Drilling of two wells in B-80 block has completed, says HOEC Managing Director P Elango

P Elango, Managing Director, HOEC, talks about increasing crude prices & their impact on HOEC, B-80 block, Hardy Exploration & Production as well as Kharsang Oil Field and CapEx during a candid chat with Swati Khandelwal, Zee Business. Edited Excerpts:  

Q: Crude prices have reached around $70 per barrel. What impact will it have and what are your expectations related to crude prices?  

A: Really what happened is in January is Russia and Saudi Arabia did a very surprise announcement of cutting their production by one million barrels during February and March. This action which is taken by Saudi Arabia almost after several years without consulting OPEC sent a very strong signal in the market after which you saw the oil prices rallying upwards. The other factors that are happening are before the COVID hit the world an average of 100 million barrel of oil demand and supply was there in the global system. Post the pandemic about 8-10 million barrels of oil demand declined sharply and the industry has never seen such a sharp decline in demand globally. Now, why the rebound is happening, but it is happening at a very uneven pace in the different region, for example, China didn’t lose much of demand and India came back very strongly as the lockdown opened up. And Europe is still struggling because the market is expecting a scenario in which as the demand for oil and petroleum products recover in 2022, the market expects that the current supply to shrink marginally and particularly whenever you put additional 1 million barrels into the market, the price will go down. And, if you take out a million barrels of oil from the global market the prices will shoot up. This is what is happening in the market. General predictions across the analyst's world are for oil prices to get stronger in the latter part of this year and touch pretty higher levels in 2022 as the whole world demand comes back. What the pandemic has really taught is the world’s dependence on oil and petroleum products only becomes stronger than ever as people prefer a personal mode of transportation rather than using the public mode of transportation. That is the overall outlook. Specifically, at HOEC, we really don’t look at the oil price movement, but we focus on how we improve the volume of production and how do we keep down our cost always. So, our focus has always in on how to keep up the volumes and how to keep down the prices and our efforts and focus always remains in that direction.  

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