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T.K. Ananthkumar, Director (Finance), Oil India Limited

23 Aug 2011

OIL is the second largest oil and gas national company in the country. Over the past 52 years, the company has made significant progress from a small north eastern player to a national player with global footprints.

OIL was awarded prestigious 'navratna' status last year allowing the company to invest up to Rs 1,000 crore in capital expenditure and acquisitions without approval from the government. The company also had a dream debut on stock market a year back.

The oil major produces close to 10 percent of oil in the country and five percent of gas with widely expanded international portfolio.

In a conversation with InfralineEnergy's Sangeeta Ananthkumar shares OIL's unique experience of working in a tough terrain such as north-east, rapid progress made by the company subsequent to its participation in NELP rounds, and OIL's aggressive plans to acquire overseas oil and gas assets.

Edited Excerpts

OIL is the second largest oil and gas company in the country. How has the organisation evolved over the past 52 years?

Our rich heritage goes back to 1959 when Burmah Oil Company, a British firm and Government of India formed a 50-50 JV for oil/gas exploration in North-East. In 1981, our company became fully government owned following Burma Oil selling its stake to the Government of India. OIL could not expand much beyond North East as we were restrained by lack of competition till 1999.

ONGC, our sister company being a national company right from the beginning was given more preference. But post New Exploration Licensing Policy (NELP) in 1991, when market was opened up and competition was ushered in, we started spreading to other geographies as well. Over the past 10 to 12 years, we have been getting NELP blocks at regular intervals at almost all the places in the country. Our company, though a specialist in onshore activity, entered into offshore as an operator to become a whole E&P company. Since NELP, our acreages have grown 12 times.

What are the challenges of operating in the north-east region?
North-east is one of the most challenging areas to work in E&P. The experience of operating in such a difficult terrain gives us the confidence to work in other areas. The tough terrain, accessibility, political environment and other such experiences in the north-east are not comparable to other areas.
The refineries in the north-east have at times operated below the optimum utilisation levels owing to unavailability of required crude stock. What are the steps being taken by OIL to ensure surplus crude availability to enable refinery to operate at maximum throughput?

OIL has recorded good growth in crude oil production in the past three-four years against the company's production of 3.1 million tonnes in 2006-07.

We are currently producing 3.7 million tonnes in the north-east. The company has been growing at the rate of seven percent in crude oil production over the past four years. Our North East customers comprise four refineries - Numaligarh Refinery Limited (NRL), Digboi Refinery (Upper Assam), Guwahati Refinery (Assam) and Bongaigaon Refinery. Together, they have a total capacity of seven million tonnes. However, in the north-east the crude oil production by OIL and ONGC put together is close to five million tonnes. Now to augment this shortfall, the north-east refineries are also getting crude oil from Cairn operated Ravva fields. However, even then, there is a shortfall. Though, we are hopeful that with our good year-on-year growth this gap will be bridged. Till that time, the shortfall, if any, will be met either from imported source or by increasing the supply from Ravva fields.

OIL has made significant oil and gas discoveries in the north-east. Do we have a potential gas market in place for off-take of gas produced from the fields in this region?
Currently OIL is supplying natural gas it produces to the state electricity board for its thermal power plants at Lakwa and Namrup, Brahmaputra Fertiliser Plant (BVFCL), North Eastern Electrical Power Corporation (NEEPCO), Assam Petrochemicals Limited and tea gardens. From March 2011, OIL has started supplying gas to NRL, with a commitment to supply 1.00 MMSCMD. It is presently drawing around 0.85 MMSCMD. We have also committed supply of 1.35 MMSCMD of gas to BCPL, the Assam Gas Cracker at Lepetketa once the cracker comes on stream in 2012-13. The company is also trying to take the Duliajan-Numaligarh gas pipeline to Guwahati for supply of gas to consumers enroute and city gas for Guwahati in future. So, the potential gas market for natural gas is definitely there.
What are the ways in which we can move towards a more competitive natural gas market?

Gas market is well regulated by the government both from the point of view of allocation as well as pricing. However, in a way, the natural gas market is competitive. The growing estimates of natural gas resources, including shale gas, indicate that natural gas will be available in good quantities for use in the energy mix. Hence, it is necessary to develop a competitive gas market. And the price of gas needs to be looked into so that both the producers as well as the buyers benefit.

"If oil upstream companies are making money, we are not averse to sharing it with the government like it happens in any other country. But what we want is clear cut guidelines, which would help us to determine what our level of share is going to be at different price points."

Currently, there are different types of gas pricing mechanisms including gas sold at administered price, under production sharing contract (PSC) and those produced from joint venture fields, and as R-LNG - in the country. Hence, the delivered gas price is not fixed across the customers.

Since gas is a national asset, we are only working in the business as an operator. The government has the right to exercise control over pricing of APM gas and its allocation to various priority sectors.

The current price of APM gas, which was increased in June last year to US$ 4.2 MMBtu is quite good, considering our low operating cost. The increase in APM gas prices last year has contributed Rs 500 crore to our top-line and Rs 350 crore to our bottom-line. At the same time, as far as non-APM prices are concerned, we are allowed to negotiate the price and then seek the government's approval.

OIL has protested the increase in upstream under-recovery share to 38.75 percent from the proposed 33 percent. What are your arguments for the same and what could be the way forward for developing a more transparent mechanism for sharing of under-recoveries?

We have requested the government for a transparent and predictable subsidy sharing mechanism so that there is no uncertainty over the quantum of under-recoveries. It will not only help us, but the investors as well to plan for budgeting and forecasting in an effective manner.

If oil upstream companies are making money, we are not averse to sharing it with the government like it happens in any other country. But what we want is clear cut guidelines, which would help us to determine what our level of share is going to be at different price points.

Crude price volatility results in a lot of deviations from the projected realisations that you might normally expect. How does OIL manage its risk exposure from such high volatility in the price of a commodity like crude oil? What is your take on the likely movement of crude oil price in the short-term as well as the long-term?

At the moment, crude oil prices stand totally deregulated and we are linked to the international prices. So, whatever the international price is, we get our gross price and we pay subsidy out of this gross realisation. We have been able to get a net realisation of close to US$60 after paying the government subsidy over the past three to four years.

As far as the international crude oil prices are considered, the prices may hover between US$ 90-100 and it may not go down significantly in near future. Crude oil prices will be range-bound and hover between US$100 and US$150 in the short-term. The long term trend in crude oil depends on geo-political situation, economic conditions globally and the supply-demand scenario. The volatility in prices is not controllable but optimisation of costs is the obvious solution.

How do you see the government's move of removing custom duty on crude oil? What impact would this have on the entire value chain?

As far as OIL is concerned, the removal of customs duty of five percent on crude oil does not have any impact on the company's operations at all. This is so because custom duty is not factored in our pricing.

As far as reduction in excise duty or reduction in customs duty on petrol and diesel is concerned, it is the refineries that would have some impact, which could be positive or negative depending upon where they are placed. Overall, it's a welcome decision since increase in the price and reduction in custom duty shall certainly reduce the under-recoveries, which will ultimately reduce our share of burden as well. More importantly, the benefit is passed on to the consumers.

OIL ramped up its oil and gas production from three MMTPA and four MMSCMD to 3.90 MMTPA and seven MMSCMD, respectively in recent years. What were the major drivers fuelling this growth?

The company has achieved reasonably good growth in spite of ageing and depleting oil fields. This has been made possible by the deployment of latest technology and enhanced oil recovery coupled with discovery of small and medium sized fields. We have been able to increase the production owing to increase in drilling efforts and introduction of innovative technologies like horizontal drilling and J-Bent drilling with effective exploration in our area of operations.

OIL has been consistently making small to medium size discoveries leading to a healthy reserve replacement ratio of over 165 percent. Our 2P reserves as on April 2011 stand at 921 mmboe. Most of the wells drilled in our operational areas are over 3500 metres deep and we are now probing deeper in search of hydrocarbons. All these efforts have contributed to our rapid growth over the last few years.

OIL has enhanced natural gas production potential to 7.93 MMSCMD in 2010-11, (7.0 MMSCMD in Assam and Arunachal Pradesh and 0.93 MMSCMD in Rajasthan). What is the expected growth in production of natural gas in the next three to four years?

In line with the crude oil production growth, the gas segment has also given OIL reasonably good growth over the years. We were able to ramp-up our production from four million standard cubic metres per day to seven million standard cubic metres per day in Assam. Fortunately, we have been able to supply this gas to captive customers in the north-east such as companies in fertiliser, power, and tea gardens.

"In the present scenario, we would like to stick to our core business of exploration and production of hydrocarbons with selective diversification in hydrocarbon value chain as and when the right opportunity emerges."

I also believe that the growth in the natural gas would be sustained in future. It is likely to touch 10 million standard cubic metres per day in the next three years. All this has been made possible because of signing of two key agreements; one with NRL for supply of one million standard cubic metres per day and the second with Brahmaputra Gas Cracker which is likely to go on stream in 2013-14.

Rajasthan Rajya Vidyut Utpadan Nigam Ltd is responsible for off-take of natural gas produced from OIL's Rajasthan fields. There have been reports that the off-take has been on the lower side in the recent past. How do you address such eventualities since off-take has a bearing on your financial results?

While we have the potential to produce 0.9 million standard cubic metres per day in Rajasthan, the supply could not be achieved to the desired level because of the customers' problems in their plants. The customer is likely to overcome its problems so that we can maximise the production and protect our financials. At the same time plans are afoot to find an alternative off-take by way of putting up some power plant or mini LNG plant to take care of the shortfall in case Rajasthan is not able to commit the entire off-take. The shortfall of about 0.2 million standard cubic metres of gas is due to Rajasthan not being able to off-take the entire natural gas committed by them. Rajasthan will take 0.65 to 0.7 million standard cubic metres of gas per day. Since, OIL is producing 9.3 million standard cubic metres of gas per day, the balance gas can be given to diesel based power generation plants and develop some other customer which would take care of OIL's full production.

RRVUNL has present commitment for 0.70 MMSCMD and have requested for additional 0.20 MMSCMD for which Agreement is being worked out.

With respect to the blocks acquired through the NELP bidding process, OIL is expected to enter into offshore operation in Cauvery Basin as an operator and also establish its presence in Andaman deepwater as joint operator along with ONGC. Given these developments, what is your current progression plans to get into deepwater blocks?

We have already started seismic survey in its offshore block in Cauvery Basin, where the company is an operator. Once the complete data is acquired, processed, and interpreted, we will decide on the drilling campaign along with our consortium partner ONGC, which possesses a lot of expertise in offshore operations. OIL already has experience in offshore activities, having drilled in Bay of Bengal /Andamans in the 1980s. Going forward our strategy is to gain more experience in deepwater operations and acquire more offshore blocks.

OIL has been exploring the possibility of setting up of a petrochemical complex and a greenfield refinery at Vizag, Andhra Pradesh. What business opportunities do you see in going down the value chain?

OIL is already present in the downstream business with 26 percent equity in Numaligarh Refinery and 10 percent stake in the upcoming Brahmaputra Cracker and Polymer Limited. In the present scenario, we would like to stick to our core business of exploration and production of hydrocarbons with selective diversification in hydrocarbon value chain as and when the right opportunity emerges. We had joined the consortium for setting up of the Vizag Greenfield refinery but the project was kept on hold owing to the global recession. We are looking forward to reviving the project soon.

"Since freight tariff has been revised recently for both the forward pumping as well as reverse pumping, the pipeline segment is also set to show some profitability and growth in future."

The company has also tied up with other PSUs such as BPCL, GAIL and ONGCL to participate in bidding for the city gas distribution in cities notified by PNGRB.

OIL is also seriously looking at the possibility of constructing a pipeline along with other state and central government undertakings operating in Assam for transportation of natural gas to Guwahati and other towns and cities enroute.

OIL has opted for diversification as its strategy for growth. So, we would be certainly investing in other business. Having said that we are not going to make huge investments in petrochemical complex and other related areas since we do not have the requisite experience in these areas. Thus, we are only looking at making some equity investment in these projects.

However, as of now, OIL does not have any structured plan to foray into other sources of energy such as solar and wind.

OIL owns and operates 1,432 km of cross country crude pipeline. What are your plans for further developing the pipeline network?

It was in 1962 that OIL laid its first pipeline and since then the pipeline has been working at more than 99 percent of planned capacity without any breakdown. So, we are one of the pioneers in pipeline maintenance and operations.

Unfortunately, we did not capitalise on that experience for a while. But in the last three years, the company has laid 660 km pipeline from Numaligarh to Silliguri. So, we have oil pipelines from our producing fields connected to all the four refineries. We also have pipeline carrying crude from Barauni to Bombay gaon. Currently, we are operating three segments encompassing pipeline - forward segment taking into account four refineries, reverse segment beginning from Barauni and the product segment.

Since freight tariff has been revised recently for both the forward pumping as well as reverse pumping, the pipeline segment is also set to show some profitability and growth in future.

"As part of the 12th five year plan, we plan to invest about US$ four to five billion in the next five years to supplement our exploration and production activities. We are in a position to earmark close to US$1 billion for acquisitions."

Present capacity of the pipeline is adequate for current customers and current production level of the operations in our region. Any major discovery would require not only expansion for evacuation but also perhaps increase in refining capacities.

OIL started expanding its footprint globally by pursuing overseas E&P assets in 2004-05. What is the company's portfolio of overseas E&P assets now?

In the past five years, OIL has set its foot in eight countries for oil exploration and two countries for production as operators.

The company is present in Libya, Gabon, Yemen, East Timor, Egypt, Iran, and Sudan. In the recent past we bagged a big block in Venezuela along with OVL, Indian Oil, Malaysian Petronas and Spanish company Repsol. The consortium has been selected to produce from a discovered oil base at Venezuela, which is considered to be a multibillion dollar project. We are 3.5 percent share holder, and in the next two years, we are hopeful of starting production from this block.

Our investment in this block is going to be around US$450 million. Given that it's a big production field and with a share of 14,000 barrel of oil per day, this block makes for a good investment for us. It is close to 15 percent of OIL's current production, and once this project comes up, it will provide both bottom-line as well as top-line growth to the company's balance sheet.

OIL started expanding its footprint globally by pursuing overseas E&P assets in 2004-05. What is the company's portfolio of overseas E&P assets now?

In the past five years, OIL has set its foot in eight countries for oil exploration and two countries for production as operators.

The company is present in Libya, Gabon, Yemen, East Timor, Egypt, Iran, and Sudan. In the recent past we bagged a big block in Venezuela along with OVL, Indian Oil, Malaysian Petronas and Spanish company Repsol. The consortium has been selected to produce from a discovered oil base at Venezuela, which is considered to be a multibillion dollar project. We are 3.5 percent share holder, and in the next two years, we are hopeful of starting production from this block.

Our investment in this block is going to be around US$450 million. Given that it's a big production field and with a share of 14,000 barrel of oil per day, this block makes for a good investment for us. It is close to 15 percent of OIL's current production, and once this project comes up, it will provide both bottom-line as well as top-line growth to the company's balance sheet.

What are the other potential overseas E&P assets that OIL is currently looking at? What are the short-term and long-term overseas plans of OIL?

OIL has close to US$ three billion cash reserves. As part of the 12th five year plan, we plan to invest about US$ four to five billion in the next five years to supplement our exploration and production activities. We are in a position to close to US$1 billion for acquisitions.

We have selected countries like Canada, Australia and South Africa for our future investments. The best thing is that OIL is a debt free company and has good potential of raising funds, if required, to supplement its planned acquisition.

What is the criterion employed by the company while selecting a particular country/block for E&P investment abroad?

We have developed a comprehensive overseas Acquisition Strategy through engaging PFC Energy, an International Consultant. OIL is keen on discovered and producing properties. We are restructuring our forays in overseas market. The Strategy Document also covers our strategy for Acquisition by way of selection of Regions, size, investment level, operatorship or otherwise.

We have also engaged some investment bankers to help us in acquisition. Our future acquisitions can be a result of competitive bidding as well as one-to-one discussion. However, we do not believe in hostile takeover.

What is the contribution of OIL's international business to the company's bottom-line and top-line?

As far as OIL's bottom-line and top-line is concerned currently international business is not contributing anything.

"Well, China with its strong national oil companies has been able to acquire assets in various parts of the globe. But we believe that they are paying much more than the economic price for these assets."

We expect the first contribution from international business to come only after three to four years from now. In all the above mentioned areas, the exploration activity is going on. Exploration is an activity which is going to take six to seven years and if a discovery takes place, then the production will be available to us for the next 15 to 20 years. At present we have almost 40 new exploration licensing NELP blocks along with some nomination blocks that OIL got prior to NELP. Then, there are foreign blocks as well and the company has accelerated exploration activity in all these areas.

You have significant investments in eight countries overseas, most of it is in the Middle East and African region. How do you see continuing unrest in Libya affecting your business interest in the region?

In Libya, OIL has business both as operator as well as a non-operator. As operator, the company has been there for the past five years and done exploration jobs drilling three wells. Unfortunately, though the wells had some oil, but it was not found to be commercially feasible. Therefore, after thorough testing, we abandoned this block.

Fortunately, it happened only around February-March this year when the trouble started in the region. OIL was already in the process of winding-up and the ensuing trouble in Libya expedited the winding up. OIL partner's Sonar Track, the Algerian company, is engaged in another block in Libya, where Sonar Track is the operator. So, the work has been disrupted there too due to unrest. They have requested for the application of force majeure clause.

OIL also has assets in Sudan with interest in a product pipeline entailing a significant amount of investment. With the country being divided into two independent states, North Sudan and South Sudan, what are the likely implications it would have on the company's business in Sudan?
In Sudan, OIL has a stake of only 10 percent in an operating pipeline, where OVL is the operator. So it's not a big investment for OIL and thus partitioning of Sudan wouldn't have much impact on the company.
It is learnt that the Business Development Committee of OIL, has assessed the value of Australian E&P Company KOALA, and OIL is scouting for targets for acquisition in oilfield service business. When is OIL planning to takeover these targets? What would be the value created post-acquisition?
We were looking at acquiring KOALA an oil service company in Australia which is into providing technology services, oil field services, well planning and engineering. Unfortunately, due to some approval issues, the acquisition could not materialise. But this company has got niche potential to work in ageing and depleting fields and we plan to engage them in our oil fields for enhancing our production.
What kind of potential do you see in CBM? We have learnt that OIL has entered into a consortium with Arrow Energy (which is now Dart Energy) to explore the opportunities in CBM. Could you elaborate on the partnership with Dart Energy?

CBM has a lot of potential. Having the third largest proven coal reserves, India's CBM reserves are estimated to be 4.6 trillion cubic metres (TCM), which is indeed big. One block owned by Great Eastern Energy Corporation Limited has already commenced commercial production.

And it was only after the formulation of the CBM policy for exploration and production by the government in July 1997, that the CBM exploration activity commenced in the country. In the fourth round of CBM, OIL has won a block in consortium with DART Energy, which will operate the block. OIL has 40 percent participating interest in the block. The block (AS-CBM-2008/IV) is in Assam with an area of 113 Sq-km. The statutory approvals are being taken by the operator for grant of PEL and core hole drilling in Phase I exploration. OIL plans to drill the pilot/test well in 2012 under the Phase I of the work programme.

CNPC gives OIL and OVL stiff competition in the major international deals, as it has access to a lot of funds and is actively backed by the Chinese government. India is also mulling over a similar plan of creating a sovereign fund of about US$20 billion to help Indian companies compete with CNPC. Comment.

Well, China with its strong national oil companies has been able to acquire assets in various parts of the globe. But we believe that they are paying much more than the economic price for these assets. Whereas, Indian companies, OVL and OIL, prefer to look at economics and commercial viability first before taking a decision. As far as competition is concerned, OIL has not been directly affected by the competition. Even in Venezuela, despite China being in the fray, OIL bagged the block. In fact, we are also considering joining them while biding for overseas blocks. Even the Chinese, by now, have realised that they should not be so aggressive and be more economical with their future investments.

As regards the funding for future acquisition, it's a macro and political issue, where the Government of India would have to decide regarding funding similar activities overseas to aid the acquisition process of companies like us.

How well is OIL doing on financial front?

In line with OIL's volume growth, the company has been able to show good profitability over the years. In fact, in the past year, 2010-11, OIL recorded all time high top-line and all time high bottom-line.

Our EPS has been close to Rs 125 and we have paid record dividend of 375 percent. Our cash generation is close to US$ one billion per annum. EBITDA margin is around 50 percent. This, despite contributing, significantly as subsidy to under-recovery. Last year we gave Rs 3,200 crore as subsidy to downstream companies - much more than Rs 2,887 profit after tax that the company earned.

"We have identified certain regions like Australia, Canada, parts of Africa, Russia and South America as some of the areas, where oil and gas potential, could be considered for appreciation."

OIL as an E&P company, especially after its IPO in 2009, has found good visibility and focus. The company is having market capitalisation of close to 7.5 billion dollars and from being a not so well-known company three to four years ago, today the company is more visible, established and widely known and good value has been unlocked. Oil industry has got a lot of potential, as the government is encouraging oil industry from energy security point of view.

Despite encouraging performance by the company - OIL's stock has experienced volatility. What are the reasons for the same?

OIL IPO has been one of the landmark IPOs in the recent past. In fact, out of other PSUs, I believe only OIL and Coal India has been the best in the share market. About eight months back, our share was allowed to be traded in future and options market as well which means it can be traded in the forward option also. The liquidity in the oil and gas share is still not much. Only about 11 percent shares are held by the public and even out of this 11 percent, three to four percent are held by the long-term investors like Pension Funds and FIIs. The actual liquidity is restricted to six to seven percent.

The volatility, I wouldn't say, has been specific to OIL only, considering that the market also went up very high up to between 21,000 to 15,000. So, the variation between Rs 1200 to Rs 1400 is not very significant. In fact, it has been quite stable. When the subsidy sharing was increased from 23 to 38 percent, it even fell down to about 70 percent.

We regularly meet investors to communicate our business plans, strategies, performance and efficiency parameters so that the share holders of the company get the latest information.

What are the key strategy and business plan that the company is pursuing to further its growth in the next five years?

The first strategy is to grow organically by increasing the oil and gas production. Our second strategy is to accelerate the exploration in all the blocks, where exploration activity is going on. This is the strategy for the long-term growth as well.

The first strategy is for short-term and immediate term. The third strategy focuses on inorganic growth. Because we have reasons to believe that with our strong technical and financial background inorganic growth through acquisitions can be a good action point for the company. With this objective in sight, we engaged an international consultant to study OIL in total and also scout around the globe in for prospective assets and give us a strategy paper for the same. We have been given a strategy as to what kind of assets we should look at, which regions we must go for, whether we should go for operatorship. The strategy paper has been given to our board for approval and would help in our international foray.

We have identified certain regions like Australia, Canada, parts of Africa, Russia and South America as some of the areas, where oil and gas potential, could be considered for appreciation. We had a look at our exploration blocks and we felt that since we already have many exploration blocks available, we decided to go for discovered developed and producing property which would give us overnight growth in top-line and bottom-line. Our fourth strategy is that being an E&P company, OIL has reasons to believe that unconventional oil and gas assets should be part of its long-term growth strategy. Consequently, the company has decided to spend its time, energy and efforts in the area of shale gas, shale oil, CBM. We also realise that this is a new area for us so we want to tie-up with some experts in this area and can learn along the way while still being in these potential businesses with an eye on future. Keeping this in mind, we have engaged a consultant to look at shale gas prospects in the north-east.

Parallely, we are looking at some assets abroad like Argentina, Canada, US and Australia and looking forward to becoming a joint venture partner with existing shale gas operator so that we can supplement this experiment in the north- east. The fifth strategy is that our focus area should be E&P where we should be completely leveraging our 52 years of experience. At the same time, OIL realizes that the company should further concentrate in certain value chain business like refinery, petrochemical, gas and CGD.

What are the key strategy and business plan that the company is pursuing to further its growth in the next five years?

The first strategy is to grow organically by increasing the oil and gas production. Our second strategy is to accelerate the exploration in all the blocks, where exploration activity is going on. This is the strategy for the long-term growth as well.

The first strategy is for short-term and immediate term. The third strategy focuses on inorganic growth. Because we have reasons to believe that with our strong technical and financial background inorganic growth through acquisitions can be a good action point for the company. With this objective in sight, we engaged an international consultant to study OIL in total and also scout around the globe in for prospective assets and give us a strategy paper for the same. We have been given a strategy as to what kind of assets we should look at, which regions we must go for, whether we should go for operatorship. The strategy paper has been given to our board for approval and would help in our international foray.

We have identified certain regions like Australia, Canada, parts of Africa, Russia and South America as some of the areas, where oil and gas potential, could be considered for appreciation. We had a look at our exploration blocks and we felt that since we already have many exploration blocks available, we decided to go for discovered developed and producing property which would give us overnight growth in top-line and bottom-line. Our fourth strategy is that being an E&P company, OIL has reasons to believe that unconventional oil and gas assets should be part of its long-term growth strategy. Consequently, the company has decided to spend its time, energy and efforts in the area of shale gas, shale oil, CBM. We also realise that this is a new area for us so we want to tie-up with some experts in this area and can learn along the way while still being in these potential businesses with an eye on future. Keeping this in mind, we have engaged a consultant to look at shale gas prospects in the north-east.

Parallely, we are looking at some assets abroad like Argentina, Canada, US and Australia and looking forward to becoming a joint venture partner with existing shale gas operator so that we can supplement this experiment in the north- east. The fifth strategy is that our focus area should be E&P where we should be completely leveraging our 52 years of experience. At the same time, OIL realizes that the company should further concentrate in certain value chain business like refinery, petrochemical, gas and CGD.

(InfralineEnergy thanks T K Ananthkumar for sharing his valuable insights with our readers. The column 'In Conversation', is a platform to engage experts from various sectors to share their views on the different transformations happening in the Indian energy sector.)