Hello and welcome to this special broadcast on the eve of Advantage Assam 2.0. My guest today is Dr. Ranjit Rath, Chairman and Managing Director of Oil India Limited and Chairman of Numaligarh Refinery Limited. One of the top geoscientists of the country, Dr. Rath is an alumnus of IIT Bombay and IIT Kharagpur. Dr. Ranjit Rath, welcome to this special broadcast.
Thank you very much. It is a pleasure having me here. I'm so glad to be part of your discourse in Northeast Life.
My pleasure, my pleasure to have you here. We are sitting down to talk this evening, Dr. Rath, on the eve of Advantage Assam 2.0, the mega infrastructure and investment summit being initiated by the government of Assam under the leadership of Chief Minister Dr. Himanta Biswa Sarma. Now, when we talk about business and industry or business and economy since Independence, we have only been talking about oil and tea, oil and tea, and later of course gas. But today we are talking about aerospace and semiconductors, we are talking about defense manufacturing, we are talking about IT, we are also talking about flavors and fragrances. Now, my question to you, Dr. Rath, is: in this backdrop, do you think the oil industry in Assam and the Northeast will be able to consolidate and continue to be one of the key drivers of the economy in this region?
Let me tell you, first of all, the excellent initiative being taken up by the honorable CM of Assam in terms of offering to the whole world the advantage to be in Assam, and we are so glad that the honorable PM is going to inaugurate this event. We are putting up an excellent stall of Oil India and NRL to showcase what Oil India and NRL is doing not only in the state of Assam for the entire Northeast and the country at large. To answer your question, the kind of spectrum which today Assam offers, the kind of opportunities today which Assam offers is phenomenal. It's very natural that we will continue to have more such opportunities, more such wide spectrum. But to tell you something, given the fact that Northeast of Assam has been the first discovery of oil in this part of the globe, and given the fact that India with 140 crore people around the hydrocarbon story is continuing to be the mainstay, and with 250 million metric ton of refining processing that is happening today, we would always continue to be an energy-hungry country. Absolutely, energy-hungry country with Assam having so much bet full of resources of oil and gas, we strongly feel Oil and NRL will have the major anchor role to play in the state of Assam and in Northeast. And for which while Numaligarh Refinery is under capacity expansion from 3 million ton to 9 million ton, Oil India is on a growth path of not only enhancing production but also doing more deeper drilling as part of our exploration campaign.
Absolutely. Now when you talk about the new avenues that Oil India Limited itself is going into, now I understand that Oil India Limited has achieved some kind of a major breakthrough in Assam. You have discovered oil in the North Bank of the Brahmaputra, which is something new because so long you have been doing it only in the South Bank of the river. Tell me something about that, that's a big big thing.
So first of all, let me tell you at Oil India or as a petroleum sector, we are very very elated with it. But I will not tell that this is a discovery per se. Okay, technically it is establishment of a reported presence of hydrocarbon in Northeast in the North Bank of Brahmaputra because there is a testing of flow rates, testing of the resource position, testing of the reserve position has to be done in terms of declaring it as a discovery. Okay, however, given the efforts that has been given over a sustained period of time, this has opened a new vista of exploration for which we are not only drilled a well of 4,400 meters in the North Bank of Brahmaputra, and as we know all of us that the entire South Bank of Brahmaputra we have lots of discovery and producing fields right, but we have established hydrocarbon. We are following it up with more well drilling in Northeast North Bank of Brahmaputra to establish and possibly it will be one of the good discoveries, but time will tell.
Now this is a very interesting thing that you said. You are drilling 4,400 meters. Now when oil was discovered here more than a century ago, you used to go only about 50 to 100 meters deep. So from that point you have come to 4,500 meters, so that is technology is speaking itself, isn't it?
I'm so happy that you asking this question and I want to tell the entire audience who are watching us. When it started in 1889, that was the first well we drilled in Digboi and we discovered the depth was about 50 meters. And today as we speak, we are producing from our Machkhow 6 field, that's 5,400 meters. Machkhow 7 we have established hydrocarbon, huge stacks of sandstone with natural gas, 5,700 meters. We have drilled the deepest well in this part of the globe, 5,800 or 5,900 meters in Sadiya, and we aspire to go deeper.
Absolutely. Now very nice to hear that. Now obviously my follow-up question will be what about the possibility of establishing, I will use your word, establishing hydrocarbon on the bed of the Brahmaputra. Okay, we are talking in the...
Absolutely, you are bang on. That's what the geologist in me tells. That if you have so prolific South Bank of Brahmaputra and we have established hydrocarbon, it's but natural we would tend to believe that there is hydrocarbon beneath the Brahmaputra bed. Therefore Oil India Limited has now adopted two more additional technology-driven drilling campaign. One is called extended reach drilling wherein we will target below the Brahmaputra bed by drilling vertically and then horizontally, so that the ecosystem or the ecology of that particular sensitive zone is not disturbed. Similarly, this is a breaking story, Oil India Limited is going to look for oil on the bed of the Brahmaputra. Yes, time will tell that we are going to drill ER wells. Further to reduce the footprint of our drilling efforts, we are also now initiated a campaign called multilateral drilling. Well, from a single point we are going to drill three to five wells and all the wells can be operated. And the letter of award has already been given, so in Barauni we are going to adopt it.
Right now, now you see, I mean you are a very passionate Oil Man. I mean you know now my question to you is how do you reflect 1889, more than 100 years ago oil was found in Assam and today as we are sitting here we are talking about drilling to establish or find hydrocarbon under the Brahmaputra river bed. How do you reflect?
Thank you very much for that passionate term. You are gracious enough. Now we strongly believe that Oil India Limited has got the best of the assets in this part of the globe. Assam self which is the category one basin is the number one out of those seven basins under category one. It's prolific and I must salute to all those indomitable spirit explorers who established first discoveries and discoveries and discoveries by drilling deep. So when we established hydrocarbon and we are producing today from the Oligocene formations from Lakhidhar as they call it, we are now targeting deeper horizons and we have been successful. We have been successful in Machkhow, we have been successful in Kusijan, and we are going to drill Sadiya well. That's what is our effort and we are hopeful to striking more resource positions and more reserves for India.
Right. Now talking about Oil India Limited, you have about a year ago, you have got the status of a Maharatna company, you were a Navratna company. Now Oil India Limited last fiscal you saw registered a growth of about 5.5 to 6%. Yes. Yet India continues to be heavily dependent on oil imports. Now you have set a target of only 4 million tons of oil crude and about 5 billion cubic meters of gas. Correct. Now don't you think you have a lot to go?
We have a lot to go because there are two things which comes on the way. These are all mature fields we have been producing from these fields 60-70 years, so there is a traditional conventional decline which happens in the production. So that decline is about 10 to 12%. So when Oil India as an EMP company reports a growth story of 5%, that means on top of the decline it is reporting 5%. So therefore the aspirational target of 4 million metric ton of crude oil is, I'm using the term aspirational, but as we drill deeper we would definitely reach there. The gas story is a bit different. As I speak, additional infrastructure development is happening. Indradhanu gas grid is getting connected to the source to the consumers, so with more infrastructure coming in we are going to have more gas wells. And I must tell since I'm speaking in Advantage Assam on the pre-evening and we are talking about northeastern part of the country, as part of our commitment to Northeast for BCPL, Oil India is targeting getting to drill 15 wells, deep wells, to ensure availability of rich gas. That's what is our gas story.
15 deeper wells, existing ones or new ones?
New ones. Now I must complement and I should use this platform that government of India has brought out this beautiful policy wherein as national oil companies, whether it is ONGC and Oil India, we would get a premium of 20% on the price of the gas which is $6.5 per mmbtu for the new gas and we are doing well. This allows us to experiment and explore deeper.
Right. Now see as you said we are talking on the eve of the Advantage Assam Summit where you are going to speak in the presence of a galaxy of people from India and abroad. My question is you see what possibilities do you see in Assam and the rest of the Northeast as far as investment is concerned in the petrochemical sector, let's say methanol and formaldehyde based sectors? You know what are some of the possibilities of investment you have?
As a very pertinent question. As an integrated energy company, because Oil India today is having NRL as part of its major subsidiary, but Oil India has also got stakes in various other units in Assam, say Brahmaputra Cracker and Polymer. Our interest is to protect and supply assured rich gas to BCPL so that it keeps producing Assam Petrochemical Complex. That's what is a JV of Assam government and Oil India where Oil India continues to supply gas and it produces methanol. Now more story from NRL, we have kind of not only looking at an expansion of 3 million ton to 9 million ton, we have also already taken an FID for 360 ktpa of a polypropylene unit. So as that about another 7,000 crore worth investment on top of 34,000 crore as part of our refinery expansion.
Right. You see both Oil India Limited and Numaligarh Refinery Limited, these are two companies which are very dear to the people of Assam. Yes. You know Oil India Limited has always been very dear to the people of Assam because that is the company that has been providing employment. When private companies producing the same amount of oil will be recruiting maybe about 5 to 600 or maybe 1,000 people, Oil India has more than 10,000 people or more on your rolls because that is your way of helping the people of Assam by even if you don't need people you have people, if my understanding is right. Now my question is when NRL expands as you said from 3 million ton to 9 million ton, we understand this thing are going to happen as early as the end of this year. How is it going to impact as far as the employment scenario or how is it going to contribute to India's oil production?
Look, I mean refinery, I mean end product, I would put it in a manner that it's not that Oil India or NRL we are doing any favor. It's very natural that this is our local community engagement is at the highest standard because the kind of nature or the portfolio that we hold we reach out to the people, that's one aspect. In terms of employment generation, as we speak last to last year Oil India drilled 38 wells, then we drilled 45 wells last year, we have drilled 60 plus wells this year also we are going to drill something like 60 plus wells. The 60 plus wells you have drilled where across India, but about 90% of them in Assam or in northeastern part of the country. So that brings an additional investment this year from an Oil India point of view, our committed investment is about 6,800 crores as far as drilling is concerned. Look at the derivative chemicals or derivative super speciality chemical possibilities which will emerge after the refinery expansion happens and the petrochemical refinery petrochemical complex or polypropylene unit happens. But most importantly, Numaligarh, we have also taken a very flagship decision and the flagship initiative is underway under the clarion call of honorable Prime Minister as part of import substitution. You said so during your initial opening remark, Malda, we are putting up one of its kind 2G ethanol project which is bamboo-based. The agrarian economy of northeastern part of the country or in Assam specific is going to flourish, the entire feedstock is going to come from Assam. That is bamboo, absolutely 300 km radius, the entire feedstock is bamboo, so it doesn't come between any food for fuel controversy and the plant as we speak is under pre-commissioning. Maybe in about 2 months we'll have full-fledged commissioning.
Now if I understand correctly, that biofuel plant that ethanol-based, you are going to produce 50,000 metric tons, which may be tons, which may not be a very big amount, but it is going to send out a message that you are serious about producing biofuel.
