The 10th CFO Meet of Oil & Gas Industry was held under the stewardship of ASFA-MoP&NG & MoCAFPD, Shri G Srinivas on October 8-9, 2021 at Mussoorie.
Invoking the divine blessings
The finance stalwarts of the industry came together to brainstorm on some of the current and emerging issues in Oil & Gas Industry. The primary objective of this Meet is to deliberate on the emerging challenges and find a collaborative way forward on key common issues faced by the Industry.
The meet was attended by CMD and Director (F) ONGC- Subhash Kumar, CFO ONGC- Vivek Tongaonkar, Director (F) OVL- Vivekanand, Director (F) IOC- S K Gupta, Director (F) GAIL- A K Tiwari, Director (F) BPCL - V R Gupta, Director (F) MRPL- Pomila Jaspal, Director (F) CPCL- Rajeev Ailawadi, Director (F) NRL-Indranil Mittra, CFO HPCL-Rajneesh Narang, CFO GAIL-R K Jain, and GGM (F&A) ONGC-Vinod Hallan.
ASFA-MoPNG & MoCAFPD, G Srinivas during his keynote address
In his inaugural address, ASFA-MoPNG & MoCAFPD, G Srinivas remarked, “Having recently joined as ASFA-MoPNG, this forum is going to be beneficial for me to understand the key aspects and issues of the Oil & Gas Industry.” He underscored the huge task at hand as India is the third largest consumer of Energy in the world, with only the US and China ahead of us.
Mr Srinivas highlighted that in an industry like Oil & Gas, although possibilities are immense, at the same time such decisions always involve equal associated risks. However despite risks, and considering the challenges in the present environment and demands to increase production, amongst emerging trends worldwide of increased stakeholders’ involvement, the CFOs have to take critical decisions with less than clear sights or assurance of inputs & outputs, he added. The government understands the peculiar nature of job at your end and will provide all support and assistance as required, he assured.
There is a need to look at the future of the company and take decisions with common sense approach, he exhorted the fraternity stalwarts. “By working together in a cohesive manner to address the issues and challenges at hand, we can achieve better results”, he stressed. Its better to keep moving rather than being stuck, he added.
CMD & Director (F)-ONGC, Subhash Kumar addressing the gathering
In his welcome address, CMD and Director (F)-ONGC, remarked that Responsible Business is the Mantra today. Subhash Kumar emphasized the importance of this platform and said, “CFO Meet of O&G Industry is a collective forum to exchange views and find solutions to the real issues facing the fraternity which need to be addressed collectively and implement with synergized efforts.”
The two years of the Covid pandemic has changed the landscape as the kind of regulatory framework coming along is changing rapidly, remarked CMD, ONGC. “Today, CFOs are being required to address issues beyond numbers. CFOs have to now peep in the future and take holistic view while taking any decisions”, he underlined.
The way Government of India is steering the economy in a fast paced manner, bringing in new ways of business transactions and holding assets, the transition is taking place at a rapid pace, stated Mr. Subhash Kumar. The CFOs today can also be called Chief Future Officer as you need to peep into future, assess it and report it. All present decisions have future implications which can be accounted for today, he remarked.
During the two day meet, detailed discussions and deliberations were held on issues facing the Oil & Gas Sector and finance fraternity of the industry in particular.
Presentations were made by Industry experts and deliberated upon in detail by the forum on the following topics and issues:
- ESG Considerations and Implications for CFO
- Integrated Reporting
- Emerging Trends in Investment and Financing for Energy Companies, InvITs
- Energy Transition, Net-Zero, New Technologies such as Hydrogen, etc.
On the subject of “ESG Considerations and Implications for CFO”, Mr. Shailesh Tyagi of Ernst & Young (EY), set the context regarding the heightened awareness about Environment, Social and Governance (ESG) issues which has been created due to Social pressures leading to regulatory changes on ESG Risks disclosures and reporting requirements. He also pointed out that studies had shown that ESG integration helps in reducing Business volatility leading to lower cost of capital, improved management of resources and helps companies to manage systemic risks. Remarking that increased stakeholder activism has resulted in increasing investor push for ESG he elaborated that ESG is important for the oil and gas industry specifically as momentum continues to build to promote renewable energy, sustainability and energy transition as investors, governments and individuals remain focused on issues such as climate change, labour standards, diversity and corporate governance. Noting that it is important for CFOs to lead this ESG transition he suggested that the CFOs can start by focussing on three (3) key steps:
- Make ESG a strategic priority
- Connect financial performance metrics with ESG Goals
- Develop a framework to measure cumulative effect of ESG initiatives
He also presented ESG Best Practices in the industry.
Glimpses of presentations by Mr. Shailesh Tyagi and Mr. Manpreet Singh
In the next session on “Integrated Report (IR)”, Mr. Manpreet Singh, Partner, and Ms. Tanima Singh, Manager from KPMG educated the house on the requirement of Integrated Reporting in the Oil and Gas Sector in India. Expounding on the subject, they charted out the rise of ESG and non- financial reporting, the key investors’ perceptions and investing trends in ESG sector. The evolution of Integrated Reporting Framework and regulatory requirements and adoption of IR were highlighted. They pointed out that IR will help to present the financial and non- financial information of an organization making explicit the connectivity of information in the context of value creation with the purpose of clarity and emphasis on conciseness. The seven (7) Guiding Principles that underpin the preparation and presentation of an IR are:
- Strategic Focus and future orientation
- Connectivity of Information
- Stakeholder Relationships
- Reliability and Completeness
- Consistency and Comparability
The following session was on “Emerging Trends for PE Investments and InvITs” and Mr. Kunjal Thackar from Brookfield enlightened the members about the trends in PE investments, Infrastructure Financing and innovative financing structure – InvIT, its applications in Oil and Gas sector and the potential in India. Given the governments emphasis on monetising the assets of PSUs the members present were eager to obtain more details and this resulted in enthusiastic discussions by all.
Presentations by Mr. Kunjal Thackar and Mr. Atul Arya
The concluding session dealt with the topic “ Energy Transition: Going Fast, Going Slow?”. Delivering his presentation over VC from Boston, USA, Mr. Atul Arya, Chief Energy Strategist, HIS Markit gave the Key Messages on Energy Transition from Fossil to Non – Fossil Fuels / Renewables:
- Energy transition is about reducing GHG Emission and emission are not going down
- Transitions take time and are messy – this transition will not be an exception
- Oil and Gas Industry will be part of the Solutions – not part of the Problem
- Investors and Financial Regulators will drive the change
He concluded that in the recent past there has been a much stronger momentum to getting to Net – Zero; Collaborating will be critical to scale technologies such as CCS, Hydrogen and large-scale storage. There is a very significant gap between current level of investments and current pace of change vs. that required to achieve Paris Climate Goals and any path to Net- Zero will have to travel via the developing countries.
Meet in progress
In his concluding remarks, CMD and Director (F)-ONGC, Subhash Kumar said, “CFO has to face the challenges about trends developing in the industry and not overlook them in order to contribute towards cohesive and holistic management decisions.” In today’s times, a CFO can’t afford to miss the big picture beyond numbers and past dealings and is required to peek into the future for making prudent financial decisions, he added.
CMD & Director (F)-ONGC, Subhash Kumar during his concluding remarks
Although this meet was held in a truncated manner by following Covid appropriate behaviour, but has served as a great platform for this forum to meet, interact and discuss the challenges and issues being faced by CFOs across Oil and Gas Industry, said Mr. Subhash Kumar. “Hope this post covid restart leads to more opportunities for interaction amongst the fraternity”, he added.
ASFA-MoPNG & MoCAFPD, G Srinivas, in his closing remarks, shared, “This was a good opportunity for me to understand the contours of the elephant that Oil & Gas Industry is, as well as certain nuances of the sector.” From the Indian economy point of view, this sector is a major pillar which has its foundations in place and is continuously contributing to growth of the nation, he stated.
ASFA-MoPNG & MoCAFPD, G Srinivas during his closing remarks
“As discussed and deliberated during the meet, the concept of a CFO being Chief ‘Future’ Officer is absolutely spot on, considering the uncertain future trends emerging constantly which are difficult to predict but still need to be factored in while making decisions”, remarked Mr. Srinivas. Finding best possible solutions by navigation through various financial, environmental, technical and other issues is the name of the game today, he observed.
Mr. Srinivas concluded by urging the stalwarts of the industry, “You are the pathfinders who can create and lead other people down defined paths for sustainable growth.”
ED-CFO, ONGC, Vivek Tongaonkar during the vote of thanks
The event was anchored by DGM (F&A), ONGC, Lakshman Gora and the Vote of Thanks was proposed by ED-CFO, ONGC, Vivek Tongaonkar.
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