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India plots international shale-gas drive

Unconventional-energy assets, such as oil sands, shale gas and liquids, must be secured to develop a balanced portfolio for India’s ONGC Videsh (OVL), says the company’s new exploration director

Narendra Verma said the state-owned company needs to boost its unconventional reserves to counter growing international competition for conventional oil and gas resources.

“The profitability of unconventional hydrocarbon resources is increasing as prices are driven up by intensifying competition for conventional oil and gas assets. Therefore, it will be prudent to pursue targeted investments of unconventional oil and gas assets,” he said in a note to the company’s staff.

Verma took on his new role on 2 January, following the retirement of his predecessor, Joeman Thomas.

OVL, the international exploration and production (E&P) arm of state-owned Oil and Natural Gas Corporation (ONGC), has been striving to turn itself into a overseas sizeable player, as it seeks to sate India’s growing appetite for oil and gas. The company says its equity stakes in international projects yielded 9.45 million tonnes of oil equivalent (toe) of oil and gas production in the financial year 2010-11 – a figure it aims to boost to 20 million toe by 2018 and 35 million toe by 2030.

A credible operator

According to Verma, the company now has working interests in 34 projects, in 15 countries, but must establish itself as “a credible operator with matching competencies to handle large international E&P projects”, if it wants to become an oil and gas major.

The firm has stakes in conventional E&P assets in large producing countries, including Brazil and Russia, but many of its international assets are in politically unsettled or contentious areas, such as Syria, Libya, Myanmar (Burma) and Cuba.

Diversification into unconventional production assets, which tend to be in more fiscally and politically stable countries, may be seen as a positive step. The US’ shales could be one target, but, so far, OVL has no shale assets on its books and no conventional US assets either. Another Indian company, privately owned Reliance Industries, is a significant player in the US shale sector, having paid more than $3 billion for stakes in three ventures in 2010.

ONGC has made a foray into India’s unconventional sector, drilled the country’s first shale-gas well in early 2011, as part of a pilot project in West Bengal. But the find has yet to translate into commercial production.

India is desperate to maximise domestic, as well as international oil and gas production to meet growing demand. ONGC wants to boost domestic gas output to 36.5 billion cubic metres (cm) by 2017, compared with 23.1 billion cm in 2011. It is targeting a rise in oil output to 560,000 b/d by March 2014, up from around 488,400 b/d last year.

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