‘Privatise ONGC, selling 18% can fetch Rs 41K cr’

NEW DELHI: The government should privatise ONGC rather than give away its prime producing oil and gas fields to private companies "for a song and bleed the PSU to death", say company executives.

Selling just 18 per cent out of the government's 68.07 per cent shareholding in Oil and Natural Gas Corp (ONGC) will fetch over Rs 41,000 crore at current market price, many times more than the investment commitment it may get from giving away 60 per cent in 11 identified oil and gas fields of the company, they said.

On the condition of anonymity, a cross-section of ONGC employees, officials and executives expressed dismay at the move by Directorate General of Hydrocarbons (DGH) to handover 11 of the company's fields including Kalok, Ankleshwar, Gandhar and Santhal - the big four oilfields in Gujarat, to private sector on grounds of raising output.

"If they think ONGC is inefficient, the company should be privatised. The proposed approach will only drive the company, which is India's most profitable PSU, the Air India way," one of them said.

Cutting government stake to just one share less than 50 per cent would give government enough revenues to meet its disinvestment target as well as bring in "an efficient private sector management", he said.

India has 0.3 per cent of world's oil and gas reserves but produces 0.6 per cent of global output, with ONGC accounting for the bulk of it, another official said. He sought to debunk the theory that since the recovery at the state-owned firm's fields is low, it warrants involvement of private sector in raising production.

ONGC, officials said, has maintained production levels despite most of its prime fields being in production for decades and natural decline setting. "Petroleum Minister Dharmendra Pradhan has been touting at public forums ONGC'S 'stagnant' production being on the rise," one of them said. Another official said that if drop in production is a criterion for getting so-called experts for raising production, eastern offshore KG-D6 gas fields in Bay of Bengal and Barmer oilfields in Rajasthan are the fit case.

These fields are just 8-10 years old but have seen considerable drop in production, he added. Natural gas output from the biggest gas field in the KGD6 block is one-tenth since global major BP Plc came on board nearly seven years back, he said. Another official cited the example of Panna/mukta and Tapti oil and gas fields in western offshore, which was taken away from ONGC in the 1990s and given to Enron Corp and Reliance Industries.

After Enron's bankruptcy, the fields were first operated by BG Group of UK and now under Royal Dutch Shell but the production has only fallen, leading to the partners deciding to relinquish one of the fields, he said.

The DGH wants private companies take 60 per cent stake in producing oil and gas fields of national oil companies, ONGC and OIL, with the view that they would raise production above the baseline estimate.