ONGC wants to integrate its overseas and domestic oil and gas exploration activities.
Currently, exploration activities for overseas and domestic assets are independently handled by separate groups located in ONGC and ONGC Videsh Ltd (OVL). But, now there is thinking within ONGC, to have an integrated technical outfit that will manage both the domestic and overseas exploration activities in synergistic manner.
Whether this would mean merging the overseas group with domestic one is a call, which ONGC’s board will take.
“We are still working out the details, which will be submitted before the company’s board,” said Narendra Kumar Verma, ONGC Director (Exploration).
The proposal, if fructified, will not only help cut costs, but also enable ONGC and OVL to leverage on each other’s strengths and lead to benefits such as developing technical skills, imbibing the domain knowledge, international quality benchmarking and global technological innovations on fast track.
On reports suggesting carving out of OVL, the wholly-owned subsidiary of ONGC, into a separate entity, he said that OVL is an integral part of ONGC and will continue to be so.
OVL is nurtured by ONGC over the decades and its success is attributed to the critical resources such as exploration and production skills, manpower, and financial strength continuously made available for its growth. Strong interdependence of the two is natural and complimentary, which warrants their existence together and stronger integration in the future, he said, adding that, “For ONGC, it (OVL) provides a growth engine, whereas for OVL, it (ONGC) provides required balance sheet, technical strength and strong national oil company brand for business development overseas.”
Any attempt to separate the two will harm both of them and will not be in the national interest, Verma pointed out.
In view of the unfavourable demand-supply balance of hydrocarbons in the country, acquiring equity oil and gas assets overseas is one of the important components in enhancing the energy security, and OVL will be the primary contributor to the growth of exploration and production volume for ONGC.
The Minister for Petroleum and Natural Gas, M. Veerappa Moily, in a recent interview to Business Line when asked whether OVL is ready to venture on its own without the parent ONGC’s name, had said that they should go with ONGC brand.
Exploration strategy
On ONGC’s exploration strategy for the fiscal 2014, Verma said it wants to drill over 150 wells. ONGC plans to spend Rs 11,000 crore for exploration activities in fiscal 2014.
About the recent reports of Shell being in talks for striking a partnership with ONGC, Verma while not disclosing details said that we are exploring the possibilities.
Asked what kind of partnership the company was looking at, he said that normally there are two types of partnerships -- one at organisational level for multiple projects and the second is project specific.
Organisational alliances with international companies which ONGC has include those with Conoco Phillip, China’s CNPC, and Ecopetrol.
richa.mishra@thehindu.co.in