New Delhi/Mumbai: Vedanta Ltd is investing $4.1 billion to boost oil output from its flagship Barmer block in the desert state of Rajasthan to over 400,000 barrels per day (bpd) in 2021, chairman Anil Agarwal said.
Agarwal said oil output from the block would rise next year to more than 300,000 bpd from about 250,000 bpd currently. “In 2-3 years it will be 450,000 bpd. We are investing almost 300 billion rupees to reach there," Agarwal told reporters.
India, the world’s third biggest oil importer, ships in 80% of its oil needs from overseas as its local output has stagnated for years. The country produces an average of 720,000 bpd oil.
The conglomerate on Monday bagged 41 of the 55 blocks offered by India under the new eased rules that offer the freedom to bidders to carve out areas for drilling.
For the new blocks, the company plans to invest 30-40 billion rupees in the exploration phase, Agarwal said.
Vedanta, the Indian unit of diversified mining group Vedanta Resources Plc, wants to scale up its operations to be able to contribute at least 1 percent to the nation’s planned $5 trillion economy by 2025, he said.
In contrast to Vedanta’s aggressive bidding for the latest auction, key foreign players continue to shy away from participating.
“I am looking for more and more competition to come. I want at least 10 more players to come ... This market will be better than foreign markets," Agarwal said.
India’s strong economic growth and the demographic advantage of having a pool of young people will remain key drivers in its energy demand growth.
India’s crude oil demand is forecast to grow to 500 million tonnes per year by 2040, according to the country’s top refiner Indian Oil Corp.
Agarwal, however, said India need to ease policies further to attract foreign majors to exploration. India bars exports of crude which means producers are limited to who they can sell their oil, often at a discount.
“Foreign players will not come until and unless they get international prices ... Today also they (the government) set the price, and which is so discouraging for the international players to come," he said.
Vedanta is currently selling its oil to local refiners at 10-12% discount to global benchmark Brent, he said, adding the company’s current cost of production is $7/barrel.
This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.