Indias second most valued company with a market capitalisation of Rs 2.29 lakh crore,ONGC,entered into a MoU with ConocoPhillips of the US for collaboration in shale gas and deep water exploration to tide over static growth from conventional resources. ONGC chairman Sudhir Vasudeva spoke to George Mathew and Sandeep Singh on the business climate faced by the company. Excerpts:
What is your association with ConocoPhillips?
At this stage there is only an MoU for exploration and development of shale gas and deep water resources in India. ConocoPhillips has expertise in both shale gas and deepwater. We will also look at the possibility of teaming up for shale gas property abroad. Also they are interested in our deepwater blocks that allow no room for errors and that is where their experience would help.
Getting right technology is a problem. How would you overcome it?
Deepwater technology is only available with 4-5 firms … and all want their pound of flesh and we are willing to give it. We get the technology but at the same time if they pick equity that helps in mitigating the risk,it helps us.
How will the hike in cess impact you?
We have been telling the ministry that this 80 per cent increase will mean a Rs 5,000 crore hit on our profit before tax. Our request is that reduce our subsidy burden to the extent that our net realisation remains same (at around $58 a barrel).
How do you look at the subsidy burden for the next year at an assumed price of $115 per barrel?
The finance minister has taken a price of $114 for oil in 2012-13 and has calculated Rs 45,300 crore as subsidy burden for next year. This means there are only two ways,first is part of this will be passed on to the consumers and second is that supplementary demands would be raised. I hope that part of this is passed on to the consumers. Consumer has to be educated that by this way they are paralysing the government,OMCs and the E&P businesses.
How will you arrest the decline in output?
Almost 80 per cent of our production is from 15 fields all between 35-50 years old. Also we have about 165 marginal fields where volumes were less. But now with oil price increasing this has become viable and we are putting some 34 of these fields on production and hope to get 110 million tonnes from these. This year we are touching 27 million tones,next year the target is 27.5 million tones.