Pact with TotalEnergies to aid deepwater exploration: OIL CMD Ranjit Rath

The company's first partnership with TotalEnergies would help exploration in deep-water and ultra-deep water blocks, an area where OIL lacks significant expertise, Rath said

State-run Oil India Ltd (OIL) plans cost reduction of around ₹1,000 crore in 18 months as crude oil prices fall to nearly $65 per barrel, said chairman and managing director (CMD) Ranjit Rath in an interview with Shubhangi Mathur in New Delhi. Edited excerpts:

 

How do you see collaboration with TotalEnergies affecting exploration initiatives? 

 

The collaboration will provide technical support for deep and ultra-deep water exploration efforts. TotalEnergies is a pioneer in deep water exploration. A collaboration was necessary as deep water exploration is a first for Oil India. To succeed in exploration, acquisition, processing and interpretation of seismic 2D and 3D data is the building block. Our collaboration captures technical support from TotalEnergies in formulating designs and reviewing data we acquire for Open Acreage Licensing Policy (OALP) IX blocks. We have about 40,000 square km of area in Mahanadi and Krishna Godavari basin from OALP IX round. Meanwhile, for OALP X, we have initiated in-house assessment of the blocks under bidding. We will seek support from TotalEnergies in identifying additional inputs which would help us revisit our bidding strategy.

The collaboration is also for identifying locations for undertaking stratigraphic wells. As part of our ongoing exploration initiative, we have been able to establish the presence of natural gas in Andaman. The partnership includes technical support for the appraisal of this gas find.

 

You have reported natural gas occurrences in the Andaman basin. When do you expect production to start? 

 

In Andaman, we need to do a thorough appraisal now. We have reprocessed 2D seismic data and would run a 3D seismic campaign for about 300 square km. Meanwhile, the third well is under drilling and we will soon drill the fourth one. We will give our best effort to achieve commercial production, should there be a discovery in 60 months (or five years).

 

What is the status of exploration activity in the Krishna Godavari (KG) basin? 

 

We are currently doing seismic efforts in the KG basin. The nature of formation, reservoir and entrapment would get clear after interpretation. It would take us around two more years for completion of data and interpretation. Post completion, a view will be taken for possible drilling. We believe potential exists in deep and ultra-deep water basins of the country, which includes Mahanadi, Krishna Godavari, Andaman and Kerala-Konkana. Our initial prognostication asserts that, and we are carrying out seismic surveys to establish prospectivity and undertake drilling.

 

What impact do you see of carrying out deep water exploration amid sliding crude oil prices? 

 

A drop in crude oil prices has led to a drop in profits for Oil India. We have initiated a two-pronged strategy. One is to enhance production, so that you get more volumes even when there is a drop in crude oil prices. Second is cost optimisation. We target about ₹1,000 crore in cost reduction in the timeline of 18 months. We target cost optimisation in terms of drilling efforts, workover efforts, cost centres, manpower deployment, inventory holding and procurement process.

 

How do you see PM Modi’s National Deep Water Exploration Mission panning out for Oil India? 

 

Falling oil prices have definitely got some bearing on exploration efforts but as a national oil company, exploration remains our top priority. In that context, PM Modi’s announcement of Sagar Manthan is a welcome step. We are looking forward to corpus allocation by the central government. This will encourage explorers to undertake high-value investment decisions and drilling wells.

 

What are your production targets? 

 

We reported highest-ever oil and oil-equivalent gas of 6.71 million tonnes in FY25. We are looking at 3 per cent production growth in the current financial year (FY26). We plan to drill over 70 wells this year and around 100 wells in FY27.

 

What are your capital expenditure (capex) plans? 

 

On a consolidated basis, we would incur capex in the range of ₹15,000-16,000 crore this year. We plan capex of the same order for next year. A lot of capex will happen for subsidiary Numaligarh Refinery Limited (NRL) in two years.