Govt wants ONGC to identify areas for involving private sector: Oil Secretary

India is 85 per cent dependent on imports to meet its oil needs, and a way to cut the high import bill is to increase domestic production.

India is 85 per cent dependent on imports to meet its oil needs, and a way to cut the high import bill is to increase domestic production. Reuters Photo

The government is pushing the public sector behemoth ONGC to involve private sector companies and service providers wherever possible to help raise oil and gas production, Petroleum Secretary Tarun Kapoor said Thursday.

Kapoor's comments came days after the second-highest ranked official in his ministry asked Oil and Natural Gas Corporation (ONGC) to give away a 60 per cent stake plus operating control in India's largest oil and gas producing fields of Mumbai High and Bassein to foreign companies.

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"ONGC has to explore more so that it can discover more oil and gas reserves and bring them quickly to production to raise domestic output. The government is very clear that ONGC has to do more," he told reporters here.

India is 85 per cent dependent on imports to meet its oil needs, and a way to cut the high import bill is to increase domestic production.

"Naturally, when they do more work, there are areas where they can get experts in the fields... Such as in deepsea," Kapoor said.

Discoveries that the company hasn't been able to develop or areas that it hasn't been able to explore are some of the examples where the ONGC can involve the private sector and foreign companies.

ONGC, he said, should identify areas where it can get private sector expertise and efficiencies. These could range from technical collaboration to giving partially explored and undeveloped discoveries to private firms. The private sector can also be involved in enhancing production from existing fields.

"We have only made suggestions to ONGC... The government cannot give directive to a Maharatna company. The ultimate decision has to be taken by the company board," he said.

Amar Nath, additional secretary (exploration) in the Ministry of Petroleum and Natural Gas, on October 28 wrote a 3-page letter to ONGC Chairman and Managing Director Subhash Kumar, saying productivity of the Mumbai High and Bassein & Satellite (B&S) offshore assets under state-owned firm was low, and international partners should be invited and given 60 per cent participating interest (PI) and operatorship.

This is the second time since April that Nath, who is part of the ONGC management as the longest-serving government nominee director on its board and often considered a potential candidate to replace Kumar next year, has written an official letter, painting a poor picture of the company's performance.

According to the letter, a copy of which was reviewed by PTI, he said the redevelopment projects will raise recovery of the mature and continuously declining Mumbai High field from 28 per cent to 32 per cent, "which is quite low".

Mumbai High, which was discovered in 1974, and B&S that was put into production in 1988 are Oil and Natural Gas Corporation's (ONGC) mainstay assets, contributing two-thirds of its current oil and gas production. Without these assets, the company will be left with only smaller fields.

Nath had on April 1 written to Kumar to sell stake in producing oil fields such as to Ratna R-Series to private firms, get foreign partners in KG basin gas fields, monetise existing infrastructure, and hive off drilling and other services into a separate firm to raise production.

The two letters by Nath are the third attempt by the oil ministry to get ONGC to privatise its oil and gas fields under the Modi government.

In October 2017, the Directorate General of Hydrocarbons, the ministry's technical arm, had identified 15 producing fields with a collective reserve of 791.2 million tonnes of crude oil and 333.46 billion cubic meters of gas, for handing over to private firms in the hope that they would improve upon the baseline estimate and its extraction.

A year later, as many as 149 small and marginal fields of ONGC were identified for private and foreign companies on the grounds that the state-owned firm should focus only on big ones.

The first plan couldn't go through because of strong opposition from ONGC, sources aware of the matter said.

The second plan went to the Cabinet, which on February 19, 2019, decided to bid out 64 marginal fields of ONGC. But, that tender got a tepid response, they said, adding that ONGC was allowed to retain 49 fields on the condition that their performance will be strictly monitored for three years.

Nath in both April 1 and October 28 letters stated that two years have elapsed since the Cabinet decision but ONGC is yet to initiate the process for partnerships.

ONGC produced 20.2 million tonnes of crude oil in the fiscal year ending March 31 (2020-21), down from 20.6 million tonnes in the previous year and 21.1 million tonnes in 2018-19.

It produced 21.87 bcm of gas in 2020-21, down from 23.74 bcm in the previous year and 24.67 bcm in 2018-19

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