-16 there have been 37 dis- management of Digboi oilfields OIL is operator in most of the ar- coveries by OIL in the Northeast changed hands from the erstwhile eas, a small oil and gas field in out of which 40% have been in the AOC to OIL. Although initially con- Arunachal Pradesh is being oper- prolific Eocene Formation. Addi- fined to the north-eastern region ated by a Joint Venture in which tional development locations are of the country, the Company grew OIL has participating interest. expected to be drilled till FY’22 in into a strong fully integrated E&P Apart from the Northeast, OIL has newly discovered areas. Company and spread its activities two nominated PMLs in Rajasthan to different Basins of India and from where it is currently produc- Exploratory drilling of New abroad. ing heavy oil andalso producing Prospects gas since 1996. In addition to its Exploration activities constitute OIL was granted Miniratna sta- producing assets, the exploration identification of new prospects tus in October, 1997 and subse- acreages of OIL include nine ac- in new area and identification of quently became a schedule “A” tive NELP blocks spread over India, new prospects in existing areas. In Company in July, 2004. OIL joined including a Block each in KG Basin north-eastern India, a substantial the elite Navratna club in April and Mizoram and;a Pre NELP JV inventory of exploratory locations 2010, thereby gaining greater (Dirok). During 2016-17, OIL has currently stand released for drill- functional autonomy. Today OIL’s produced 3.277 MMT oil and 2.936 ing. On-goinggeo-scientific studies core competencies are in the up- BCM gas. are expected to identify additional stream and midstream petroleum prospects to be probed by explor- business, especially in E&P and Key initiatives & road map atory drilling. pipeline technology.The Com- to achieve target oil and pany owns and operates a trunk gas production However, a substantial part of the crude oil pipeline in the North- Northeast is covered by forests and east for transportation of crude As per the projected oil & gas national parks/ sanctuaries. Forest oil produced by OIL and ONGC production profile, OIL will be re- De-reservation approvals and Wild in the region to feed three refin- quired to achieve 7.25 per cent Life Clearancesarebeing pursued eries. The Company continues re- increase in oil production and to obtain environmental clearances verse pumping of imported crude 30.4 per cent increase in gas pro- to drill these locations.Additional- for IOCL to Bongaigaon refinery duction by the end of 2021-22 ly, approval of grant of leases from since 2003 through its existing from its 2014-15 level of produc- Government authorities is being Barauni-Bongaigaon Trunk pipe- tion (overall ~18.1% increase in followed up in an expeditious man- line section.OIL also holds busi- O+OEG). In order to achieve the ner so that planned operations can ness stakes in the hydrocarbon targeted levels OIL has prepared a be carried out. sector viz., Numaligarh Refinery road map with the present portfo- Limited, Brahmaputra Cracker and lio of existing domestic fields/as- Certain areas within OIL’s oper- Polymer limited and Duliajan – sets by adopting a number of key ational area are poorly covered Numaligarh Pipeline Limited. initiatives for achieving the goal of by seismic data due to surface reducing the dependency on im- logistics constraints. Some are- With its operational headquarters in port in energy by 10% by 2021-22. as lie close to discovered oil and Duliajan, Assam,the main operating The thrust of these initiatives are gas fields and in the vicinity of and producing areas of the com- in the Company’s domestic oil and the frontal Naga Thrust. These pany, at present, are in Assam and gas producing hubs in the North- areas are envisaged to have high Arunachal Pradesh. Today apart east and Rajasthan. potential for the presence of hy- from its presence in the Northeast, drocarbon prospects and explora- Rajasthan, KG Basin and participa- Development drilling Campaign tion success of these locations is tion in a number of NELP blocks in Enhancement of oil and gas pro- expected to add to the oil and gas Rest of India, OILhas anexpanding duction is expected from the Com- production potential in the North- global portfolio with presence in pany’s portfolio of existing reser- east. By systematic planning and Russia, USA, Venezuela, Gabon, Lib- voirs. OIL has plans to undertake deployment of optimal resourc- 20
es these areas are planned to be wellbore damage. presentin OIL’s major producing covered by 2D seismic in order to • Gravel pack campaign to counter fields and to tap thisgas poten- optimise drilling campaigns. sand ingression. tial,limitations in evacuation and • Installation of ESPs and gas lifts producing facilities arebeing Redevelopment of Mature fields are being carried out on a regu- ramped up bythe completion of Some major oilfields located in the lar basis. under construction pipelines and Northeast in OIL’s portfolio were • On-going studies for Chemical additional wells. discovered way back in 1950s and EOR and Carbonated Water In- • Recent gasdiscoveries in far 1960s. Makum-NorthHapjanis an jection. flung areas within OIL’s opera- oilfield presently contributing sub- • Plans for full field scale heavy oil tional area will be monetized by stantially to the Company’s pro- development in Rajasthan. construction of GGS and pipe- duction and had been discovered lines for increase in gas produc- in 1995. Apart from in-house stud- New Surface Production facili- tion potential. ies, to prolong plateau production ties / debottlenecking of existing • In Rajasthan, the gas produc- and to increase the recovery factor, facilities tion potential has been en- the field is being studied under a hanced with the recently drilled collaborative effort of OIL and Uni- • OIL has initiated a number of development wells as well as versity of Houston, USA.Implemen- projects for creating surface in- successful workover campaign. tation of recommendations from frastructures for production and Effortsare being made to en- the study is expected to enhance transportation of oil which in- hance the sale of gas through production, identify and provide cludes construction of Group new contracts to overcome con- tangible improvementto existing Gathering Stations (GGS), con- straints of limitation of gas pro- set-up of surface facilities to re- struction of a number of oil and duction due to lesseroff-take by movebottlenecks in order to im- gas pipelines to connect the far consumers than the contractual prove performance and arrest the flung installations; construction quantum. decline.Geo-cellular and dynamic of Secondary Tank Farm (STF) model of the reservoirsare also and capacity augmentation of an All statutory clearances are being being revisited for optimizing field existing tank farm. pursued vigorously,with necessary development. • An initiative to carry out Pro- support from appropriate authori- duced Water Re-injection (PWRI) ties / statutory bodies,and work be- The over hundred year old Digboi is also being envisaged to stra- ing monitored closely so that all the field, is also being studied in techni- tegically manage increasing projects can be completed within cal collaboration with M/s Belorus- volumes of produced water and the respective timelines. neft, Republic of Belarus, in order increase the longevity of the pro- to redevelop the field and enhance ducing wells. It is envisaged that the additional production/ recovery. • All the projects are planned to be oil and gas potential gain through completed by 2020-21. theseinitiatives will help in increas- Arresting decline in existing ing production of oil and gas from fields with IOR-EOR activities & Road map to achieve target gas OIL’s domestic assets to contribute well interventions production to the country’s planned overall in- Production enhancement measures cremental production of 0.23 MMT are being implemented in the res- • OIL plans to increase gas pro- and 36.4 MMTOE for oil & gas re- ervoirs of our mature fields and in- duction by 30.4 % by end 2021- spectivelyfrom domestic produc- clude, 22 from its level of production in tion,required in 2021-22 from the • Increasing rig resources to carry- 2014-15 to reach the level of 3.7 levels in 2014-15. The company’s out workover/well interventions BCM for which a number of pro- actual production profile, till date, in a larger number of non-flow- jects have been initiatedfor cre- is almost in line with the required ing wells. ating infrastructure for produc- mandate. The market and infra- • Enhancing water injectionby tion and transmission of natural structure will play a critical role in adding additional reservoirs to gas. A few of the major initiatives OIL’s annual gas potentialwhich the existing ones. to achieve the projected gas pro- is supposed to reach the level of • Carrying out of chemical water duction targets are. 3.7 BCM by 2021-22 through the shut off jobs. • Augmentation of gas production planned efforts of OIL,is expected • Implementing radial drilling fromthe Company’smost prolific to be provided for by the country’s techniques. gasfield by removing the con- demand for natural gas which is • Hydraulic fracturing in tight / straints in the form of facilities expected to grow at a CAGR of 4.6 low permeable sands and matrix and sand ingression issues. per cent. acidization for removal of near • A number of gas upsides are 21
Low Oil Price and India’s Import Reduction By Narendra K Verma In March 2015, while Hon’ble of the gulf war brought in a glob- Prime Minister sounded the clari- al recession. The Asian Crisis of on call for reduction of import of 1998 again crashed the oil markets crude oil by 10% by 2022, every as seismic shocks of Asian Giants Narendra K Verma industry veteran worth hissaltwas collapsing rippled throughout the MD and CEO, pondering on where oil prices had globe. The world saw a recession ONGC Videsh Ltd. moved since mid -2014; a question again in 2001, and of course we had that even now haunts the industry the Financial Crisis of 2008. In each Mr. Narendra K Verma is the over- three years since the sustained de- of the above instances, oil prices seas arm of ONGC, India’s premier cline in oil prices began. Having declined continuously for consec- State-owned petroleum major. braved a debilitating drop in 2008 utive trading days,ranging from 90 ONGC Videsh operates exclusively in the immediate aftermath of the days in case of 1991, to 484 days outside India and currently has a financialcrisis, oil had recovered in the case of the Asian Crisis, be- portfolio of 38 oil and gas assets to levels close to its historic highs, fore reversing. We arealready ap- spread across 17 countries. before something historically inex- proaching over650+ trading days plicable happened to the sector in where oil prices have struggled Mr. Verma, anaccomplished ex- 2014. at 50 and below in the presentcy- ploration geologist and manager cle, notwithstanding its recovering with nearly 37 years’ of experience In 2008, oil markets were on a joyride, from its lowest point of USD26/bbl in upstream Oil & Gas industry in fueled by seemingly unstoppable in January of 2016(a low not seen India and abroad, joined ONGC global growth, whenthe Lehmann- since 2003, and not witnessedeven in 1980 and has worked in various Brothers collapseacted as the trigger in the 2008 crisis). Each of the above technical, operational, commercial to send the entire global economy historical examples had an obvious and management roles through into a tailspin. But the industry could geopolitical trigger (war, nations’ his long stint. draw comfort then from the fact that economies collapsing, financial sys- the crisishad pervaded all sectors-fi- tems imploding); there is no such Mr. Verma holds a Masters degree nancial, industrial, commodities, trigger visible now. in Applied Geology from Luc- manufacturing, services. The might know University and M.Tech. in of governments were thrown behind How is this downturn dif- Petroleum Exploration from Indian revival efforts, and commodities, es- ferent? Institute of Technology (ISM) Dhan- pecially a strategic commodity like bad. He also holds a Masters in oil, recovered quickly to participate The low oil price regime that we see Business Administration in Finance. in an global economy fueled by aids now (which analysts christened the Mr. Verma is recipient of pres- and revival plans funded by govern- “the lower for longer” scenario) thus tigious ‘National Mineral Award’ ments. The 2014 drop provided no stands out in its uniqueness,defined given by the Government of India such comfort for the oil and gas sec- by the following characteristics: in the field of geosciences, mining tor. The sustained drop is inexplicable 1. We are witnessing one of the and allied areas. for a sector long used to being the longest slumps in oil price histo- central focus of all commodities, a ry Mr. Verma is one of the Vice Chairs strategic and geo-economically cru- 2. This slump is fundamentally dif- of Bureau of Expert Group for cial industry that governments and ferent from historical dips, taking Resource Classification for United nations can never ignore. So what is virtually no cues from geopoliti- Nations Economic Commission for different now? cal triggers (Libya, Syria, Nigeria, Europe (UNECE). Crimean sanctions). Analytical The History of Oil price evidence points towards a clear He has published more than 20 Declines and fundamental supply-de- technical papers and authored mand predicated downturn. over 40 technical reports. Let us study the history of recen- 3. From the time that OPEC came toil price crashes. In 1991, the end into international prominence
as a muscle-hefty cartel in the 1. Inventories are at all-time highs; So, is it all gloom and 1970s, the world has been used any hope of inventory draw- doom? to OPEC interventions; to protect downs in one month are offset price, to cut production, influ- with increases in the next. As The answer is a categorical No. ence global and regional flows. long as inventories are at 30% The Industry has gained in a sub- This was a first experience with premium to five year averages, a stantial way from innovation and an initiallyconsciously passive demand-supply led price drop is technology upgradation. Lower OPEC, which finally galvanized not going to alleviate itself. oil prices have resulted in cutting itselfinto taking some concerted 2. China was the fuel for the oil in- of flab, and the industry is learn- action, only to realize to its utter dustry for all of the first decade ing to survive through innovative chagrin that one of the highest of this millennium. Chinese eco- and out-of-the-box thinking pro- compliance reductions that the nomic growth headwinds are no cesses. A case to point is the US cartel ever enforced still saw the longer a matter of conjecture, shale oil industry. Technology on prices unmoved. In other words, it is an established reality. Oil is shale oil/tight oil extraction has the world is facing the startling the first commodity to suffer. seen the maximum innovation reality of the increasing irrel- 3. Iran is back as an international in recent years, propelling US to evance of OPEC in influencing oil player, desirous and anxious one of the largest oil producers prices. to regain its place as a principal in the world. Efficiency gains and 4. As recently as 2007, oil analysts oil exporter, a status it enjoyed project optimization benefits are and oil producers were discuss- before sanctions. The OPEC in- visible throughout the E&P val- ing the impact of the nascent tervention had to do without ue chain;US Lower 48 unconven- shale oil industry in academic Iran’s participation, and Iran will tionals sector was the amongst terms. A few years since then, obviously try to make up for lost the first sectors to react to falling shale oil has contributed in mak- time. prices and come out with innova- ing the biggest oil consumer in 4. The US shale oil producers have tive cost-saving technologies, by the world virtually self-sufficient been the dark horse in this en- continuously going back to the in oil production. As a corollary, tire oil price conundrum. Ex- drawing board. the balance of producing power, perts pointed at their imminent and ability to manage swing pro- demise at $60 a barrel, then at Across the industry, from Majors duction, has shifted from a clutch $45; bankruptcies and falling rig to NOCs to independent produc- of producing nations acting as a count notwithstanding, the in- ers, rapid cost deflation through cartel, into the hands of 2500+ in- dustry continues to produce. In increased efficiency has been sus- dependent producers, for whom a study, Woodmac pointed out taining competitiveness. The in- the only consideration is the ad- that at $35/bbl, 3.4 million b/d dustry is seeing new benchmarks ditional dollar they can squeeze of oil production is cash negative everyday in scope optimization,- from the marginal barrel. and should have been shutdown deferring non-essential capex 5. Most importantly, trillions of ; but only a miniscule 100,000 without compromising on opera- dollars are being transferred bopd actually went offline. To tional deliverables,capturing cost from oil producing countries use an American phrase, people deflation in the market through to oil consuming countries. The are hanging in there. More so negotiations, competitive bidding benefits for our nation in terms now, as oil inches around $50 a ,leveraging currency devaluations of foreign exchange reserves barrel. and increasing local content, op- and balance of payments have 5. Changes in automotive technol- timizing resources including re- been reiterated by experts in ogy, the fight against climate visiting opex estimates. The com- multiple fora and is well docu- change and explosion in renew- placence brought about by high mented and understood. Clear- able alternatives are dampening oil prices may not have sustained ly, since the dawn of the oil age, the world’s appetite for crude. such a culture for innovation. the geo-economic balance of Speculation in the E&P industry power is shifting. has shifted from so-called peak The Indian Context oil to peak demand, when re- Lower for Longeror Lower serves considered valuable as- Domestic portfolio of oil and gas Forever? sets today wind up being left in fields particularly of NOCs is quite the ground. Royal Dutch Shell matured, and it is perceived that So, is the “Lower for Longer” sce- CEO Mr. Ben Van Buerden has there is limited Yet-To-Find(YTF) nario here to stay for the near-fore- recently stated that his compa- potential in the existing acreage seeable future? Anecdotal evidence ny has adopted a “lower forever portfolios. Private sector may have a may point towards the affirmative. mindset”. relatively young portfolio, but there Here are a few obvious reasons: has been steep decline in their pro- 23
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