The petroleum ministry has proposed that public sector giant Oil and Natural Gas Corporation (ONGC) should allot a part of its production assets to private players to increase production of crude oil and gas, including selling stakes to private companies and exploring tie-up opportunities.
Petroleum Secretary Tarun Kapoor has reportedly said the ONGC’s output has to be increased, for which it should expand its portfolio and explore more. Also, it should engage private players for deep sea exploration and increase production from existing fields.
He was answering questions about a letter Additional Secretary (Exploration) Amar Nath had written to ONGC, asking the state-run oil explorer to sell a 60 per cent stake plus operating control in the country’s largest oil and gas producing fields of Mumbai High Offshore and Bassein and Satellite (B&S) Offshore to foreign firms. Nath is also on the board of ONGC as the longest-serving government nominee director.
Currently, India is the world’s third-biggest oil consumer and importer, and its dependence on foreign crude oil has steadily risen to more than 80 per cent as its local oil and gas production has been declining for years.
“The ministry does not interfere in the working of public sector undertakings. The letter gave suggestions to ONGC on ways to increase production. Such proposals have also come from within ONGC. If ONGC wants to expand, it needs to let go of some functions and outsource them. This is the approach adopted by successful national oil companies,” an official told Business Standard, clarifying the government’s position.
In his letter to ONGC Chairman Subhash Kumar, Nath mentioned that ONGC should divest its Drilling and Well Services arms through startups, Investment Trusts, societies, firms and companies and others. The demerger of services/drilling businesses may enable the company to become asset-light with the same earnings.
Two assets—Mumbai High and Bassein—need to have output improvement models. Nath said oil recovery from them would dip and ONGC would need an “experienced international partner” for boosting production, the financial daily mentioned. He suggested giving a 60 per cent participating interest and operatorship in both these assets to foreign partners. ONGC, however, is not ready to dilute stakes in producing assets.
Worth mentioning here is that this is the second time since April that Nath has officially communicated to the ONGC chairman about bringing in foreign partners and monetise existing infrastructure, and portraying a poor picture of the company’s performance.
In August, ONGC had invited bids from private players to hand over the operations of 43 small and marginal oil and gas fields in an attempt to maximise production.
