Monetise reserves or get set for auction: Oil minister Pradhan to ONGC, OIL

Taking into account the acreage Oil Natural Gas Corporation (ONGC) Oil India Ltd (OIL) hold amid the country’s dependency on imports for oil, Petroleum Minister Dharmendra Pradhan today said that the reserves held need to be monetised else the government would take it away for auctioning.

Speaking at BNEF Summit today, Pradhan said that the two state-owned firms cannot indefinitely sit on resources when the nation is a net importer of oil gas.

“We have asked them to do two things – do it yourself, (produce oil gas) through some joint venture (with domain experts foreign companies) (and) through a new business model. But the government cannot permit you to hold resources for an indefinite time,” he said.

Despite India bidding out acreages to private other companies since the 1990s, ONGC) OIL hold a “sizeable number of acreage for years,” he said.

ONGC OIL, which discovered brought to production all of India’s eight sedimentary basins, produce about three-fourths of the nation’s oil gas.

Pradhan said India needs energy for its ambitious economic growth agenda. “We want to reduce import dependency. We want to monetise our own resources.”

The two state-owned companies, especially ONGC, have faced criticism ranging from not being able to quickly bring discoveries to production to lower recovery.

“We have given policy guidance to our state-owned oil companies – either you do on your own through new partners new economic model, (else) the government will after a particular period intervene use its authority to bid out the resources,” he said.

The government has already taken away dozens of small marginal discoveries from the two firms auctioned them in what is known as Discovered Small Field (DSF) rounds.

DSF offers pricing marketing freedom to operators, something which ONGC OIL do not have currently, constraining their efforts to monetise smaller discoveries.

Pradhan indicated the government would not hesitate to take away larger idle discoveries auction them to private foreign players.

Earlier this month, the minister had stated that the Directorate General of Hydrocarbons (DGH), the oil ministry’s technical arm, had the “full mandate” to identify unmonetised major fields that could be offered for bidding.

“Resources don’t belong to a company. They belong to the nation the government. They cannot lie with a company indefinitely. If somebody cannot monetise them, we will have to bring a new regime,” he had said.

The statement comes weeks after his ministry told ONGC to sell a stake in producing oil fields such as Ratna R-Series in western offshore to private firms get foreign partners in KG basin gas fields.

In October 2017, the DGH had identified 15 producing fields with a collective reserve of 791.2 million tonne of crude oil 333.46 billion cubic meters of gas, for handing over to private firms in the hope that they would improve upon the baseline estimate its extraction.

A year later, as many as 149 small marginal fields of ONGC were identified for private foreign companies on the grounds that the state-owned firm should focus only on bid ones.

ONGC produced 20.2 million tonne of crude oil in the fiscal year ending March 31 (2020-21), down from 20.6 million tonne in the previous year 21.1 million tonne in 2018-19. It produced 21.87 billion cubic meters of gas in 2020-21, down from 23.74 bcm in the previous year 24.67 bcm in 2018-19.

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