ONGC seeks to be global oil and gas player

India's state-owned Oil& Natural Gas Corp. (ONGC) is making a major bid at both the domestic and overseas levels to increase its oil and gas market capitalization equity and become a global player.

In the 20 months that he has headed ONGC and its overseas arm, ONGC Videsh Ltd. (OVL), Subir Raha, the corporation's chairman and managing director, has logged long hours preparing India's biggest state-owned petroleum firm to cope with life after the liberalization of the Indian economy and the mainly upstream company's impending privatisation.

Today, ONGC has a market capitalization of over $10 billion, and has been ranked the No.1 company in India in the ET-500 (top 500 Indian companies in the Economic Times). It has net assets valued at $7 billion, and its fiscal year 2001-02 net profit of $1.27 billion was the highest among Indian corporations, public or private.

Need to grow
"Our thrust to procure more oil and gas equity at a global level was made possible by the deregulation of the oil sector in India last year," said Raha. "Now we have reached a stage where we cannot afford to stagnate; we either have to grow or fall by the wayside.

"We have therefore drawn up expansion plans that envisage doubling our reserves, from 5.77 billion tonnes of oil and oil-equivalent gas, to 12 billion tonnes, and sourcing 20 million tonnes/year of oil and gas from equity assets abroad during the period of the 10th 5-Year Plan (2002-07)."

Cairn assets bid
ONGC has made a nonbinding bid for Cairn Energy PLC's assets in India, while OVL has made an offer to buy Cairn's assets in Bangladesh (OGJ Online, Sept. 16, 2002).

"Our nonbinding bid is for all the oil properties of Cairn Energy, except the producing Ravva field," said Raha. "Cairn, which has made 10 oil and gas discoveries in India, has offered to sell all of them, except the Saraswati exploration block in Rajasthan."

Four of those discoveries, all named after Indian goddesses—Gauri, Ambe, Parvati, and Lakshmi—were made in shallow water on Block CB/OS-2 in the Cambay basin off Gujarat state. A fifth, Saraswati, was made onshore on Rajasthan Block RJ-ON-90/1.

The remaining discoveries were made in deep water off Andhra Pradesh state on the Krishna-Godavari basin Block KG-DWN-98/2.

Foreign expansion
Not all of ONGC's efforts at expansion have been applauded.

Raha bristled at criticism of his company's acquisition of Canadian firm Talisman Energy Inc.'s 25% equity stake in the Greater Nile oil project in Sudan at a cost of $720 million. Noting that state oil firms Petronas of Malaysia and China National Petroleum Corp. (CNPC) have been willing to raise their stake in the project, he said, "All this talk about the inadvisability of investing in a country with a poor human rights record is a sham. The fact that two other state-run companies have shown interest in increasing their stake in the project is itself testimony that it is a good deal."

The company is in the process of incorporating a special purpose vehicle, Sudan Nile-Ganga BV, to take over Talisman's equity stake in the project, which has oil reserves of 150 million tonnes, with prospects of more within the block.

This venture would be similar to the structure of Sakhalin India Inc., which was set up to control the $1.7 billion investment that OVL has made in Sakhalin, the largest single investment out of India and the biggest single foreign direct investment deal in Russia.

Having thus gained respectability in the international market after sealing these two major deals, OVL has either closed, or is in the process of closing, as many as seven other global oil equity deals: in Myanmar, Iran, Iraq (pending lifting of sanctions), Kazakhstan, South Korea, Libya, and the US.

The ONGC chairman refused to divulge further details of the deals, but he noted that his firm is also looking at equity in gas blocks off Tasmania.

Domestic development
At the domestic level, ONGC plans to invest 5 billion rupees ($104 million) for developing three new fields in India that collectively are expected to yield production of 1.3 million tonnes/year of oil and oil-equivalent gas.

"We are taking up the development of the G-1 offshore field in the Krishna-Godavari basin, the D-1 exploration block offshore Mumbai, and the recently found oil and gas field east of the gigantic Vasai gas field, near Mumbai," Raha said.

Vasai East, which lies east of one of India's largest known gas fields, Vasai, is estimated to hold 100 million tonnes of oil and oil-equivalent gas. The three fields are expected to go into production within 30 months.

"We have put in place a 37 well deepwater drilling campaign during this fiscal year," Raha said. "We have floated tenders for deepwater drilling rigs and hope to begin drilling in the deep waters of Krishna-Godavari, Mahanadi basin, and adjoining areas before the monsoons set in this year."

Crude supply deals
Raha noted his company's success in turning around a decline in oil production and its growing prospects for exporting crude oil.

ONGC forecast a 1 million tonne rise in production this fiscal year over levels registered last fiscal year.

"The Mumbai High (formerly Bombay High) redevelopment and improved oil recovery schemes have been giving us good results," Raha said. "Already, crude oil production is up 13%, while gas production has risen 11%."

Production growth has spurred new crude supply agreements with India's three main refiners.

Raha said that 2-year contracts, for fiscal years 2002-03 and 2003-04, are being negotiated with Indian Oil Corp., Bharat Petroleum Corp., and Hindustan Petroleum Corp. for supply of a combined 25 million tonnes of crude.

"The agreement in force is for the quantities produced by us in fiscal 2001-02," said Raha. "We are free to sell any incremental quantities to anyone who pays us the best price."

Meanwhile, the corporation has sought a lifting of the ban on the export of indigenous crude on the grounds that such a move has no negative security implications.

"Crude oil is strictly a tradable commodity, and not a strategic resource," Raha noted. "There would not be any security implication if the export ban were to be lifted. In case of contingency situations, we ourselves would desist from exporting crude."


Career highlights

The 54-year-old Subir Raha was named chairman and managing director of Oil & Natural Gas Corp., India's largest state-owned company, in May 2001.

Employment
Raha joined state-owned refiner-marketer Indian Oil Corp. in 1970 as a management trainee. Following several field and staff assignments, he served a stint with India's government as head of the Oil Coordination Committee in the Ministry of Petroleum and Natural Gas. He later joined the IOC board as director-human resources. Concurrently, he had responsibilities for IOC business development, information technology, and corporate communications.

Raha also created and chaired several of IOC's joint ventures with other firms.

Education
Raha graduated in 1969 from Jadavpur University with Electronics & Telecommunications Engineering as his electives and won the Rector's Medal for the best all-round graduate.

Later, as a working manager, Raha received an MBA from the University of Leeds in 1985. He also is an alumnus of the Administrative Staff College at Henley, UK.

Awards
Raha was named Top CEO by the Institute of Marketing & Management, New Delhi. Recently, he was named CEO/Leader of the Year at the India Leadership Summit.

Related Articles

Petrobras to exit Japanese refining business

04/02/2015 Brazil's state-owned Petroleo Brasileiro SA (Petrobras) is initiating a plan to exit its Japanese refining business, which consists of wholly owned...

TransCanada to change Energy East route

04/02/2015 TransCanada Corp., responding to new concern about Beluga whales and community comments, will change the destination end of its proposed Energy Eas...

BHI: US rig count decline slows; production increases

04/02/2015 The US drilling rig count dropped 20 units—with just slightly more than half targeting oil—to settle at 1,028 rigs working during the shortened wee...

Strike extends Sea Lion play off Falklands

04/02/2015 Premier Oil PLC will plug a discovery well on the Zebedee prospect after successfully testing a southward extension of its Sea Lion oil field under...

KKR, Fleur de Lis buy Wyoming carbon dioxide assets

04/02/2015 KKR and Fleur de Lis Energy have acquired properties related to carbon dioxide enhanced oil recovery in the Powder River and Green River basins of ...

Petronas PFLNG2 plant to use Yokogawa control-safety system

04/02/2015 The consortium comprising JGC Corp. and Samsung Heavy Industries that will supply control systems and safety instrumented systems for Petronas’s se...

RFF speakers relay challenges faced by Alaskan offshore oil developers

04/02/2015 Significant problems ranging from the lack of deepwater ports and spill-response systems to potential impacts on wildlife and indigenous population...

FWS lists Northern Long-Eared Bat as a threatened species

04/02/2015 The US Fish & Wildlife Service designated the Northern Long-Eared Bat (NLEB) a threatened species, but attached an interim special rule that it...

EIA: OPEC’s net oil export revenues declined 11% in 2014

04/01/2015 Members of the Organization of Petroleum Exporting Countries, excluding Iran, earned $730 billion in net oil export revenues during 2014, according...
White Papers

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by

7 Steps to Improve Oil & Gas Asset Decommissioning

Global competition and volatile markets are creating a challenging business climate for project based ...
Sponsored by

The impact of aging infrastructure in process manufacturing industries

Process manufacturing companies in the oil and gas, utilities, chemicals and natural resource industri...
Sponsored by

What is System Level Thermo-Fluid Analysis?

This paper will explain some of the fundamentals of System Level Thermo-Fluid Analysis and demonstrate...
Available Webcasts


Prevention, Detection and Mitigation of pipeline leaks in the modern world

When Thu, Apr 30, 2015

Preventing, detecting and mitigating leaks or commodity releases from pipelines are a top priority for all pipeline companies. This presentation will look at various aspects related to preventing, detecting and mitigating pipeline commodity releases from a generic and conceptual point of view, while at the same time look at the variety of offerings available from Schneider Electric to meet some of the requirements associated with pipeline integrity management. 

register:WEBCAST



On Demand

Global LNG: Adjusting to New Realities

Fri, Mar 20, 2015

Oil & Gas Journal’s March 20, 2015, webcast will look at how global LNG trade will be affected over the next 12-24 months by falling crude oil prices and changing patterns and pressures of demand. Will US LNG production play a role in balancing markets? Or will it add to a growing global oversupply of LNG for markets remote from easier natural gas supply? Will new buyers with marginal credit, smaller requirements, or great need for flexibility begin to look attractive to suppliers? How will high-cost, mega-projects in Australia respond to new construction cost trends?

register:WEBCAST


US Midstream at a Crossroads

Fri, Mar 6, 2015

Oil & Gas Journal’s Mar. 6, 2015, webcast will focus on US midstream companies at an inflection point in their development in response to more than 6 years shale oil and gas production growth. Major infrastructure—gas plants, gathering systems, and takeaway pipelines—have been built. Major fractionation hubs have expanded. Given the radically changed pricing environment since mid-2014, where do processors go from here? What is the fate of large projects caught in mid-development? How to producers and processors cooperate to ensure a sustainable and profitable future? This event will serve to set the discussion table for the annual GPA Convention in San Antonio, Apr. 13-16, 2015.

This event is sponsored by Leidos Engineering.

register:WEBCAST


The Future of US Refining

Fri, Feb 6, 2015

Oil & Gas Journal’s Feb. 6, 2015, webcast will focus on the future of US refining as various forces this year conspire to pull the industry in different directions. Lower oil prices generally reduce feedstock costs, but they have also lowered refiners’ returns, as 2015 begins with refined products priced at lows not seen in years. If lower per-barrel crude prices dampen production of lighter crudes among shale plays, what will happen to refiners’ plans to export more barrels of lighter crudes? And as always, refiners will be affected by government regulations, particularly those that suppress demand, increase costs, or limit access to markets or supply.

register:WEBCAST


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected