Oil ministry tells ONGC to sell oilfields; hive off drilling, other services

This is the third attempt by the oil ministry to get ONGC to privatise its oil and gas fields under the Modi government (Reuters)

The petroleum ministry has instructed India’s largest oil and gasoline producer ONGC to sell stake in producing oil fields corresponding to to Ratna R-Series to non-public companies, get overseas companions in KG basin gasoline fields, monetise current infrastructure, and hive off drilling and other services right into a separate agency to elevate manufacturing.

Amar Nath, further secretary (exploration) within the Ministry of Petroleum and Natural Gas, on April 1 wrote to Oil and Natural Gas Corporation (ONGC) Chairman and Managing Director Subhash Kumar giving a seven-point motion plan, ‘ONGC Way Forward’ that will assist the agency elevate oil and gasoline manufacturing by one-third by 2023-24.

The motion plan, reviewed by PTI, calls on ONGC to think about sale of stake in maturing fields corresponding to Panna-Mukta and Ratna and R-Series in western offshore and onshore fields like Gandhar in Gujarat to non-public companies whereas divesting/privatising ‘non-performing’ marginal fields.

It wished ONGC to herald international gamers in gas-rich block KG-DWN-98/2 the place output is slated to rise sharply by subsequent yr, and the just lately introduced into manufacturing Ashokenagar block in West Bengal. Also recognized for the aim is the Deendayal block within the KG basin which the agency had purchased from Gujarat authorities agency GSPC a few years again.

The ministry additionally needs the corporate to discover creating separate entities for drilling, effectively services, logging, workover services and knowledge processing entities.

This is the third try by the oil ministry to get ONGC to privatise its oil and gasoline fields below the Modi authorities.

In October 2017, the Directorate General of Hydrocarbons, the ministry’s technical arm, had recognized 15 producing fields with a collective reserve of 791.2 million tonnes of crude oil and 333.46 billion cubic metres of gasoline, for handing over to non-public companies within the hope that they’d enhance upon the baseline estimate and its extraction.

A yr later, as many as 149 small and marginal fields of ONGC have been recognized for personal and overseas corporations on the grounds that the state-owned agency ought to focus solely on massive ones.

The first plan could not undergo due to robust opposition from ONGC, sources conscious of the matter mentioned.

The second plan went up to the Cabinet, which on February 19, 2019, determined to bid out 64 marginal fields of ONGC. But, that tender bought a tepid response, they mentioned including that ONGC was allowed to retain 49 fields provided that their efficiency will likely be strictly monitored for 3 years.

The ministry observe of April 1, 2021, mentioned two years have elapsed because the Cabinet determination and non-performing fields want to be recognized for divestment and privatisation.

It urged market-friendly bid phrases corresponding to decrease royalty charges and full advertising and marketing and pricing freedom.

For medium-sized producing fields, the motion plan wished ONGC to establish maturing fields corresponding to Panna-Mukta, Ratna and R-Series in western offshore and Gandhar in Gujarat in addition to fields corresponding to Daman in western offshore which had upcoming improvement plans, for stake sale.

It additionally wished ONGC to think about growing new enterprise fashions for monetisation of stranded property/discoveries corresponding to design, finance, constructed and function in addition to annuity and securitsation based mostly fashions for improvement. Fields corresponding to GK-28/42 and all unmonetised discoveries, both individually or as a bouquet, have been recognized for the aim, the doc confirmed.

The observe mentioned that to cut back dependence on import of crude oil and gasoline, the ministry has set the home manufacturing goal of 40 million tonnes of crude oil and 50 billion cubic metres (bcm) of pure gasoline by 2023-24. The bulk of the focused home manufacturing for 2023-24 is anticipated to come from ONGC, which is required to contribute 70 per cent of the home manufacturing (28 million tonnes of oil and 35 bcm of gasoline by 2023-24).

It mentioned the share of ONGC contribution within the oil and gasoline consumption of the nation is reducing constantly as its manufacturing is stagnant or reducing for a very long time. As a outcome import dependency is rising.

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

It produced 21.87 bcm of gasoline in 2020-21, down from 23.74 bcm within the earlier yr and 24.67 bcm in 2018-19.

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