India’s oil companies have had a record of failing to pull off big acquisitions overseas and have often lost out to the Chinese in the race for oil. A week ago, the man at the helm of India’s “global” oil company — ONGC Videsh — pulled off the country’s largest acquisition in the oil sector, bang in the middle of a financial slowdown.
RS Butola is not often seen, much less heard. But the post-graduate from Delhi University’s Faculty of Management Studies, has got 33 oil blocks spread across the world for the company. He also aims to put ONGC Videsh and India on the road to produce 60 million tonnes of oil and oil-equivalent-gas from overseas properties in the next 16 years, from 8 million tonnes in 2007-08. India currently imports around 120 million tonne of crude oil per annum.
“And you can be sure he will do it, even though he may not be with the company in 2025,” said an ONGC official who works closely with the OVL managing director. Butola joined ONGC in 1991 and took over as Managing Director of OVL in May 2003. OVL is a wholly-owned subsidiary of ONGC, and gets all its funds from its parent company.
OVL was mandated to be ONGC’s overseas investment arm. But OVL officials will quickly correct you. “We are not an investment vehicle. We are a global oil and gas operator with expertise in production and development,” said a top-level OVL official.
The company operates in 21 of the 38 oil and gas blocks in which it owns a stake. It has a presence in eight oil-producing areas in Sudan, Russia and Venezuela, among others. It has discovered oil or gas in Egypt, Iran, Myanmar and Brazil.
“Getting all these projects when political forces are always questioning the motive behind making huge investments for long-term projects is always difficult,” said a close aide of Butola who worked with the Union Bank of India before he joined ONGC.
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Oil and gas exploration and production assets typically have a life span of over 30 years and are capital-intensive. OVL’s investments are often questioned by the government, which is the largest shareholder in its parent, ONGC, because politicians are often bothered about the here and now, said a top OVL official.
“That’s where Butola’s expertise comes in. The buck stops with him and he carries that responsibility confidently,” the official added.
You get one unanimous answer to queries about Butola’s hobbies — work. “That’s what he loves to do. Work. He is usually the last to walk out of office, after every one has left,” said a Butola aide. Another common adjective for the OVL managing director — perfectionist. “Sometimes it becomes difficult working with a man who likes everything to be perfect. One cannot always live up to his expectations. But maybe this quality has been instrumental in the many successful deals he has concluded,” another top ONGC official said.
With the recent £1.4 billion acquisition of Imperial Energy, OVL, under Butola, has scripted a turnaround of sorts. It beat competition from China’s Sinopec for probably the first time.
The deal itself has been under question with falling oil prices reducing OVL’s return on investment in Imperial. But OVL’s philosophy is that these long-term investments in oil will pay off. Given the sharp volatility in oil prices, a final answer may be a long way off.