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Interview

with J.L. Raina Secretary General & CEO Petrotech Society

24.09.2010 / Energyboardroom

Could you briefly introduce Petrotech Society to OGFJ readers worldwide highlighting how the association, with a wide array of member-companies, promotes their main common interests?

Petrotech Society was created on 8th June 1999 by veterans of the Indian Oil & Gas industry that understood the need to have an organization that served as a knowledge platform for the upstream and downstream operations including areas such as Health, Safety & Environment, R&D and policy frameworks thereof.

Events such as PETROTECH 2010 ” it takes place every two years “, which will be held in October, are among the most successful experiences in nurturing the flow of information and technology in the industry and are a showcase of India’s oil and gas major technological advances. These events count with the support of the most prominent national and international players interested on investing and capitalizing on the Indian expertise. PETROTECH 2010 also serves as a platform for Indian companies to assess the most cutting-edge technologies available worldwide.

Besides that, Petrotech Society has a particular focus on the industry/academia interface. We minimize the gap between the industry and the academia. This year we have reached even to students by forming student-chapters in Indian universities where petroleum engineering is being taught. This broadly sums up our day-to-day and long term functioning. In short, Petrotech is a unique platform for all oil and gas companies to work together towards excellence.

India’s technological capacities are widely recognized in areas such as IT and pharmaceuticals. However it is not the same in the OG industry yet. How feasible is it for the local oil and gas industry to change this scenario?

India has already reached a very high level of expertise in the regular operations of the oil and gas industry, be it upstream or downstream sectors. This has been achieved by a sustained effort to assumulate the advances in technology through hard work and learning. This is getting recognized gradually in the international oil and gas industry as can be observed by increasing interest shown in India’s energy sector by all major global companies.

India’s main asset is clearly its working-force quality which has registered its presence in the form of Indian experts being employed by every important multinational companies worldwide. Indian players in oil & gas are also recognizing this aspect and are gradually reaching out to such experts for achieving excellence. Petrotech Society is trying to help in that cause.

As the New Exploration Licensing Policy (NELP) is going towards its 9th round and more than 200 blocks have been successfully awarded since 1999, is there much potential yet to be found in India’s basins?

The potential is clearly there. For instance, some years back people had no idea India would become an important gas producer, but after we discovered in 2002 the biggest gas field found in the world and with recent discoveries the expectations have soard such as the one Cairn in Rajasthan. No one has any doubt now about the unexplored potential Indian upstream industry has.

With the fast advances on data exploration currently taking place, I am sure many more headlines will come about new Indian oil and gas discoveries.

Having said that, how developed are India’s service providers in terms of data-acquisition and interpretation?

Even though Indian companies in this area are reasonably equipped, world leaders such as Schlumberger and Halliburton have set strong bases in India serving major clients such as ONGC and OIL. Indian companies have also accumulated a valuable expertise in data-collection with their decades of upstream experience. The companies are taking more advantage of this accumulated data by systematic analysis and forecasts. Thus even though India took time to build such data base all global companies and world leaders in data acquisition, processing and interpretation have well recognized this expertise bynow.

Policies such as NELP and Coal Bed Methane (CBM) have also been able to open the market to other companies other then a few state-owned players. But even so, the Indian upstream market is still very concentrated in a few players. What’s your assessment over the benefits and drawbacks of these policies?

I think these policies have greatly helped to make all parties eligible and they have given them the confidence that the government is moving towards an ever improving business-environment. Just look at companies such as BP and Cairn and you will see that there is always space for new players willing to invest and take advantage of the booming Indian market.

The first thing that comes to oil and gas experts’ minds when India is mentioned is “refining-hub ” especially now that the country has the biggest refinery complex in the world (Reliance Jamnagar Complex). Plus we are witnessing eight new refineries being added to India’s current installed capacity. What makes India such an attractive place in terms of refining and how policies such as price-controls impact the sector?

Price control has been a historical problem, and maybe it continues for some more time. Nevertheless the present government has taken definite initiatives towards liberalization of prices starting with petrol, now changeable according to market variations. This will continue since the current subsidies are a big burden for the government. This will further strengthen India’s refining industry in the already competitive market. Nowadays India meets international standard level quality and safety regulations. Secondly we have expertise in processing, operating, and design which we have developed over the years.

This has led India to its current prominent position in the world’s reining industry.

What particular success-stories would you highlight as an example of that?

We can begin with the state-owned players that nowadays are competitive, profitable and market-driven. If it wasn’t for the still existing price subsidies they would be at an even better position. But now that we have started the process of deregulation these companies should become even better.

Private, public, every actor in this field is feeling the urgency to develop ways and means to achieve success. This expertise can come the hard way and needs meticulous follow up at every stage of progress.

With India being already the 4th biggest oil consumer worldwide and its economy growing at almost double digits, infrastructure-upgrading is an urgent matter for the energy security of the nation. With multi-billion projects underway and even bigger ones on the pipeline, will the country find the financial means to attend such great demand?

Fund-raising is not a major issue in India nowadays (there is enough public and private funds willing to invest in the industry). This is particularly due to the fact that India has a clean system. Financial records, data and financial statements are checked at all levels, especially at the public sphere with great customer focus. Nobody can afford to commit a mistake in the Indian financial sector because of various checks and balances. Any operator in the field can loose his credibility for good if this is not followed with top down approach.

What are your main expectations and predictions for India’s oil and gas industry in the years to come?

India is a country that is going to matter in the future. We need energy and suppliers will have to pay attention to a country like India. In this sector China and India are the only two great markets. Ultimately I will say that demand and supply have to go hand in hand. Demand is here. Supply may be even somewhere else. The distance proximity has to be met from overall logistics point of view.

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