Focus on E&P, ONGC told

The ministry has warned ONGC to focus on its core business of exploration and production. It has said the company could otherwise become a marginal player in the gas sector in two or three years, and in the oil business in five to six years.

?This (warning) should be the driving factor for ONGC to redraw its priorities and focus on core E&P to retain its position in the years to come,? said the minutes of the meeting, quoting petroleum secretary MS Srinivasan.

The publicly listed company has also been cautioned about the fact that ?smaller and nimble companies were proving formidable? and that it was time for ONGC to set right its priorities by aligning its actions along the mandate.Its shares closed at Rs 930.70 at the NSE on Tuesday, down from its 52-week high of Rs 1,205.

?ONGC should produce more and more hydrocarbons as this is its prime objective. Globally, E&P companies have ventured into integration only after becoming giants in hydrocarbon exploration and production. ONGC?s recovery factor is a matter of concern and that reserve accretion should translate into production,? the minutes said.

When contacted, an ONGC official said, ?We agree that ONGC will have to perform better in coming years. Actions have been taken to optimise the reserve-to-production ratio. Several domain experts and consultants have been appointed both in exploration and production. A rig acquisition and upgradation plan has also been put in place.?

The exodus of talent and high attrition rate was also highlighted at the meeting. Attrition over the last one year has been the highest in the past five years and 328 professionals have left the organisation. The main reason for this was the inability of ONGC to meet compensation packages being offered by the industry. The petroleum ministry has asked ONGC to take immediate steps to arrest attrition, especially from exploration and drilling or else it would badly affect its core E&P business.