, said it was premature. When the government put him on the board of top oil exploration firm Oil and Natural Gas Corporation (ONGC), many wanted him out, saying a regulator could not be on the board of a company that he regulates.
Now in the midst of evaluating the bids received for the fifth round of bidding under the New Exploration and Licensing Policy (NELP), Sibal ducks and sheds light on some of the controversies in an interview to Jyoti Mukul. Excerpts:
Why do companies need to get their reserves certified by the director-general of hydrocarbons (DGH) before making announcements?
Since such news moves the markets, it is important to verify that it is indeed correct, for one. There have been several cases the world over where reserves have been revalued, so it is obviously better to value them correctly to begin with.
Also, production profiles and field development plans can only be approved once we are aware of the actual reserves. In any case, getting a reserve certified is a commitment made by the firms in the production-sharing contract with the government.
How do you see the DGH's functioning changing once it becomes the regulator for the upstream sector?
Right now, the DGH which was formed through a Cabinet resolution is only an advisory body, it has no statutory powers.
How do you react to the controversy over your appointment to ONGC's board?
It was purely a government decision.
What were the challenges when you assumed office?
The priority was to launch the fifth round of bidding under the NELP. Previous NELP rounds were not well received; there was less than one bid per block.
Before NELP was launched, we visited the board rooms of all major multinationals and apprised them of prospectivity and infrastructure development, to create a feeling that India is highly unexplored.
We wanted to market the country in such a way that people could trust us while taking geological, political and investment risks while investing in India.
Even the operators who were requested to make a presentation during the roadshows were clearly asked to be honest in their presentation to let the entire world know the pros and cons of business in India.
Investors not only look at data but also at whether the regime takes decisions fast. They do not mind success or failure.
Isn't it true that Indian companies are likely to corner most of the blocks since they've bid aggressively? Even companies such as Phoenix who have nothing to do with the oil business have put in aggressive bids. Why weren't foreign companies as aggressive?
Even foreign companies have bid aggressively. The D3 KG-DWN-2001 block in the Krishna-Godavari basin was perceived as very prospective.
Blocks in Assam and Arunachal Pradesh also saw aggressive bidding. Of course, Indian companies have an advantage.
They are allowed ring-fencing, which means losses made in exploration can be made up from gains in other businesses. Foreign companies are not allowed this.
However, it is premature to say which companies are getting the blocks.
How far will this translate into actual oil and gas production?
India has prognostic reserves of 30 billion tonnes. About 25 per cent of this has been discovered. Therefore, India is highly underexplored.
Out of the 26 sedimentary basins only seven to eight basins are reasonably explored. Most of the on-land areas have not been explored, while exploration in deep waters is only four years old.
In the last decade, there have been 32 discoveries in pre-NELP and NELP blocks, of which two are truly world class.
Reliance's discoveries will bring in about 40 million standard cubic metres per day of gas into the market by the middle of 2007, and Cairn is likely to bring in 100,000 barrels of oil per day on stream by end-2007.
We expect the total gas reserves in the Krishna-Godavari basin to be as large as 70 trillion cubic feet.
When the exploration sector was opened to the private sector, there were stories of crucial data being sold to private companies by public sector employees who joined them. Is this true?
Data is no information and data-selling is a misnomer. Countries put data on the Internet. In Canada, geoscientific data is made public in two years while information on wells is made public within a year.
Similarly, in Norway, data is being made public. It is made available only to increase the exploration cycle speed.
There was never any data available for the deepwater area where Reliance made a discovery. Moreover, if data is not sold, who will come forward to invest in exploration in India?
If data is not crucial, then what is the clinching factor?
The data is the same, only the geological thinking is different in different companies. One company drills based on one geological model and other on a different one.
One goes dry and the other finds oil. The clinching factor is synergy of technology and expertise.
Indian refineries are primarily designed to process sweet crude. What are the prospects of finding such crude?
The days of good quality and cheap crude are gone. Crude quality depends on mother earth but it should not make a difference since refinery technology can do wonders.
In fact, refineries have bigger margins if they process the worst quality crude.
