Maharatna ONGC makes strong pitch for Essars Ratna fields

Written by Siddhartha P Saikia | New Delhi | Updated: Jun 3 2014, 14:21pm hrs
ONGCThe government is expected to decide on the matter shortly after consulting the Prime Minister?s Office.
Oil and gas major ONGC has opposed the UPA governments move to re-auction the Ratna and R-series fields, located130 km southwest of Mumbai. The state-owned firm has made a strong pitch to Dharmendra Pradhan, the new petroleum minister, arguing the field was originally held and developed by it and should be reallocated to it.

The Ratna and R-series fields have been languishing since 1993 when the PV Narasimha Rao-led Congress government decided to invite bids. It was subsequently allocated to Essar Oil in 1996. However, with the government failing to come up with an amicable production-sharing contract, the field has so far not been formally handed over to Essar and not a single barrel of oil has been produced.

With outgoing petroleum minister M Veerappa Moily deciding during his last days in office to re-auction the fields, ONGC has thrown its hat in the ring. The government is expected to decide on the matter shortly after consulting the Prime Ministers Office.

Recently, ONGC chairman and managing director DK Sarraf wrote a detailed letter to petroleum secretary Saurabh Chandra that it had originally found 57 million tonnes of in-place oil reserves in the Ratna and R-series fields. Of this, it took out 1.36 million tonnes of hydrocarbons from February 1983 till September 1994 from nine development wells. The current reserves are expected to be more than the projection at the time of awarding, a petroleum ministry official said.

The maharatna firm had drilled 35 exploratory wells and also set up a platform to monetise eight oil-bearing structures at a cost of $300-500 million. Of this, R12 is the main field, holding maximum reserves.

Moreover, even though ONGC was not given the acreage, it continued to maintain the infrastructure through aerial surveillance and hence incurring additional expenses, officials said.

Sources said that ONGC is making a strong pitch for the fields at this point in time because with its production dipping it needs access to fields from where it can generate production faster. The firms standalone crude oil production has dipped to 22.25 million tonnes in FY14 from 24.67 million tonnes in FY10.

At the time of bidding in 1993, the Ratna and R-series fields had a project life of 22 years. Of this, 18 years have passed with no production-sharing contract being signed. None of the petroleum ministers who headed the ministry during these years took a decision ostensibly because some similar awards prior to it had got entangled in audit objections by the Comptroller and Auditor General followed by public interest litigation.