Theme Session: Investment and Partnership Opportunities in Upstream Sector
Mr. Anish De, Partner & Lead Oil & Gas, KPMG India, moderated the discussion , the panelists included Mr Shashi Shanker, CMD, ONGC, Mr Amar Nath, Joint Secretary (Exploration), MoPNG, Mr Sashi Mukundan, Country Head BP, Mr Gustavo Baquero, Sr. VP (Ops & Technology), Equinor, Mr Ajay Singh, Special Advisor to the Chairman and the President; and Head of Strategy and Commercial, JAPEX The energy industry today faces complex challenges, some of which are very far reaching. In this era of volatile prices, emergence of new low carbon energy sources, geopolitical uncertainties, changing consumer preference, technology disruption and rapidly changing demand supply dynamics, the consolidation and diversification of assets is gaining pace in E&P industry. Producers need to cut spending, improve efficiency and seek new ways of revenue enhancement. How they do this and who they can collaborate with to achieve this has spawned a new wave of strategic thinking that is accelerating the transformation of E&P companies and the energy partnerships. Against this context of shifting sands, the companies must also focus on the areas of environmental efficiency in their operations while ensuring adequate profitability. These emerging realities and new energy dynamic defined the context of the Upstream Theme Session of Petrotech 2019 held on February 11. Anish De started the discussions by giving an overview of global energy outlook, investment scenario in upstream industry, rapidly transforming energy landscape, India energy story and its recent policy and regulatory reforms. All forecast indicate that Indian economy is likely to grow 4X by 2040 to become world’s second largest economy. With the scale of anticipated economic growth, oil and gas would continue to play a critical role in ensuring India’s energy security. He also highlighted how some of the recent reforms in domestic upstream space has moved the country towards a flexible and investment friendly E&P regime to catapult its domestic gas production. At the same time, it was also brought out that how in the current era of technology and innovation, companies are adopting digital technologies to transform their business to achieve efficiency in cost and operations. Shashi Shanker, CMD of ONGC, shared his perspective on how ONGC being a leading energy player in upstream sector, is transforming its business. ONGC produces over 70% of India’s oil and gas production and continuously thrives to step up the gas share in the energy mix from current 7% to 15% in 2030. The gas production of ONGC has witnessed a Y-o-y increase of 6% in last two years with highest ever production crossing 70 MMSCMD mark. In order to reduce the import dependence, ONGC is focusing on exploration of new acreages, fast track development activities of discovered fields and maximize recovery from operational fields. The upstream major is also actively seeking partnerships with global companies for technology (including EOR/ IOR) in mature and ultra-Deepwater fields. Sashi Mukundan mentioned that India needs to make energy accessible, affordable and low carbon emission compliant. The most effective way to achieve the same is through innovation and collaboration. Mr. Mukundan suggested six actions to ensure the sustainable growth of energy sector in India namely; i) Predictable fiscal policy framework; ii) focus on exploration activities; iii) EOR/IOR techniques to achieve international benchmark of oil recovery and adequate infrastructure for sustainable & accessible supply of gas; iv) inclusion of petroleum and natural gas in GST; v) market access for marginal field production; and vi) Unlock option for partnership in upstream industry. He also mentioned that India has made significant strides in improving its policy and regulatory regime. As per BP’s assessment, the enhanced recovery techniques can potentially lead to additional recovery of 4 billion barrels from around 88 operating fields. Gustavo Baquero, Sr. VP (Ops & Technology) of Equinor shared an overview of Equinor’s business, its future energy outlook and how it is transforming its business by adopting digital transformation across its value chain. He mentioned that safety, value and low carbon is at the core of their business philosophy and as a firm they have pledged to reduce the carbon emissions by 8 kg per barrel (Co2 equivalent). Equinor is actively diversifying their business portfolio and considering significant investments in renewable energy to the tune of USD 12 Billion. They are also focusing significantly on digital transformation of their oil and gas business to remain competitive at all times. Equinor considers data as ‘asset’ and is focusing on capturing, cleaning and using the data to improve efficiency. He also opined that India could possibly become a center for innovation in digital energy. Ajay Singh, Special Advisor to the Chairman and the President; and Head of Strategy and Commercial, JAPEX started the discussion by emphasizing the need to actively consider investments in renewables along with oil and gas given the scale of growth in countries like India and China. He also opined that Asian countries viz. Japan, China and India needs to pursue investments in overseas equity oil&gas. He was of the view that such investments need to focus on majority equity including operatorship. He also talked about India’s human capital and expertise that can be further leveraged by promoting a culture of global teams with diversity. Amar Nath, Joint Secretary (Exploration), MoPNG started discussions with criticality of financing in upstream industry and the need to consider innovative models that we provide easy access of capital to small players. He talked about government’s recent initiatives to improve the overall regulatory regime for upstream industry. The new regime intends to provide access to quality E&P data to all interested stakeholders (through National Data Repository) supported by a flexible, easy to administer and transparent contracting model based on revenue sharing. All the policy initiatives are based on the philosophy of “Minimum Government, Maximum Governance”. A recent reassessment study of Indian sedimentary basin indicates a 49% increase in the prognostic resource estimate from ~28 billion tons of oil equivalent two decades ago to ~42 billion tons of oil equivalent currently. The respond to the OALP rounds is a testimony of government’s investment friendly regime for upstream industry.