Oil India aims to increase crude output by over 30% in FY24: Chairman

In a Q&A, Sushil Chandra Mishra says the company hopes to pay off long-term debt raised for NRL stake buy if crude oil rally sustains

Oil India (OIL) has set its eyes on becoming a 4 million tonnes per annum (MTPA) oil producer by 2023-24. In an interview to Twesh Mishra, chairman and managing director Sushil Chandra Mishra said OIL would be increasing its annual capital expenditure to around Rs 4,500 crore to achieve this goal. The company also aims to pay off all the long-term debt it had raised for acquiring controlling stake in Numaligarh Refinery (NRL) if the current crude oil price rally sustains.

What are the near-term oil and gas production goals for OIL?

OIL has plans to increase total crude oil output from 3 MTPA to 4 MTPA by 2023-24. In natural gas, the focus is to increase output from 7-7.5 million metric standard cubic metres per day (MMSCM) to 12 MMCMD. Some of our acreages are facing environmental concerns, but we are regularly engaging with different stakeholders including the Central and state governments for resolving these issues.

How is this higher oil and gas production going to be achieved by OIL?

We normally undertake a capital expenditure (Capex) of Rs 3,500-3,800 crore every year. In line with the higher production targets, our annual Capex will go up between Rs 4,200-4,500 crore. It will not be so capital intensive in Assam since we have existing production facilities there. The major additional cost there will be for drilling the wells. A larger chunk of this proposed Capex will be for OALP blocks where OIL has a commitment of $1 billion investment in the next three to four years.

What is the status of blocks that OIL had recently bagged under the Open Acreage Licensing Programme (OALP) bid rounds?

OIL presently has 25 blocks (of the 105 awarded) through the OALP bid rounds. This boosted OIL’s acreages by 49,000 square kilometres (sq km), taking the total area of OIL to 58,000 sq km.

We have 12 blocks in the North East and have consciously bid for more area in this region. There is one block each in Nagaland, and Tripura, while 10 are in Assam and Arunachal Pradesh. In addition to these, there are five blocks each in Rajasthan and Odisha onshore. Two blocks are in Andaman, and one is in the Kerala-Konkan basin.

Assam is our main thrust area. We have almost completed our seismic survey commitments, and the data interpretation is going on. In Rajasthan, seismic survey has been completed in all blocks except one.

We have completed our seismic survey commitments in Andaman and Kerala-Konkan.

Tell us more about the progress of oil and gas exploration in Odisha that OIL has been spearheading?

Seismic survey work has also been completed at three blocks in the Mahanadi basin (Odisha), and is currently ongoing in remaining two blocks. We plan to begin drilling during April 2022 in the Mahanadi basin. Oil and gas exploration activities in Odisha are resuming after a long gap with the last such instances in the mid-eighties.

What are the focus regions for OIL in the North East?

Accelerated Drilling in the North Eastern region has started now. There are four areas which have been identified in Assam & Arunachal Pradesh namely Baghjan, Lakwagaon, Balimara and Kumchai. Two new wells have already been drilled in Baghjan area and 2 wells are under drilling in Kumchai.

How does OIL intend to manage the debt raised for buying controlling stake in NRL?

We have Rs 2,000 crore of long-term debt. Only Rs 1,100 crore of short-term debt is left, we are hopeful to clear it by February-March 2022. Even for the entire long-term debt, we are hopeful of clearing it by the end of the next financial year. With the current crude oil prices, we are hoping to get good cash flows margins.

In addition to the core oil and gas production vertical, what are the new areas that OIL is looking at?

Our main focus will be the city gas grid in the North East. We are very aggressively pursuing it. We are also coming up with some pilot plant for Green Hydrogen, but that is in a very fluid state and we are looking for some partners. We are also looking for partnerships to grow in the renewable energy sector.