Oilmax Energy, a privately-held oil and gas company, plans to spend more than $100 million in the next three years in order to expand its operations, the company’s founder, chairman and managing director Kapil Garg told FE. The company also expects its gas field in Duarmara, Assam, to begin production by September, thus adding to the domestic gas output of the country.
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“In the next three years, we are looking to spend more than $100 million as capex. So, for the current expansion plans as of now, we are fully funded,” said Garg.
Other than Duarmara, the company owns two more fields in Assam – Amguri and Tiphuk. The Tiphuk field already has some wells and the company aims to start testing these by the end of the month.
“We have applied for regulatory permissions and are hoping that we can start testing these wells towards the end of this month,” Garg said. “If the tests are successful, we can just start production in about six months.”
At present, the company’s Amguri field produces 250,000 cubic meters of gas per day, which can go up to 750,000 cubic meters a day, while the Duarmara field produces 1 million cubic meters of gas per day. The Amguri field also produces 500 barrels a day of condensates (a crude oil-like liquid that comes out of the ground along with the gas).
“Tiphuk is at a very early stage but in phase 1, we anticipate it should be able to produce 0.1 cubic meters of gas per day,” Garg said.
Further, Garg believes that the completion of the Indradhanush project — the Northeastern gas pipeline that is currently under construction — by November will likely help the company ramp up its production and transport it to other markets.
The company’s Indrora field in Gujarat produces 75 barrels of oil a day. Garg hopes that it will cross 300 barrels a day output in the next three months and 750-1,000 barrels a day towards the end of this year.
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In addition to its oil and gas fields under exploration, the company recently won a block of coal-bed methane in Chhattisgarh and aims to start its operations within six months after it receives all the environment and pollution board clearances.
“Our subsidiary, which is listed, Asian Energy Services, already provides all the services to the coal sector, including seismic surveys for the estimation of coal seams, which will be critical in this particular case too. So, we have expertise to do most of the work and should be able to start it within six months,” Garg said.
The company plans to spend Rs 35 crore for the exploration part of the project and release subsequent capex once the exploration is successful.
Oilmax is the parent company of the listed entity Asian Energy Services and has a 62.5% stake in it.
Oilmax Energy is looking to expand its business and aims at selling oil to large companies, including the Indian Oil Corporation, to enable itself get the real price of the product. “We have been talking to IOCL to sign a long-term agreement (for supply of oil) and recently, they have agreed to participate in the tender process for sale of oil from the Indrora field,” Garg said.
Addressing the challenges in the oil and gas sector in the country, Garg noted that financing in the sector needs a push and the industry has now and again demanded the government to give it the ‘infrastructure status’.
“We have had discussions with the government about creating some kind of a dedicated bank or financial institute, which can help finance oil and gas projects, and the government has been proactive about it,” said Garg.
As per the information, the government has made a committee of three banks – State Bank of India, HDFC, and ICICI- to make a framework, which has already been submitted.
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“Basically, the framework suggested some of the changes to the contract the government must sign,” Garg said. “We’ve noted down the concern areas and also the framework to the government, including changes in contractual clauses to give banks the comfort they will need in financing those projects.”
