A key priority for any developing nation is to maximise its self-sufficiency in energy.
As one of the world’s fastest-growing economies, and with oil-demand growing exponentially, India is seeking to reduce its oil imports – which currently account for around 80% of the nation’s consumption.
At Vedanta, we are not only ready to reduce this deficit, but are positioning ourselves to contribute half of the total oil produced in India. Over the next few years, we aim to increase production from 200 kboepd today to 300 kboepd. This ambitious aim will be aided by a new business-partnership model (see below) and lays the foundation for achieving a production of 500 kboepd with reserves of three billion barrels.
In the near-term, we are investing gross capex of US$2.3 billion to increase our resource and reserve base by around 375 million barrels. Our rich project portfolio is comprised of enhanced oil recovery projects, tight oil & gas projects and exploration prospects. As well as boosting production, this investment will generate sustainable employment opportunities, directly and indirectly and bring cuttingedge solutions to community needs.
For example, as part of our Jeevan Amrit Yojana programme, we are also focusing on recycling water in Rajasthan, a dry area of India. By installing 330 community reverseosmosis plants, we will help to deliver safe drinking water to one million people.
Today, we have fundamentally altered our strategy, enabling us to execute multiple projects simultaneously with greater efficiency and to deploy innovative technological solutions across the value chain.
Our new end-to-end integrated partnership model, developed in collaboration with our business partners, is the first of its kind in India. Partners receive a fixed base fee, but with the added incentive of participating in a share of output, based on speed, efficiency and safety parameters. In turn, this encourages those partners to innovate in terms of technology and operations.
We have started awarding the integrated development contracts, for these projects worth c. US$1.8 billion, of which US$1.3 billion has already been awarded to global oil field service providers such as Halliburton, Schlumberger, Petrofac and Baker Hughes, to be executed over the next 1-3 years. These contracts incorporate clearly defined timelines and a risk-reward matrix linked to performance.
This new model has already generated significant value for us: by consolidating existing contracts, we have reduced costs by more than 20%. We expect further upside from operational efficiencies, driven by best-in-class technology solutions.