00:00 Hello, I am Vikas Shrivastava. We are with the Kain Oil and Gas, the Vedanta Group's
00:07 oil and gas company. Deputy CEO is here as well as the CFO. We are going to talk to them
00:12 about their existing production, the way they are planning to ramp up their production as
00:17 well as what are the challenges in the industry that they are facing. Welcome to NDTV Profit
00:22 Minister Steve Moore.
00:23 Thank you.
00:24 So just wanted to start with by asking you what are the new technological developments
00:30 or ramping up of production as far as it is concerned. What new technological developments
00:37 are happening in this field and how you are planning to raise your production?
00:41 I mean Kain as you know works across exploration, development and production. So we are focusing
00:47 on all those areas to underpin the growth. So in the exploration we are moving into new
00:53 areas such as the North East. We are just about to kick off a major campaign across
00:57 four blocks. We will drill nine or ten wells in the North East. We are also looking at
01:02 new exploration areas on the East Coast close to our existing Rava assets and also in deep
01:08 water and similarly on the East Coast around the Kambe field and the DSF that develops
01:14 more field blocks that we have picked up in that area. Of course we will also be doing
01:18 further exploration and a lot of appraisal work in Rajasthan where we have had 38 discoveries
01:24 over the last ten or so years and we are trying to fully quantify what is there. On the development
01:30 side a lot of the development will come out of that exploration work but also from the
01:36 discovered small field blocks particularly the G4 block which we are actively developing
01:41 on the East Coast and the Ambe block on the West Coast. We are also bringing into operation
01:48 some of the fields that have been discovered over the last ten years. Durga which was a
01:54 discovery from two years ago in the OALP rounds in Rajasthan was commercialised yesterday.
01:59 We just brought it on stream and we have got a plan to go to a 2004 discovery called Shakti
02:05 which is a heavy oil field that needs thermal techniques this year as well. On the technology
02:12 side we continue to apply the technologies that I think Cairn is famed for which is the
02:17 polymer flood that we have started in Mangala that we are expanding to all the fields and
02:22 then we are building on that to add to the polymer mix a surfactant. Surfactant is effectively
02:28 something that washes the reservoir and can get you very high recovery factors. The other
02:33 technology that we are working to implement that hasn't been implemented so far in Rajasthan
02:39 is taking carbon dioxide and putting that back into the reservoir and flooding the reservoirs
02:44 with CO2. That gives also very high recoveries but a lower cost but it can only be used in
02:51 our deeper fields. But it also is an opportunity to take the CO2 that we are currently venting
02:57 which is obviously not good for the environment, harness it and it is a key part of our path
03:02 to net zero which we are trying to achieve by the end of the decade. You also wanted
03:09 to reach India's almost 50% of total production capacity. You are at around 500 million barrels
03:15 per day kind of thing because some two years back that was the plan. So what is the status
03:21 on that and how soon can we expect that to happen? It is obviously a hard process to
03:28 ramp up production. So I think for our existing discoveries we will make a big step in that
03:35 direction and we will start to see production growing but that will be backed up by the
03:39 exploration successes that we are expecting in the northeast. So I think we need to put
03:45 a timeline together. If we are looking at getting to 200,000 barrels a day we are looking
03:50 at the 3-5 year horizon. Beyond that I think that needs either a breakthrough in our deep
03:57 gas potential. We have huge deep gas potential in Rajasthan. We are going to drill a well
04:01 this year. If that is successful that will trigger a further ramp up and also if we can
04:08 bring online rapidly some of the discoveries we expect to make in the northeast that will
04:13 be another stepping stone up to a target of 250 or 300,000 as we obviously aspire to achieve
04:19 eventually. Since all these activities that have been planned up right now this would
04:24 require massive investments also. So what is the kind of investments that you are looking
04:28 at over the next 3-5 years and how you are applying to fund it? For us our vision as
04:37 Steve said is to contribute to 50% of India's production and one of the reasons is we want
04:41 India to be at least 50% self-sufficient in its energy requirements. I think what we have
04:47 done last 3-4 years is build a portfolio. From 3 producing blocks now we have 62 blocks
04:52 spread across the country both onshore and offshore. Our acreage is in excess of 60,000
04:57 square kilometers. So one part of the job we have already done is building the portfolio.
05:02 Second is bringing the right set of people. So last one year we have brought people from
05:07 across the world having the specific skill sets. And the third part now is for us to
05:13 start executing those projects. We have taken the last few months trying to work out the
05:20 plans and as Steve said our focus now is in exploration, in development and as well as
05:28 in-field wells for our producing fields right across whether it is in Northeast, whether
05:32 it is in Cambe, whether it is in Rajasthan or our offshore blocks. Now the most important
05:37 part is on the amount of capex investment. This we know will require substantial effort.
05:44 We intend to spend say around $4 billion over the next 3-4 years and this is the number
05:49 which we have spent in the past when we were building the Rajasthan facility as well as
05:54 bringing that into production. That was our first step to reach to 25% and that time annually
06:00 we used to spend in excess of a billion dollars and we achieved that target. Now this is our
06:05 second part of our journey where we are trying to replicate the same thing. The only advantage
06:09 as I said now we have a big portfolio, 62 blocks, a large amount of activity and the
06:16 onus now is on the management team to start executing those projects.
06:21 So as far as shale development is concerned you all wanted to increase your shale production
06:26 also. So given that crude is very volatile almost around 75% at times 80% 82% so at this
06:34 level do you think that you all can take shale activity? What is the status right now on
06:38 that?
06:39 So I think obviously shale is a big opportunity not only for us but for India and we have
06:44 seen what has happened in US. The advantage Cain has is as far as processing facility
06:50 is concerned whether for oil and gas we have abundance in Rajasthan. We have built a large
06:55 scale facility so the advantage which we have is we don't have to build these facilities
06:59 either to process or to transport and that's why what we are focusing on is drilling wells
07:05 ensuring that whatever we have as shale resources to look at the quantum and how do we put them
07:11 into production and that will require a lot of, it's not more about cost it's more about
07:16 technology so how we are able to implement those technologies. We did some work last
07:20 year and this year in the next 6 months we are trying to do couple of more wells and
07:26 that will give us a flip to what more we need to do to make it commercial. So I think pricing
07:30 80 dollars I think it will work for us.
07:33 What is the current production as in what is the total number of wells that you all
07:36 have drilled as of now and how many more will be drilled?
07:40 See we have over the last, our total well count is in excess of 800-900 wells across
07:45 Rajasthan in our offshore asset. What we intend to do every year is try to drill at least
07:52 75-80 wells so that's the plan and compared to past obviously this is increasing and this
07:58 is required because we intend to now grow our production and as I said we now have the
08:02 portfolio to drill so many more wells.
08:03 So out of 4 billion dollars that you said how much will go towards shale and new discoveries?
08:08 See in the initial phase it will be say for shale it will be say around 100 million because
08:13 you know that's the initial phase but more importantly the investment will be on exploration
08:17 as well as developing those exploration and a part of it in doing more wells in our existing
08:22 facility and if shale is successful this CAPEX will ramp up. It will be further more. In
08:28 our current production plan we are not counting shale as of now.
08:32 So when we quoted numbers we are not really factoring in the shale because we haven't
08:36 demonstrated its commerciality. If it does come off as we hope it will then we may have
08:42 to drill 200-300 wells so that's 5-6 million dollars a well so it's a huge investment but
08:49 it's a big increase in the production as well because as Hitesh said we have the facilities
08:55 there and we will be able to make use of those facilities and further expand the facilities.
09:00 What is the kind of reserve that you will have seen for shale in your fields?
09:05 Again it's early days to quantify it but if we take the area and we take the thickness
09:11 where we think the shale exists and we look at analogues from North America then we have
09:16 three basins. Each of those basins could contain 2 or 3 trillion cubic feet of gas that could
09:23 be developed but as I say early days we have to go and drill some more wells across the
09:30 basins and understand the amount of organic matter in the shale and whether we can really
09:36 frack it. Now obviously we have a lot of expertise of fracking because we are fracking a lot
09:40 of the other reservoirs. We are taking technologies we have already brought into India, we are
09:45 applying them just slightly deeper than our MBH, ABH developments that are already ongoing.
09:52 And given that government has come out with several OLP rounds, so what is the kind of
09:59 challenge that you see for players like you, upstream players like you in the industry
10:04 and also what is the kind of outlook you portray for companies like you?
10:08 I mean from the exploration side I don't think we have any unique challenges in India. Exploration
10:15 is challenging wherever you do it in the world. I think the Indian government has listened
10:19 to the industry, is making a good portfolio of blocks, you can nominate blocks that you
10:25 are interested in. So I think it is a very progressive licensing system that India has
10:31 moved to on the exploration front.
10:33 On the outlook front, how do you see the outlook for the industry?
10:37 I think it is excellent because I mean I have come to India, I am relatively new but it
10:42 is a very exciting place to be because it still is relatively under explored. There
10:46 is a lot of basins with only a small number of wells, there is a lot of running room still
10:52 in the basins which are proven. So the KG basin on the east coast remains one of the
10:56 world's great basins and it is only partly being developed. So we talk about creaming
11:04 curves, we are still well down the creaming curves on a lot of basins. Same with the Kutch
11:09 basin on the west coast. A number of wells drilled, a lot of discoveries, no developments
11:14 to date, relatively simple locations to develop, a little bit remote from the infrastructure
11:22 but the infrastructure will come. So I think it has got great potential and obviously India
11:27 needs hydrocarbon resources and will need them for many years to come. Obviously we
11:32 are committed as an oil and gas company to do that work, supporting India become self-sufficient
11:39 or more self-sufficient but also in a manner that takes cognisance of the environmental
11:45 concerns of the world. So we have to work to make sure that we are not polluting the
11:50 environment and we have to really focus I think on gas. India needs oil but it needs
11:56 gas more than it needs oil. I think the world needs more gas and I think you will see Cairn
12:02 over the next few years becoming less of an oil company and much more of a gas with oil
12:07 company in our journey. Thank you very much both the gentlemen for talking to NDTV profit.
12:14 It was a pleasure talking to you.
12:15 Thank you.
12:15 Thank you.
12:16 (dramatic music)
12:19 [music]
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