We will soon be India's second-largest gas producer: Cairn Oil & Gas CEO

Vedanta arm Cairn Oil and Gas was the most aggressive bidder in the Open Acreage Licensing (OALP) rounds, getting 55 blocks so far. Ajay Dixit, chief executive officer, speaks to Shine Jacob on why they bid aggressively, and the road map for unconventional fuel. Edited excerpts:

During the past two OALP rounds, Vedanta was the most aggressive in bidding. What was the reason?

It is more to do with vision. In the near term, we would like to be a 500,000-barrels-per-day company and, after that in the next four-five years, a million barrel company. You need reserves and resources to achieve these targets. In terms of reserves, we now have 1.2 billion barrels (estimated reserves). To increase this, you need technology or find more fields. In that respect, we want to go ahead in funding our presence in pre-selected areas, so that we can increase our reserves and resources. For that, we have to be exploring more, identifying opportunities in that, getting into production faster.

Production from Rajasthan is coming to around 180,000 barrels now and we expect to exit the year with somewhere around 250,000-270,000 barrels. Next year, we will obviously go further, as we have invested some money in getting beyond this.

How do you see your enhanced oil recovery techniques (EoR/IoR) programme evolving?  

This is an area where we will be deploying more technologies. Six to seven years of research and development works were done by us for these techniques to get to a level of production in Rajasthan to the tune of more than 50 per cent and in Ravva (coastal Andhra) to close to 60 per cent recovery from the oil in place.  

We want to take advantage of technology for every aspect of the life cycle. First in terms of exploration, in terms of digitally identifying the prospects and from prospects to rapidly going to new production. Following this, the focus will be on maximising the production. The more EoR techniques we have, it becomes handy for us to be able to use these, even in the newly discovered fields.

You recently conducted roadshows abroad to hunt for global partners to develop existing blocks. Will a similar approach be taken for OALP blocks?

We did shows abroad to hunt for global partners for $2.3 billion in investments, for which we awarded integrated contracts. That is for new oil wells in existing fields in Rajasthan for improving our production. We want to also try this in OALP. We are open to trying alternative models of two or three packages and are integrating these packages. Exploration is a different game. That model could also be applied on identifying explored fields. We would go for a cluster approach.

We have a total of 55 blocks under OALP, of which 41 are in Gujarat, Assam and Rajasthan. It makes sense in adopting a cluster approach for development of these. Based on that, we can have development packages. This will help in getting more partners and optimising the work. We have only identified the investment for exploration of OALP blocks. We feel it to be anywhere between $800 million to $1 billion during the exploration stage. After the discovery, we will have to go for  full-fledged production, which will be different. There will be a different partner approach for exploration and full-scale production. 

Last year, the government approved a policy for allowing companies to exploit all kinds of hydrocarbon resources in a field. Your company is reportedly having huge shale reserves in Rajasthan. What is your strategy?

We have only some data about our potential shale reserves. Earlier, unconventional (search for and tapping of) hydrocarbons was not allowed within the block; it is now permitted. The second issue is financial viability. To get into commercial development of shale gas, you need exploratory drills to find the real geology underneath, test that and then come to the real diagnosis. The present financial model does not permit us to do exploration on this. We (in India) need to look at whether the current compensation and taxation regime is good enough for any investor to do it.

Your production sharing contract for Rajasthan has been extended by another 10 years. What advantage does it bring?

With the extension in place, we will go for more investments. This we will do by going for enhanced recoveries, technology. We will continue to invest in research and digital technologies to optimise production. That will increase gas production and, if luck favours, we will be the second largest gas producer in India by the end of this year in conventional gas. We are doing it at the Rageshwari gas terminal and are currently at 15,000 barrels equivalent. We will be able to finish the year at the equivalent of  50,000-60,000 barrels.