R.S. Sharma is the chairman and managing director of Oil and Natural Gas Corporation Ltd (ONGC), the largest company in India in terms of revenue. A cost and works accountant by training, Mr Sharma was appointed ONGC chairman in 2006. Earlier, Mr Sharma was director (finance). Prior to this, he was on the board of ONGC Videsh Ltd, Mangalore Refinery and Petrochemicals Ltd, ONGC Mittal Energy Services Ltd. and Indian Oil Corporation Ltd.Excerpts from an interview with S. UMAMAHESHWAR:

Petroleum prices had reached a high of $147/bbl earlier. Even now, they are in the range of $70-80/bbl. Should we be ready to live under a high oil price regime for a long time?There is a huge demand for oil and gas products globally. Though the prices have come down due to the economic recession, I think the growth in demand will take the prices back to three-digit levels. We have to live with this reality.ONGC has announced several discoveries in the KG Basin in the past couple of years. Could you give us some details of your plans here — what levels of oil and gas production do you foresee from these discoveries? We have set up a task force headed by an executive director to streamline our operations in the Krishna-Godavari basin. Our KG basin wells have a potential of 20 million cubic metres of gas per day. But some of the wells are in the deep seas below 2,800 feet. There are two problems in this — technology and financial viability. We don’t have technology to produce oil from these (deep) wells. Even if we get technology, we have to ensure the project is financially viable. So I can’t put numbers on the production from these discoveries.ONGC was supposed to start production of gas from KG basin by 2011. Is it possible to stick to this deadline?The production from two wells — Gautami and S1 — in KG basin will begin from 2011, while the production from two other wells, which was stalled because of the company’s moratorium on the acquisition of rigs, will start in 2013.The last decade has seen ONGC scale up its presence outside India as well. What kind of production and revenues are you looking at from ONGC Videsh over the next 3-5 years?Currently, ONGC produces 25.4 million tonnes of crude in 2008-09. We have forayed into foreign countries to tap the oil and gas reserves and we are continuing with this task.You were in Africa recently, with the petroleum minister. What are the big challenges there? Where does Uganda figure in your agenda?Africa is one of the important destinations for India’s search for oil and gas assets. The petroleum minister’s visit underscores the importance of Africa in India’s energy plans. Currently, ONGC has operations in Nigeria, Sudan, Libya, Egypt and Congo Brazzaville. With regard to competition, in each country, we have a different set of challenges. Among them, competition is the prominent challenge. As far as the Uganda visit is concerned, it was a goodwill visit. We held talks with its officials. As and when they invite bids, we may consider participating in it.Chinese firms have had a greater success than ONGC in bagging new projects abroad. Any views on why that is the case? Our mandate is to secure India’s energy interests. We take decision on case to case basis. Hence, we are not in line-to-line competition with Chinese companies. ONGC wanted restoration of tax holiday for the gas sector. Has there been any positive indication from the government in this regard?Yes, we have asked the Central government to restore tax holiday on gas production. But we are still waiting for the government’s response.How much of ONGC’s produce is sold under the administered price mechanism (APM) now?ONGC crude, gas and majority of value added products are sold to refineries and oil marketing companies at market linked prices. However, due to the significant subsidy outgo, the net realisation is much less than the market prices. ONGC’s production is reportedly dipping beca-use of ageing fields. What are your plans to optimise the production?Natural decline in production from the matured fields is a global phenomenon. Our 15 major fields, which account for 77 per cent of total ONGC’s total production (2007-08), have registered a 1.6 per cent increase in the fiscal 2007-08 over what they were producing in the fiscal 2000-01, bucking the global trend.