Days of easy oil finds over, need huge inputs: OIL

Oil India Ltd (OIL) Chairman and Managing Director N M Borah today said the days of easy hydrocarbon were over and exploration in “logistically difficult areas with state-of-the-art technology” would require huge inputs, owing to the capital intensive nature of the business.

Welcoming the government’s decision to reform petroleum fuel prices, he said the recent revision of APM (administered price mechanism) gas price would lower the subsidy burden faced by upstream public sector companies like Oil India and would allow them to generate additional revenue to pursue exploration activities.

Besides spreading its presence from North-East to pan India and diversifying acreage portfolio by overseas acquisitions of E&P blocks as vehicle of inorganic growth, the company would also endeavour to secure its position as a key player in new initiatives like CBM (coal bed methane), shale gas and similar opportunities, Borah added. He was speaking at the 51st annual general body meeting here. He also announced the highest ever dividend of 340 per cent.

Borah said Oil India would continue to focus on the core business of E&P and pipeline engineering, but would also foray into selective hydrocarbon value chain segments.

He informed that OIL had won a CBM block in the last round of bidding for CBM in the country. It would be a joint venture with Arrow Energy (now Dart Energy), which will act as operator, he added. In the shale gas arena, the company has made “a modest beginning and undertaken a study to assess the potential for shale gas in its fields in the North-East. Simultaneously, efforts were on to look for shale gas opportunities with other companies in other parts of the globe, Borah said.

Giving a review of the overseas activities, Borah said that the company had presence in nine countries, with acreage of 41,656 sq kms. He gave a detailed account of the progress made in each of the blocks, and expected production from Orinoco Heavy Oil Belt in Venezuela’s Carabobo area to begin shortly..

OIL is country’s second largest oil and gas company in terms of total proved plus probable oil and natural gas reserves. In his address to the shareholders, Borah said 2009-10 was a year of significant achievements for the company as its annual oil and gas production touched new heights of 3.57 million tonne and 2,415 million standard cubic metre in oil and natural gas, respectively.

The company’s turnover was the highest at Rs 7,905 crore, while the profit after tax touched a record high of Rs 2,610 crore — an increase of 20.76 per cent over the previous year.