Oil, gas key focus areas despite changing energy landscape
Energy transition will be ‘mineral-intensive’: Agarwal
Pledges $5 billion to accelerate transition toward net zero
India’s Vedanta is aiming to invest billions of dollars into the oil and gas sector and its resources businesses as the changing energy landscape will boost demand for both fossil fuels and metal resources in the foreseeable future, its chairman Anil Agarwal said.
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Vedanta, which owns Cairn Oil & Gas, Hindustan Zinc and several other commodities-related businesses, said oil and gas will continue to play a key role despite the energy transition, although the process will be mineral-intensive.
“In the oil and gas sector, we are India’s largest private-sector producer, contributing 25% of the country’s hydrocarbon production. Our strong presence in the natural resources sector is expected to yield even stronger returns in the coming years. Apart from India’s robust growth, the mineral-intensive energy transition will also boost demand exponentially,” Agarwal told investors at a recent meeting.
Vedanta was looking at a capital expenditure of $1.7 billion in the current year across its businesses, Agarwal said.
Cairn has set a target to raise its share of domestic oil and gas production to 50% as the upstream investment climate has improved, with the government easing many procedural complexities in the upstream oil and gas sector. The company is hoping for more investor-friendly policies to flow for New Delhi to achieve its ambitions of reducing energy imports to 50% of the energy basket by 2030.
Cairn recently said its estimated total gross 2P reserves plus 2C resources stand at 1.16 billion barrels of oil equivalent, of which oil accounts for 85%.
“We have significant undeveloped resources and we’re moving at pace to apply the latest technology to define a portfolio of up to 20 new projects. We’ve also a material exploration position in India and are commencing an exciting exploration drilling program aimed at continuing to grow our resources,” Cairn CEO Nick Walker said.
Cairn has 62 licenses in India that are estimated to contain over 3 billion boe of gross prospective resources. The company plans to drill up to 20 exploration wells in the next two years targeting approximately 500 MMboe gross prospective resources.
In 2004, Cairn made the largest onshore discovery in more than two decades in Mangala, Rajasthan. In its 20 years of operations, Cairn has opened four frontier basins with many discoveries and 38 in Rajasthan alone, which is its largest producing onshore oil block.
The company’s current total production capacity stands at 147,000 boe/d, with the Rajasthan block contributing 120,000 boe/d, or nearly 82% of the total. Cumulatively, the block has produced over 700 million boe in the last decade.
Other businesses
Vedanta has operations across India, South Africa, Liberia and Namibia.
Hindustan Zinc is the world’s largest fully integrated zinc-lead producer and the sixth-largest silver producer globally.
Vedanta is also the largest producer of aluminum in India and has recently acquired coal and bauxite assets to further its raw material security, Agarwal said.
The company is the sole nickel producer in India and possesses one of the largest copper production capacities in the country.
“Vedanta already has, in its unique portfolio, seven minerals which are key to the new, emerging technologies. Our iron ore business has 180 million mt of reserves, which will ensure a secure supply for the next decade. As your company evolves, we have initiated strategic review of our steel and raw material businesses for creating maximum value for our shareholders,” Agarwal said.
The company was committed to achieve net-zero carbon emissions by 2050, he said.
“To accelerate the transition to net-zero operations, we have pledged $5 billion over the next 10 years. Our decarbonization efforts include the utilization of 2.5 GW of round-the-clock renewable energy and a target to reduce absolute emissions by 25% by 2030.”
India’s annual imports are over $700 billion annually. Soon, they will reach $1 trillion and 50% of these imports would be natural resources, such as oil and gas, gold, diamonds, copper or aluminum. Vedanta is well-positioned to seize this opportunity, Agarwal added.
“The world has its eyes on India as the next factory of the world. Our country stands to be the principal beneficiary of the ‘China + 1’ strategy,” he added.