ONGC BUCKS TREND, BUILDS AS­SETS AMID OIL PRICE SLUMP

CMD DI­NESH K SAR­RAF POW­ERS NA­TIONAL OIL & GAS FIRM’S SPEC­TAC­U­LAR PER­FOR­MANCE

Resource Digest - - MINING -

Global oil ma­jors have slashed spend­ing and cut jobs in re­sponse to plung­ing oil prices but state-owned Oil and Nat­u­ral Gas Cor­po­ra­tion (ONGC) is us­ing the slump to build as­sets. Oil ma­jors in­clud­ing Shell, To­tal and BP have cut cap­i­tal spend­ing by at least $14 bil­lion this year in re­sponse to the plum­met­ing oil price.

Ad­dress­ing com­pany share­hold­ers, ONGC Chair­man and Man­ag­ing Di­rec­tor Di­nesh K Sar­raf said en­ergy in­dus­try, par­tic­u­larly the oil and gas sec­tor, was fac­ing chal­leng­ing times due to the col­lapse of crude prices.

Oil prices, he said, have col­lapsed from $110 per bar­rel to sub-50 dol­lars a bar­rel due to lower growth in de­mand than ex­pected from China, slow re­cov­ery in some of the de­vel­oped economies and steady build-up of new sup­plies backed by strong North Amer­i­can out­put.

“While many of the global E&P com­pa­nies have re­sponded to this sit­u­a­tion by cut­ting down their in­vest­ments, ONGC takes this as an op­por­tu­nity to build its as­sets in this en­vi­ron­ment of lower costs as well,” he said.

ONGC, he said, re­mains “stead­fastly com­mit­ted to the quest of en­ergy se­cu­rity, a na­tional pri­or­ity en­dorsed by none other than our Prime Min­is­ter.” Sar­raf said ONGC has stepped up on­go­ing de­vel­op­ment ef­forts to bring new hy­dro­car­bon vol­umes into the coun­try’s en­ergy bas­ket. “Im­por­tant projects have been given the

go-ahead for de­vel­op­ment and more pro­pos­als to mon­e­tise our re­serves are un­der var­i­ous stages of fi­nally be­ing ap­proved.”

Hav­ing re­versed the de­cline in crude oil pro­duc­tion in 201415, Oil and Nat­u­ral Gas Cor­po­ra­tion (ONGC) is now fully fo­cused on im­ple­ment­ing pro­grammes to raise out­put from age­ing and old fields.

“Ev­ery drop counts and ONGC’s pro­duc­tion track record from its pre­dom­i­nantly ma­ture port­fo­lio and com­mer­cially pru­dent and holis­tic man­age­ment of pro­duc­ing as­sets is really re­mark­able,” he said.

Im­proved Oil Re­cov­ery and En­hanced Oil Re­cov­ery projects to max­imise pro­duc­tion have yielded pos­i­tive out­comes - in 2014-15 over 34 per cent of ONGC’s crude pro­duc­tion was a re­sult of in­vest­ments in th­ese projects, he said.

“In fact, ef­fec­tive and ju­di­cious de­ploy­ment of tech­no­log­i­cal in­ter­ven­tions have en­abled your com­pany to re­verse the de­cline in do­mes­tic crude oil pro­duc­tion in the last fi­nan­cial year,” he told share­hold­ers.

Over­all de­cline rate of ONGC’s ma­ture port­fo­lio is 2 to 3 per cent com­pared to 6 to 7 per cent en­coun­tered glob­ally in sim­i­lar fields. Sar­raf said ONGC has in­vested Rs 36,187 crore in th­ese projects and re­alised an in­cre­men­tal oil gain of close to 95 mil­lion tons till FY’15. The dol­lar value of the in­cre­men­tal pro­duc­tion from th­ese projects in FY’15 alone stood at $4.5 bil­lion - around 4 per cent of coun­try’s forex outgo on im­ports.

ONGC MAKES 13TH OIL AND GAS DIS­COV­ERY IN KG-D5 BLOCK

ONGC has made an­other dis­cov­ery in its Bay of Ben­gal block KG-D5, tak­ing the num­ber of finds in the area to 13. ONGC dis­cov­ered oil and gas in the well F-1 in the north­ern part of the KG basin block KG-DWN-98/2 or KG-D5, which sits next to the flag­ging KG-D6 block of Reliance In­dus­tries. “On con­ven­tional test­ing, ex­ploratory well F-1 flowed oil at the rate of 732 bar­rels per day and gas at the rate of 13,155 cu­bic me­ters a day,” ONGC Chair­man and Man­ag­ing Di­rec­tor Di­nesh K Sar­raf told re­porters.

The 7,294.60 sq km deepsea KG-D5 block has been broadly cat­e­gorised into North­ern Dis­cov­ery Area (NDA - 3,800.6 sq km) and Southern Dis­cov­ery Area (SDA - 3,494 sq km). The lat­est dis­cov­ery has been made in NDA. ONGC plans to de­velop the dis­cov­er­ies in three clus­ters -- 14.5 mil­lion stan­dard cu­bic me­ters per day of gas for 15 years from Clus­ter-1 com­pris­ing of D&E finds of NDA in KG-D5 block and G-4 find in the neigh­bour­ing area. Clus­ter-2A mainly com­prises of oil finds of A2, P1, M3, M1 and G-2-2 in NDA which can pro­duce 75,000 bar­rels per day (3.75 mil­lion tonnes per an­num).

Clus­ter 2B, which is made up of four gas finds -- R1, U3, U1, and A1 in NDA -- en­vis­ages a peak out­put of 14 mm­scmd of gas, with cu­mu­la­tive pro­duc­tion of 32.5 bcm of gas in 14 years. “We are ini­tially look­ing at de­vel­op­ing Clus­ter-2,” he said. “We plan to get first gas by mid-2018 and first oil by mid-2019.” Clus­ter-3 is the UD-1 gas dis­cov­ery in SDA. UD-1 lies in wa­ter depth of 2,400-3,200 me­ters and there is no tech­nol­ogy to pro­duce from such depths. And so Clus­ter-3 is presently not be­ing pur­sued for de­vel­op­ment.

D.K. SAR­RAF, CHAIR­MAN AND MAN­AG­ING DI­REC­TOR, ONGC

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