Petroleum Minister pulls up ONGC, OIL for fall in oil and gas production

Petroleum minister Dharmendra Pradhan

IN A rare move, acting tough Petroleum minister Dharmendra Pradhan has asked leading oil and gas producing public sector undertakings (PSUs) including Oil and Natural Gas Corp (ONGC) and Oil India Ltd (OIL) to explain the reasons...
for decline in production of oil and natural gas. For the first time, ONGC and OIL, among others have been asked to explain the reasons behind drop in its oil and gas production over the past few years, especially when their private sector players including Reliance Industries Ltd and Cairn India have succeeded in making significant discoveries.
The Minister told a leading daily that the government is ready to help the oil PSUs through policies but they will have to perform and increase oil and gas production. If Reliance could get latest technologies and produce from NELP (New Exploration Licensing Policy) blocks, why can’t ONGC and OIL do that, Pradhan was quoted as saying,
He expressed shock that while ONGC has bagged many blocks from where they have not been able to produce more oil and gas even as some private players could do so.
The minister met the top brass of ONGC and OIL on July 4 in a second review undertaken within a month of the new government taking over.
He emphasised that technological advancements will have to be carried out along with increasing managerial efficiency and increase production within a stipulated time frame.
On PSUs acting as milking cows for the government to pay dividends, the minister said it was not true as PSUs were formed by the government to do business and contribute to the central exchequer and the country’s economy at large.
Crude oil production in the country declined by 0.3 percent (y-o-y) in May 2014 to 3.2 million tonnes, the second consecutive month in a row in which oil companies reported a year-on-year fall in crude oil production. In April 2014, oil production in the country had slipped by 0.1 per cent. Whereas two PSUs Oil & Natural Gas Corporation (ONGC) and Oil India reported for a poor performance and accounted over 67 percent of total crude oil production in India, private players recorded a 3.1 per cent rise in production in May 2014. These companies produced one million tonnes of crude oil during the month. ONGC, the largest oil producer in India, witnessed a 1.3 percent fall in oil production in May 2014 and produced 1.9 million tonnes of crude oil, falling short of the monthly production target by 3.1 percent. Ageing oil fields and other technical issues took a toll on ONGC’s oil production. Crude oil production of Oil India declined by 5.2 per cent to 0.3 million tonnes. Bandhs and blockades in Assam led to this fall. During the month, ONGC’s gas production fell by 0.2 percent due to lower off take by consumers and other technical issues, whereas private companies recorded an 8.2 per cent fall in gas production. Lower output from Reliance Industries’ KG basin impacted the performance of private/joint venture companies.