Why Cairn Oil & Gas is seeking a global partner for India

Reforms in the oil and gas sector including the Oil (Regulations and Development) Amendment Bill would bring in global investor interest into the segment, Hitesh Vaid, the chief financial officer (CFO) of the Vedanta group company, said in an interview.

“Our expertise has been on onshore as well as shallow water. [In] deepwater, we were not there. So, that’s why we had planned and looked at a deepwater opportunity, a good opportunity where we are moving ahead, which will ensure that we have a learning curve,” he said. “Now because of India opening up because of this ORD Act, a lot of foreign players operators want to come into India. When they come into India, they’re looking for a partner.”

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Ease to do business in oil and gas E&P

The Rajya Sabha in December passed the Oil (Regulations and Development) Amendment Bill with measures aimed at making it easier to do business in the oil and gas exploration and production (E&P) sector and attract greater investments. The Oilfields (Regulation and Development) Amendment Bill, 2024, also proposed to delink petroleum operations from mining operations, which is expected to bring in more investments into the sector.

“So they are looking at our portfolio, especially the deepwater or the exploration portfolio, and if there is an opportunity to participate in round 10 (of bidding for blocks) jointly as well,” Vaid said.

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So far, state-run Oil and Natural Gas Corporation Ltd. is the major domestic player in deepwater exploration in the country. Some of the global majors in this space are ExxonMobil, Chevron, Shell, BP, TotalEnergies, Petrobras (Petróleo Brasileiro S.A.), among others.

He said that talks are currently underway for partnerships in the development of deepwater blocks, rather than equity investments. However, going ahead, the partnership may be broadened with larger portfolio for the partner companies or equity investments.

In the tenth round of the bidding for oil and gas blocks, Open Acreage Licensing Policy (OALP), which was launched on 11 February, said that 25 blocks are on offer out of which 13 spanning 133,000 square kilometres are in deep and ultra-deepwater areas.

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Currently, Cairn has 62 blocks across 60,000 sq. km, of which five are operational. Its key assets are present in Ravva, Andhra Pradesh; Barmer, Rajasthan; Hazarigaon, Assam; and the offshore Cambay and onshore Jaya blocks in Gujarat.

He also said that the company would invest about $1 billion for Alkaline Surfactant Polymer (ASP) injection in the ageing fields in Rajasthan blocks to enhance production.

The company contributes about 25% of India’s oil and gas production. Vaid said that it aims to increase its production to 50%.