Vedanta looks abroad to rope in global players for oil and gas exploration

Cairn Oil & Gas, the hydrocarbon division of Vedanta, has kicked off a programme to rope in global players for end-to-end operations
In September 2018, when Anil Agarwal-led Vedanta won 41 of 55 oil and gas exploration blocks in the first round of open acreage auctions (OALP-1), it had not only grabbed headlines but also raised eyebrows. This was owing to the short deadline given to companies for exploration as there were not many experienced service providers in the country.

To tide over this crisis, Cairn Oil & Gas, the hydrocarbon division of Vedanta, has kicked off a programme to rope in global players for end-to-end operations, for which the company claims to be getting positive responses from major service providers. The company is likely to invest around $500 million in these 41 blocks.

Vedanta is showcasing to global players that from owning five onshore blocks with probable reserves of about 1.3 billion barrels of oil equivalent (BBOe), Cairn has expanded its reach in India with new blocks — onshore and offshore — which add a target resource of close to 4.2 BBOe. The new assets are spread across states such as Andhra Pradesh, Assam, Tamil Nadu, Tripura, Himachal Pradesh, Uttar Pradesh, Arunachal Pradesh, Rajasthan, Maharashtra, and Gujarat.

To bring in more players, the company on November 29 last year had organised a partner meet at Houston, which saw participation of more than 200 specialists from over 50 end-to-end service prov­iders and niche technology companies.

A company source confirmed that Vedanta was engaged in strategic, long-term partnerships with global companies such as GE Baker Hughes, Halliburton, and Schlumberger. Sudhir Mathur, chief executive officer at Cairn Oil & Gas, had told Business Standard recently that the plan was to bring first oil from OALP blocks by 2022, while the directorate general of hydrocarbons (DGH) in an official statement had said it was expected by 2025. 

“If Cairn is looking for end-to-end operators, only GE Baker Hughes, Halliburton, and Schlum­berger are capable of doing it globally. Already, their hands are full in India through having tie-ups with companies such as Oil and Natural Gas Corporation and Oil India. Hence, it needs to be seen if they will get interested in the offer put forward by Vedanta,” said an industry official, in terms of anonymity. Moreover, they have to follow strict global guidelines on security and anti-bribery activities.  

When asked about the progress of its talks with service providers, a company official said: “We are at pre-bid meetings stage with service providers. The time period during which companies are required to undertake exploration is typically five to eight years, the latter more so in the case of deep water exploration, which takes more time.”

The company’s aim is to award end-to-end tenders for OALP blocks to reduce the time to production and maximize the potential of these blocks.

For interested players, there is a lot on Vedanta’s platter, including deployment of niche technical and operational capabilities across the entire value chain of the exploration and production (E&P) lifecycle — including seismic activity, advanced drilling, rigs, and early production facility services through innovative commercial constructs and engagement models. The company is also offering future collaborations with these companies in the upcoming OALP and Discovered Small Field (DSF) rounds as well.

“The advantage with OALP is that companies will have to pay lesser penalty for non-performance — that includes $3 million for offshore areas and $ 1 million only for onshore. Hence, the pressure on companies will be less this time. The effort by Vedanta looking abroad for tie-ups and speed up exploration is encouraging for the government,” the industry source added.

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