Even as country?s private sector firm Reliance Industries Limited (RIL) has begun oil production from its eastern coast D6 block and is all set to shortly start gas production, the Oil and Natural Gas Corporation (ONGC) is saddled with procedural hassles which continue to delay its oil and gas production plans.
Thanks to the CVC procedures and guidelines that ONGC has to adhere to, which is restricting it to hire rigs, gas production from its eastern offshore block in the Krishna Godavari basin may not begin before 2013. Earlier, the production was envisaged to start in 2011.
?The CVC procedures and guidelines restricted ONGC to go ahead and hire a rig for its east coast operations. After detailed negotiations, the rig was available for ONGC at $ 550,000 a day. However, we were not allowed to go ahead and hire the rig, which was hired by another company for $600,000 a day. So we lost out on account of our procedures. We are in a dilemma. How are we then expected to compare with our private sector counterparts, who do not face any such restrictions,? ONGC?s chairman and managing director, R S Sharma said.
ONGC is investing close to $5.5 billion in developing gas finds in eastern offshore Krishna Godavari basin blocks?KG-DWN-98/2 and KG-OS-DW4. The estimated gas reserves in these blocks is 6.7 trillion cubic feet of gas.
Sharma said the non-availability of rigs especially the deepwater and ultra deepwater ones was a major problem being faced by all oil and gas developers across the globe. The rig prices have seen an unprecedented jump from $192,000 barrels a day in 2003 to anywhere above $600,000 a day presently. No deep-sea drilling rig was available anywhere in the world for hire before 2010 and the lead time to building new ones is three years.
?ONGC needs to be given a special dispensation to avert delays in our oil and gas production plans,? Sharma said. Giving details of ONGC?s expenditure towards oil and gas projects during the 11th plan, Sharma said the company will spend close to Rs 130,043 crore during 2007-12 period as against Rs 74,060 crore expenditure during the previous plan period (2002-07). For 2008-09, the company is investing Rs 19,338 crore, which is 10% more than Rs 17,651 crore of the previous year. ?Improving the reserve replacement ratio by intensifying exploratory efforts is company?s first priority,? he said. ONGC, which paid Rs 22,001 crore in 2007-08 fiscal for subsidising domestic LPG and kerosene, saw its second quarter net realisation on crude sales remaining unchanged from previous quarter, ONGC Director (Finance) DK Sarraf said.The company in April-June quarter earned $123 per barrel on crude it produced but it got only $69.14 a barrel after paying for subsidies. In July-September quarter, when oil prices have fallen but the rupee has depreciated against dollar, its net earnings would remain at almost the Q1 levels. ?While our gross realisation will be lower because of falling crude prices, our subsidy outgo is also expected to come down. So the net realisation will remain the same,? he said.
ONGC, Sharma said, was investing Rs 20,499 crore in development of various oil and gas fields across the country. Rs 3,195 crore was being spent on developing C-Series fields in western offshore while Rs 6,339 crore was envisaged to be invested in raising recovery factor from Mumbai High South to 35 %from current 31%. Another Rs 3,249 crore was envisaged to be invested in B-193 Cluster fields and Rs 2,305 crore in Heera and South Heera field development in western offshore.
Oil production in the period is envisaged at 140.06 million tonnes as against 129 million in the previous plan while gas output would go up to 112.39 million tonnes of oil equivalent from 115.51 million tonnes of oil equivalent 78% of the company?s planned capex in 11th Plan was
The company?s overseas arm ONGC Videsh Ltd is targeting 29.93 million tonnes of oil and 9.54 million tonnes of oil equivalent gas from its properties abroad in 2007-12 period. In 10th Plan it produced 17.62 million tonnes of oil and 5.88 million tonnes of oil equivalent gas, he said.
Sharma said expansion of Mangalore refinery to 15 million tonnes was on track for completion by 2010. ONGC also declared a Rs 14 per share final dividend for 2007-08, which is over and above Rs 18 per share interim dividend announced by it in December.