with Des Khattar, Vice President, Petrogas E&P – India
Four years after coming into the Indian upstream oil and gas market, with the acquisition of three blocks under NELP VI, how do you assess the evolution of your Indian assets and how optimistic are you about their development?
We at Petrogas continue to be very optimistic about our prospects in India. Since we arrived, the company has faced certain issues, but with hard work and understanding from all sides these issues have been resolved. They have also been brought out to the knowledge of the public authorities, whether it is the Ministry of Petroleum and Natural Gas or the DGH. By definition, we cannot do exploration work without optimism. But as a junior player we cannot go for deep offshore projects due to the necessary high levels of investments, so we are attached to our limited pull of assets.
Petrogas India is yet to get the results from these investments, as such projects take a few years to be assessed and matured. We have promising drillings in December and hopefully we will have some interesting findings in at least some of our current three blocks in India.
In all the three blocks, Petrogas has a 20% working interest and it is the operator for the Block MB-OSN-2004/2, with GAIL (India) Limited, Hindustan Petroleum Corporation Limited, Gujarat State Petroleum Corporation and Indian Oil Corporation as non-operating partners.
Of course in exploration we always need some luck, but Petrogas is working very hard with our partners in order not to miss any good opportunity of finding oil and gas if they are out there.
How strategic was it for an Omani company to buy upstream assets in India?
As a subsidiary of MB Holding, our parent company from Oman, we saw a good opportunity to enter the Indian upstream market during NELP VI. It is true that there are not many companies who go to our current level (three exploration blocks being the operator in one of them) in the first attempt. Now Petrogas is assessing the results of these three ventures and we will definitely continue to have interest in the various developments that might come in India, whether it is in marginal fields or elsewhere.
Petrogas has been offered marginal blocks in Oman and we have demonstrated our capacity of revamping these fields quite successfully. As we go along, we will be looking closely to further opportunities in this direction in the Indian market as well.
Do you believe Indian PSUs such as ONGC are taking the right stance in handing some of their marginal fields to smaller players, or do you believe they are holding these assets unproductively?
There are two factors that decide on this. Firstly, ONGC, for instance, is a major company and, at times, if they fell they are holding a secondary asset where it’s not worth investing financial, technical and human capital on it, they choose to concentrate on bigger projects. It all goes down to what type of portfolio each company wants to have. Now if in that portfolio-mix they fell that those marginal assets are uninteresting, then they will divest them and open opportunities for us.
When partnering with companies such as Petrogas, PSUs might also be looking for some new technological inputs. In those cases, they consider partnering with other players that can add value to their assets. These are the two main considerations that drive these types of decisions. For instance, Oman has offered marginal fields and, in the same line, I am sure ONGC and other Indian PSUs’ management will know what to divest and where to invest considering their own portfolio.
During Petrogas establishment in India you became the partner of some of India’s major PSUs. What assets did Petrogas offer to become their partner of choice?
If you look at our current India partners, GSPC is the only mainly upstream player. IOCL and HPCL are primarily downstream and GAIL primarily midstream, so partnering with us was considered to be a good balancing of expertise for all involved. Besides, risk-sharing is a major characteristic of this industry. For Petrogas as well, instead of putting all our eggs in one basket and betting 100% for one block, it is better to spread the participation and distribute the risk.
As a final message, what are your main ambitions for Petrogas in the Indian market in the coming years?
Our main ambition is to become an effective fast-growing player in the Indian O&G industry, helping the country answer its high energy demands in the years to come.