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PM Narendra Modi's diktat puts Oil Ministry in tizzy

As is usually the case, the responsibility will be on the public sector to cough up the efficiency gains but to show such gains will not be all that easy. The burden will be particularly onerous on OIL and ONGC, both of which are grappling with falling output from ageing fields. Will it be possible, for example, to post efficiency gains in the face of declining production? Or, will efficiency gains necessarily have to be translated into higher output?

These are questions that are yet to be answered, but the ministry has to come up with an adequate response as the Prime Minister is unlikely to take kindly to non-performance.

Under Modi`s unrelenting scrutiny, there is a sense of urgency in the petroleum ministry on delivering results. Petroleum secretary Saurabh Chandra has taken matters into his own hands and has begun weekly monitoring of the performance of OIL. ONGC is also likely to come under scrutiny soon. To begin with, Chandra has asked for first quarter 2014-15 performance data from both companies.

ONGC`s overall performance, in terms of achievement of crude oil and gas production MOU targets for Q1 FY15 is 97.4 per cent and 96.7 per cent, respectively. But these figures have to go up if the Prime Minister has to be appeased. ONGC`s standalone crude oil production is 5.508 MMT against the MOU target of 5.677 MMT for Q1 FY15, which is 1.4 per cent lower than Q1 FY14. ONGC`s standalone gas production is 5.655 BCM against the MOU target of 5.886 BCM, which is 2.1 per cent lower than Q1 FY14 The company`s performance under exploratory and development drilling in the first quarter is satisfactory.

Against the Q1 FY15 target of 25 exploratory and 59 development wells, ONGC drilled 23 exploratory and 59 development wells, which is 92 per cent and 100 per cent of the target, respectively.
In case of Oil India Limited, it is likely to see a turnaround for Q1, FY15. Figures show that OIL has achieved 97 per cent of its crude oil production target for Ql FY15. But the management, under pressure from the petroleum secretary, has succeeded in raising the daily production rate which has improved from a level of 9200 MTPD on 1 April, 2014 to the existing level of 9450 MTPD on account of various corrective actions taken in field.

The company`s gas production during Q1 FY15 is 3 per cent higher as compared to Q1 FY14. However, Budget Estimate target for gas production at 2.78 BCM is lower than the MOU target at 2.838 BCM, and accordingly, OIL has been asked to increase the BE target to the level of the MOU target. The Petroleum Ministry is also seeking to benchmark internal gas consumption, as, against a production of 7.19 MMSCMD last year, the supply was 5.73 MMSCMD, indicating a very high internal consumption of 1.46 MMSCMD.
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