Hunt for expertise tests foreign views of changes in India

Dec. 10, 2018

Has India changed? That question greeted top executives of an international conglomerate in Houston to discuss partnerships for its Indian oil and gas business.

The government lately has tried to improve India’s allure to oil and gas investment.

It now offers open-acreage licensing under revenue-sharing, rather than production-sharing terms, for example. And it no longer grants state-owned companies back-in rights.

It also has tried to streamline the infamous bureaucracy.

“There used to be 56 clearances for putting a hole in the ground,” Vedanta Resources PLC Chairman Anil Agarwal told reporters in Houston. “Now it has come down to six.”

Last year, Vedanta Ltd., Indian subsidiary of the London-based mining and resources company Agarwal founded in 1976, merged with Cairn India, which accounts for a fourth of India’s oil production and is now Cairn Oil & Gas.

Cairn dominated India’s first round of open-acreage licensing, winning 41 of the 55 blocks awarded in August.

“We are looking at how the experts can help us,” Agarwal explained in Houston, where an initial meeting drew 200 participants. “We never imagined,” he said.

Cairn Oil & Gas Chief Executive Officer Sudhir Mathur said licensing format and terms aren’t the only recent improvements for oil and gas operators in India.

The government, he said, also is licensing discovered small fields and allows operators to develop any type of resource under any license. It formerly had separate licenses for coalbed methane and other unconventional resources.

Mathur said moving from production to revenue-sharing “cuts down the need for government involvement.” And the ability to own 100% interests allows a company to move at its own pace.

When asked if non-Indian companies acknowledge these improvements or still see India as daunting, Agarwal didn’t hesitate to answer: “Both.”

But he noted that the conglomerate he heads has developed other natural resources in other countries, mainly Africa, Ireland, and Australia.

“And we are saying, ‘We are comfortable [in India],’” he said. “That’s a very big thing.”

(From the subscription area of www.ogj.com, posted Nov. 30, 2018. To comment, join the Commentary channel at www.ogj.com/oilandgascommunity.)