ONGC Says Strategy Expected to Increase Production by 20%

ONGC is optimistic of augmenting its production by around 20 percent, in the next 2 to 5 years. C&MD Mr. Subir Raha told this to journalists, during a Press Conference, arranged on the sidelines of ONGC's 11th Annual General Meeting (AGM) in New Delhi.

ONGC has adopted a five-pronged strategy to augment its production, both from offshore as well as onshore. Firstly, the fields which were not economically viable earlier, but are now commercially-viable (due to higher crude prices) are being exploited.

Secondly, the marginal hydrocarbon fields, which are not economically-viable till now, are being developed through service contracts. A substantial amount of Oil & Gas is locked up in these marginal fields. So far, ONGC has awarded 6 such onshore fields, and 19 more offshore marginal fields are expected to be awarded by the end of this current fiscal.

Thirdly, ONGC is adopting IOR & EOR schemes, targeting a two-fold objective, firstly to increase production and secondly to improve recovery over a field's entire life-cycle. A total of Rs. 12,000 Crore has been invested in improving recovery of 15 fields of ONGC.

Fourth, ONGC is revamping the facilities of its aged fields whose infrastructure has become obsolete. For example, the 3700 kilometers of offshore pipelines are being replaced at an investment of around Rs. 1700 Crore.

Fifth, ONGC is inducting new technology to restructure its processes and systems, to improve its efficiencies.

With all these, ONGC is eyeing a substantive increase (of around 20 per cent, net of natural depletion, which varies from 6-9 percent, depending upon the field) in its production from 2005-06 onwards, which can reach around 29 Million Metric Tons (MMT) by the end of the tenth five-year Plan.

Replying to a query of a journalist, Mr. Subir Raha said that ONGC's ventures in power and petrochemicals are not diversifications from its core business, they are basically integration along the hydrocarbon value-chain. Responding to a query regarding the Ministry's view in such integration efforts, Mr. Subir Raha said that there is no instruction from the Ministry against the integration efforts.

Elaborating on the financial results of ONGC in 2003-04, Mr. Subir Raha explained that ONGC's turnover and net profit have gone down solely due to reasons beyond the control of ONGC, viz, the decision of the Government resulting in ONGC giving a cash subsidy of Rs. 2690 Crore to IOC, HPC and BPC, as a discount on product prices. Had the subsidy not been there, the financial results for 2003-04 would have been better than those for 2002-03.

A query was raised regarding ONGC's Deepwater Exploration program 'Sagar Samriddhi'. C&MD said that ONGC drills more than 350 wells every year (almost one well everyday, on an average). The success ratio of 1:3 means around a hundred dry wells every year, which is considered a reasonably good performance. A risk is definitely involved in E&P business and this is one of the inherent conflicts of such a business. The Deepwater exploration campaign is no different, only thing here is that each well costs much more. C&MD also said that it took thirty years to establish the potential of Cauvery Basin; so one should not go by spot-results in exploration business. He added that even if a well emerges dry, it gives us valuable data which are useful later.