‘Must think innovatively to curb crude oil import dependence’

As <g data-gr-id="75">many</g> overseas oil and gas assets have become low-hanging fruit following the massive crash in crude prices, Oil Minister Dharmendra Pradhan on Friday said the government wants state-run oil companies to buy up assets abroad, particularly in Latin America.

“We are looking at buying oil and gas assets aboard. I see increased engagement in the Latin American region,” Pradhan said here without offering any details. The country imports four-fifth of its oil needs, making it the fourth-biggest oil consumer in the world. In 2013-14 <g data-gr-id="49">oil</g> import bill stood at around $150 billion, and this is expected to double to $300 billion by 2030, according to <g data-gr-id="48">industry</g> estimate. 

Recently, Prime Minister Narendra Modi had set a target of 10 per cent reduction in oil imports by 2022 and a 50 <g data-gr-id="57">per cent</g> cut by 2030. Pradhan said ONGC will be investing around Rs 1,200 crore in <g data-gr-id="58">capex</g> to increase production from the Bombay High and other western oil fields. It can be noted that after dipping for seven years, the output of ONGC, which produces 59 <g data-gr-id="59">per cent</g> of the country’s production, inched up in 2014-15 to 22.263 million tonne, up from 22.247 mt in 2013-14. 

This was the first increase in production since 2007-08 when the slump started. ONGC has been under critical scrutiny since the BJP government took office last year and the oil ministry has been monitoring its performance every month. 

ONGC’s production fell to 25.37 mt in 2008-09, 24.67 mt in 2009-10, 24.42 mt in 2010-11, 23.71 mt in 2010-11 and to 22.56 mt in 2012-13. Offshore production rose to 16.196 mt 2014-15 from 15.541 mt in <g data-gr-id="61">2013-14</g> but onshore output was lower at 6.067 mt in 2014-15 compared to 6.706 mt in 2013-14. For 2015-16, ONGC is targeting a total of 26 mt oil production -- 22.732 mt from its own fields and another 3.268 mt from joint venture fields like Barmer block in Rajasthan.

During 2014-15, joint venture fields produced 3.682 mt crude, taking its total oil to 25.945 mt. Gas output <g data-gr-id="64">was however</g> lower at 17.27 billion cubic meters in 2014-15 as against 17.96 <g data-gr-id="51">bcm</g> output in the previous fiscal. On the Farsi block in Iran, Pradhan today reiterated optimism that it could be worked out with Tehran. An ONGC Videsh-IndianOil-Oil India consortium had won bid for the Farsi block in 2002 from National Iranian Oil Co. Even without ownership rights the consortium was to be paid a 15 per cent return on investment once it was awarded development rights for <g data-gr-id="63">Farzad-B</g> gas field in the offshore Farsi block.

ONGC Videsh is the operator of the block in which it holds a 40 per cent stake. IOC has an equal stake and the balance 20 per cent is held by OIL. The block is estimated to have reserves of up to 21.68 trillion cubic feet, with recoverable reserves of around 12.8 tcf. After the US-sponsored nuclear deal, Iranian oil and gas reserves are attracting big oil companies from the West such as Total, Eni, BP and Royal Dutch Shell.

The OVL-led consortium will have to shell out around $9 billion to develop the gas field, together with the construction of a <g data-gr-id="35">liquified</g> natural gas terminal to transport the gas, while investment for exploration and production is around $5.5 billion.