Top India explorer to buy, not drill, its way to output goal

MUMBAI: India’s biggest oil explorer plans to snatch up producing assets to reach its goal of raising overseas output by more than half in about three years, a faster route than drilling for new reserves.

ONGC Videsh Ltd, the overseas investment unit of state-run Oil & Natural Gas Corp, spent US$2.2bil last year on an existing Russian project, which raised production by four million tonnes, or 44%.

The company still needs to add more than seven million tonnes to achieve its target of 20 million tonnes by 2020.

“Short-term production goals can only be achieved through producing assets because the exploration life cycle is very long,” Managing Director Narendra Kumar Verma said in an interview last week.

“That’s why we are focusing on producing assets to boost production in short term.”

Parent ONGC’s shares rose as much as 2% to 197.25 rupees and traded 1.3% higher at 9:30am yesterday in Mumbai.

They were the top performer on the benchmark Sensex, which was up 0.1%.

Prime Minister Narendra Modi is pushing India’s energy companies to raise domestic output and secure assets overseas to bolster energy security for a country that imports more than 80% of its oil.

Adding supplies through the purchase of producing assets is a faster, and potentially more-costly, alternative to exploring and developing new fields.

ONGC Videsh, the nation’s largest overseas oil and gas investor, is struggling to reverse declining output from Russian unit Imperial Energy Corp, which it acquired in 2008, revive assets in troubled Sudan and Syria, raise production in Venezuela and start pumping from Mozambique. — Bloomberg