STEPPING ON THE GAS
ONGC anchors the country’s domestic oil production. It owns the biggest oil fields both onshore and offshore, including Bombay High, which produces 285,000 barrels a day, and the Barmer block, which produces over 200,000 barrels daily. Of the seven basins open for commercial production, six were opened by ONGC.
ONGC has its origins in the Nehruvian era. The draft of the 1948 industrial policy laid emphasis on developing the petroleum sector. Prior to Independence, undivided India had only two oil producing companies, Assam Oil and Attock. In 1955, India decided to copy the Soviet model and formed the Oil and Natural Gas Directorate. But Jawaharlal Nehru and his deputy minister in the ministry natural resources, Keshava Deva Malviya, soon realised the model wasn’t working. In 1956, the directorate was raised to the status of commission with enhanced powers, although it continued to be under the government. The mandate of the commission was to plan, promote, organise and implement programmes to develop petroleum resources, including the sale of products produced by it. This was a time when private players dominated the limited exploration that India offered.
EYE ON ACQUISITION
The present government’s target of cutting down oil imports by 10 per cent by 2022 means ONGC will have to increase production accordingly. It is also working out its acquisition of public sector oil marketing company HPCL which will strengthen its position in all three verticals of the oil business. The plan is to turn ONGC into an oil giant that can withstand the low crude oil days. In the past three years, oil prices have been constantly hovering at around $60 a barrel, and most international players believe this will continue in the long term. As gross refining margins and marketing margins of refiners are up, ONGC can expect to see a future in this acquisition.