Dr. Ranjit Rath, CMD of Oil India and Chairman of NRL at Numaligarh Refinery is joining us exclusively on NDTV Profit. Dr. Rath, thank you so much for speaking with us. Let's start by you taking us through the numbers for the financial year and for the quarter. We've seen a 10% increase in PAT, record production levels, but year on year there has been a dip in profitability, isn't it?
First of all, thank you very much for having me and good morning to all of you there and the viewers. Yes, we had a record performance this year, the highest ever since inception — 6.71 in terms of crude oil and natural gas both. We also scripted a highest ever natural gas, and the year we scripted about 10% growth in terms of our standalone PAT, which is about 6,000 crore, and consolidated we did about 7,000 crore, which includes NRL and other subsidiaries of ours.
Okay. What has been the standout feature for you, Dr., for the quarter, and do you see production levels of the kind that we've seen sustaining?
See, it's like this — Oil India is primarily having assets in Upper Assam, which is one of the best basins that we have, a Category 1 basin. So we see a lot of opportunity still left in Assam itself. Now, having said so, we have enhanced our exploration, which is near-field exploration per se, and our development drilling campaign, which has resulted in the enhanced production. Now, since these are all mature fields, there is an ingrained production decline which happens — about 8 to 10% year on year. So whatever growth that we scripted, say about two and a half or three percent, or last to last year it was even 5%, that's on top of the decline. So the gross you would look at is about 12 to 13% growth. That happens by virtue of undertaking multiple drilling in terms of our development drilling efforts and immediate monetization, given the infrastructure availability that we have in terms of crude oil evacuation.
Okay. What is the kind of trend that you're seeing on crude oil prices? I mean, crude oil prices now have been depressed for a while. We'll wait for the OPEC Plus meet to give us some more clarity. But what is the trend that you see, sir, and how are you changing or moving strategy accordingly?
I totally agree with you. I tend to believe that the current trend that we are witnessing since the last two months is going to stay here for some time. And given that last year we had a realization number of about $78 per barrel, and this year the outlook would hinge around $65 per barrel or so. So we have lined up a three-pronged strategy to counter this depressed price point. Number one, something called cost efficiency in terms of our operations that we have already initiated. Number two, we are going to drill more identified prospect-driven wells which have got a better pool size, to maximize our production. And number three would be during the same period of one year we would have a more aggressive drilling campaign. Let's say the last three years we have been scripting about 30 to 35% growth on drilling efforts, and last year though we spotted about 70 number of wells, we could finally complete 59 wells. Now this year also we will have an aggressive drilling program. So these are the three things which we think will give us enhanced production to counter the depressed price point.
Okay. Let me just talk a bit about your volume guidance, sir. You have remained committed to a short-term target of 4 metric tonnes of oil, 5 BCM of gas output by FY27. So you're going from your current 3.5 to 4 for oil and 3.2 to 5 for gas. What is the basis of this volume guidance?
So these are the targets that we have given to ourselves. And as you would know, our target for this year would be about 3.77. Now all that would happen by virtue of multiple ways of drilling. Let me explain. A, we would identify more potential blocks within our mining lease. B, we have identified some more proven presence of hydrocarbons in our additional development wells. We have done about 40-plus geological studies in the same area, and that has given us new identified locations — about 90-plus — and those are all the prospects that we are looking at. That's one. Second, we have already given an order for a multilateral drilling effort where from a single plinth we are going to drill three wells, so that gives us additional opportunity for growth. Plus, we have also lined up integrated drilling services where the consumables will also be given by the charter rig supplier. So these are those interventions in which we would like to enhance our production. As far as the capacity in terms of evacuation is concerned for crude oil, we do not foresee any constraint at all. In terms of natural gas, as you would appreciate, we have a pipeline dedicatedly running from Numaligarh to Duliajan — that's the DNPPL Numaligarh pipeline — where currently we are supplying gas to Numaligarh. Now once Phase One of IGGL, that is Indradhanush Gas Grid Limited, the Northeast Gas Grid, is commissioned, Phase One will have a hookup arrangement, and DNPPL, once it is announced as a common carrier, from 1 million standard cubic meters per day we can ramp up to 2.5 million standard cubic meters per day. That's one in terms of gas infrastructure. Second, from our Kungchai field, which we were earlier getting flared — about 1 million standard cubic meters of gas — now we have a dedicated pipeline connecting Kungchai to Duliajan, so we are evacuating that gas as well. There are some infield lines which we are also replacing, but most importantly, the Duliajan feeder line for IGGL under the Northeast Gas Grid, as we speak, is getting approved, and that connectivity will help us to evacuate another 6 million standard cubic meters per day. So that's the outlook we carry for evacuation infrastructure for natural gas.
Got it, sir. So, good morning, NJ. I'm just trying to pin all of this down into what it would mean for investors who are looking at the business right now. I presume you had an analyst day today. And I'm trying to think of the central piece of communication that would pop up in any investor's mind — that while oil prices have been volatile, that's well accepted. But between FY23 to FY25 for Oil India, the revenues have gone down a little bit, the operational metrics have come off quite a bit, operating margins FY23 to FY25. So what is it that can give me as an investor some comfort about the outlook? What would you say to that, sir?
Okay. So the outlook would always remain positive as far as Oil India is concerned. If you would look at the last two years' results, including the year just concluded, Oil India has been scripting higher production every year, both in terms of natural gas and crude oil. So therefore we will continue to grow at a level of 3 to 5% this coming year and the year after also. So that's the outlook I would like to give to our investors. And second, we are looking at a better operating margin this year because the crude oil price point is depressed — the rig supply, we would probably have a better rate this year. That's the outlook I would like to share with the investors.
