Vasudeva: Upbeat

New Delhi, Oct. 4: ONGC Ltd hopes to ramp up its oil and gas output substantially over the next few years as it brings new fields into production. The PSU is also exploring the possibility of selling some stakes to global players to bring in deep sea exploration technology.

“Our first focus will be on our core activity, which is exploration… We will revisit strategies of exploration,” Sudhir Vasudeva, the newly-appointed group chairman of ONGC, said at his first media interaction.

ONGC expects to raise its crude oil output by 14.6 per cent to 28 million tonnes a year by March 2014 and gas production by 58 per cent to 36.5 billion cubic metres a year by March 2017.

Stating that the existing fields, which are old, are ONGC’s cash cow, he said the company would invest Rs 26,000 crore to increase output at its marginal fields.

The company is open to partnerships with overseas oil and gas majors as it seeks to ramp up output, Vasudeva said.

“We are open to all sorts of partnerships — whether it is strategic or for technology,” he said.

ONGC, sources said, is keen to ink a deal similar to RIL-BP as it needs deepwater exploration technology and to ease the risks of its domestic business.

BP has acquired a 30 per cent stake in 21 oil and gas blocks from Reliance Industries (RIL) in a $7.2-billion deal.

Reliance sold the stakes to leverage the expertise of the British firm in deepwater exploration and overcome the problems of gas production from its KG (Krishna-Godavari) basin blocks.

BP chief executive officer Bob Dudley has expressed confidence that the gas production from the blocks would rise by 2014.

The upstream regulator has said Reliance was currently producing 44 mmscmd (million metric standard cubic metres a day) of gas from the KG-D6 block, compared with 60 mmscmd a year earlier. This is far below the planned peak capacity of 80 mmscmd.

ONGC, sources said, have held discussions with BG and ENI for selling stakes up to 30 per cent in its KG basin blocks. “We want an international partner who can get us the technology for deep-sea exploration. Both BG and ENI have it,” sources said.

Sources said the stake sale would help ONGC to finance planned investments of about $7.7 billion to develop the gas fields over 4-5 years.

The company could also finance the investment on its own or borrow from the market, but a global player with proven expertise would help in developing the block.

ONGC’s KG basin deep sea block KG-DWN-98/2 is next to Reliance Industries' prolific KG-D6 fields in the Bay of Bengal. ONGC has discovered 3.42 trillion cubic feet in-place gas reserves in the block.