Govt intensifies watch on ONGC, OIL fields to avoid production slippages

The Directorate General of Hydrocarbons (DGH) in the last few weeks has issued specific directives to Oil and Natural Gas Corp (ONGC) and Oil India Ltd (OIL) to submit daily field-wise production report as well as periodic reservoir management reports, the orders said.

In March 2015, Prime Minister Narendra Modi had called for cutting India's dependence on imports to meet oil needs by 10 per cent by 2022, from 77 per cent then.

However, India's import dependence has since only risen to 81 per cent.

While output, as well as investments by private firms, have all but dried up, Oil Minister Dharmendra Pradhan sees raising production from fields given to state-run firms on nomination basis, or without bidding, as key to achieving the target.

On May 25, the ministry offered all-powerful review committees headed by its upstream technical arm DGH, to monitor performance of ONGC and Oil India, and having powers to relinquish any oil and gas field for auctioning to private firms.

The panels will review from annual work programme and budget to declaration of a discovery as commercial as also reservoir and production performance, monitoring of development activities and collaborations with other explorers.

"The advice/decision of the Review Committee shall be implemented forthwith by the NOC (national oil company) concerned and the progress of implementation shall be reported to the Review Committee through DGH at its next meeting," the order issued by Atanu Chakraborty, Director General, DGH, said.

DGH followed it up with a June 21 order asking NOCs to submit "at the end of each day, data relating to Daily Production for each field" as well as on second day of every month "the provisional Production Data for the preceding month" and "the Reconciled Monthly Production Data for each month on or before the tenth day of the following month."

In a July 11 order, it asked the NOCs to reservoir production and performance data on a half-yearly basis and in-place reserves in each of the fields on a yearly basis.

Besides seeking all technical data on reservoir performance, it asked NOCs to immediately notify any discovery and detailed timelines for subsequent processes like declaring a find commercially viable and submission of a field development plan.

"If the NOC declares the discovery a commercial discovery, then within 200 days (for oil) and 365 days (for gas), the NOC shall submit to DGH for the purpose of review and advice by the Review Committee, a comprehensive Field Development Plan (FDP)/Feasibility Report (FR)," the July 11 order said.

For previous discoveries, it wanted a quarterly status report. ONGC produced 86 per cent of its 26.13 million tonnes of crude oil in 2016-17 fiscal from fields given to it on nomination basis. Natural gas production from nomination fields accounted for 93 per cent of the total output of 25.34 billion cubic meters.

Pradhan had at an industry event last month stated that oil recovery from reservoirs internationally is 35-40 per cent and that for gas is 55-70 per cent.

"In India, the current recovery factors of ONGC and Oil India for crude oil are as low as 27 per cent and 23 per cent.

In case of natural gas, it is 54 per cent and 43 per cent for ONGC and Oil India, respectively," he had said.

State-owned HPCL will invest Rs 61,000 crore over the next four years in expanding and upgrading its existing refining capacity to meet higher quality fuel norms, the company said in an investor presentation.

HPCL is upgrading both its Mumbai and Visakh refineries to produce fuel meeting Euro-VI emission norms.

"Major planned investments in refinery, POL (petroleum, oil and lubricants) distribution and natural gas projects," the company said in the presentation.

It will invest Rs 20,928 crore in expanding its Visakh refinery in Andhra Pradesh from 8.33 million tonnes per annum to 15 million tonnes by July 2020.

Also, the Mumbai refinery is being expanded to 9.5 million tonnes a year from current 7.5 million tonnes at a cost of Rs 4,199 crore.

The investment plans are irrespective of the proposal by Oil and Natural Gas Corp (ONGC) to buy out the government's 51.11 per cent stake in HPCL. Since HPCL will turn into a subsidiary of ONGC if the proposal gets government nod, the investment plans would not change, an official explained.

The Cabinet may this month accord approval to ONGC's proposal.

HPCL said it plans to expand Mundra-Delhi, Visakh- Vijayawada and Ramanmandi-Bahadurgarh pipelines to meet rising fuel demand.

Besides, new LPG lines will be laid and bottling plants set up to cater to the increased demand for cooking gas.

HPCL said it is building a new 9 million tonnes per annum refinery-cum-petrochemical complex at Pachpadra in Rajasthan and a petrochemical complex at Kakinada in Andhra Pradesh.

It also holds a 25 per cent interest in the mega 60 million tonnes refinery state-owned firms led by Indian Oil Corp (IOC) plan to build on the west coast in Maharashtra.

It, however, did not give costings of the projects.

Of the Rs 61,000 crore to be invested till 2021, Rs 23,400 crore will be in refining, Rs 23,600 crore in marketing infrastructure and another Rs 13,000 crore in joint venture projects.

The joint venture projects include the west coast refinery, petrochemical complex at Kakinada, a 5 million tonnes LNG import terminal at Chhara in Gujarat and a fuel farm facilities at Mumbai airport.

In the current fiscal, the company has outlaid a capex of Rs 7,110 crore as compared to Rs 5,860 crore in the previous financial year, the presentation said.