Govt asks ONGC to give up 60% control in India’s largest oil field
Oil ministry wrote a letter to ONGC, citing the low productivity of both the oil fields
NEW DELHI: The petroleum ministry has told Oil and Natural Gas Corporation (ONGC) to give away 60% stake plus operating control in India’s largest oil and gas producing fields of Mumbai High and Bassein to foreign companies, according to an October 28 letter to the stateowned company.
Amar Nath, additional secretary (exploration) in the Ministry of Petroleum and Natural Gas, wrote a 3-page letter to ONGC chairman and managing director Subhash Kumar, saying productivity of the Mumbai High and Bassein & Satellite (B&S) offshore assets under stateowned firm was low and international partners should be invited and given 60% participating interest (PI) and operatorship.
This is the second time since April that Nath, who is part of the ONGC management as the longest-serving government nominee director on its board and often considered a potential candidate to replace Kumar next year, has written an official letter, painting a poor picture of the company’s performance.
According to the October 28 letter, reviewed by PTI, he said the redevelopment projects will raise recovery of the mature and continuously declining Mumbai High field from 28 per cent to 32 per cent, “which is quite low”.
“The field has substantial potential to contribute to domestic production,” he said adding the infrastructure such as pipelines and platforms on the fields are “ageing and leaking and need replacement/revamping”.
“The ONGC will, however, find this challenging as its improvement/development projects have lagged behind schedule. Procedural aspects and other constraints will not encourage ONGC to take quick decisions,” he said.
The company “should bring a joint venture partner of international experience and farm out 60% PI and operatorship of the field,” he wrote.
While projects on B&S Assets, which encompasses Bassin field—the largest gas producing field in India, envisage raising recovery factor to 70% from the current low of 45%, “ONGC can plan for a substantial increase from this field” and “can provide an entry point to international players to India to invest in gas and energy infrastructure,” he wrote.
“ONGC should plan to invite experienced international partners and give 60% PI and operatorship,” he added.
Mumbai High, which was discovered in 1974, and B&S, which was put into production in 1988, are Oil and Natural Gas Corporation’s (ONGC) mainstay assets, contributing two-thirds of its current oil and gas production. Without these assets, the company will be left with only smaller fields.
Nath also reiterated his earlier demand for ONGC to “divest its drilling and well services arms” to become asset lite and increase capital efficiency.
However, such a move would entail ONGC having to pay GST every time it would hire a rig or any other service from the hived off unit.
Nath had on April 1 written to Kumar to sell stake in producing oil fields such as to Ratna R-Series to private firms, get foreign partners in KG basin gas fields, monetise existing infrastructure, and hive off drilling and other services into a separate firm to raise production. He gave a seven-point action plan, ‘ONGC Way Forward’ to Kumar, who had taken over as the head of the company on that day.