R.K. Singh believes oil and gas exploration could emerge as one of the most important growth businesses for his company.
“By investing in upstream assets here and abroad, we are working out a roadmap for the future,” said the Chairman and Managing Director of Bharat Petroleum Corporation, speaking to Business Line .
The company’s overseas arm, Bharat PetroResources, has been in the news for its oil and gas finds in Brazil and Mozambique. “In Brazil, we have been fortunate and hope to get a good amount of oil by 2017-18,” says Singh.
BPCL’s partnership component in different fields varies from 12-25 per cent, which translates into a windfall considering that the overall reserves in Brazil are estimated to be over five billion barrels of oil.
As for Mozambique, the declared reserve varies from 35-65 tcf (trillion cubic feet). The total gas reserve in the basin, where BPCL has 10 per cent equity, could be as high as 100 tcf, which Singh believes is a “goldmine and a game changer” for his company.
Mozambique is also the new hunting ground for the ONGC-OIL combine, which announced its entry on Tuesday.
This could mark the beginning of a new association for BPCL, where it will work closely with ONGC both here and overseas.
The two have already come together to set up an LNG terminal in Mangalore. “ONGC has money and we have the gas. Mangalore is a strategic location as it can feed the South, North and West,” says Singh.
For the moment, though, Mozambique is top priority as the gas produced here can be used for diversification into value-added products such as petrochemicals, power etc. This could even take the form of an alliance, where a company keen on setting up a fertiliser unit in Mozambique will team up with BPCL. The fertiliser produced can then be brought back to India.
Yet, Singh reiterates that his company will take the final call on the best value creation model. “Anything is possible so long as it makes business sense. We have responsibilities towards the country and our business model should keep this in mind.”
The risk and money from upstream is very high, which calls for a fair mix of caution and enterprise. The eventual goal would be to mitigate risk and maximise profits.
“Once upstream revenue starts coming, it will translate into greater muscle power. We want to market gas in India but if we get a higher price in some other country, the business model will change,” says Singh.
BPCL believes it needs to find the balance between gas marketing in India and maximising revenue streams elsewhere. “In business, we cannot think of charity and must maximise value for our country. Gas is a global commodity and there will be competition. It would be wrong to assume that better prices are constantly guaranteed,” he adds.
The state-owned company has already allocated some money for upstream activities to its overseas arm. It is now entering the development phase in those blocks, for which money is being mobilised from reserves declared. “Once the revenues start coming in, our pockets will become deeper and we can then play around and acquire more assets,” says Singh.
murali.gopalan@thehindu.co.in