It may well be an alarm bell. The oil and gas fields of the Oil and Natural Gas Corporation (ONGC) are ageing and it could have long-term implications on our growth story.
The ministry of petroleum and natural gas has attributed the slowdown in crude oil and gas production during the first quarter of 2007-08 to the ageing oil and gas fields of ONGC. The PMO, in a letter dated August 27, had sought an explanation from the ministry for the decline in oil and gas production.
The shortfall in production of natural gas during the period stood at 386 million standard cubic meters (MMSCM) during the first quarter of 2007-08, a 4.5% decline compared with the year-ago period. Even crude oil production fell 0.7% at 8.38 million tones (mt) compared with 8.44 mt in the year-ago period.
The PMO had sought explanation from the petroleum ministry following concerns expressed by finance minister P Chidambaram.
In his letter dated August 21 to the Prime Minister, Chidambaram had sounded an alert over the decline in the quarterly performance of certain crucial infrastructure sectors, including coal, steel, petroleum, fertilisers and the railways.
Responding to the PMO?s concerns, the petroleum ministry cited worldwide trends of an annual decline rate of 7-8% in the ageing fields. ?There has been a natural decline in production from ageing fields, especially Bassein gas fields and partially Neelam (oil and gas field), B-173 (cluster of gas fields) and Gujarat fields. ONGC has taken pro-active measures to arrest this decline,? the petroleum ministry has said.
Another reason cited by the petroleum ministry for the slowdown was the planned shutdown at the SH platform at the Mumbai High offshore, leading to a shortfall in gas production of 113 MMSCM.