Officials send a letter to PM, say similar moves earlier have not yielded results
An association of officers of state-owned Oil and Natural Gas Corporation (ONGC) has sought the intervention of Prime Minister Narendra Modi to stave off the government's plans to privatise 15 identified oil and gas fields.
The decision, the association claimed, will have serious implications for the country, as similar moves in earlier decades did not see the desired results, and the production, on the other hand, declined.
Industry regulator Directorate General of Hydrocarbons (DGH) has been advocating offering a 60 % stake along with the operational control in the existing ageing oil and gas fields of ONGC and Oil India Ltd (OIL) to private sector companies for enhancing its falling output. The government, which is eyeing 10% cut in oil imports by 2022 over the base year of 2014-15 is reportedly unhappy with the near-stagnant oil and gas production, and wants the private sector to contribute in enhancing the output by brining in new technologies and investments.
A letter written by the Association of Scientific & Technical Officers (ASTO) to PM Modi said that after 30 years of production, output from these fields will naturally show a dip from the peak levels, and thus cannot be termed as under-performers.
The letter, signed by ASTO's president (central working committee), Sanjay Goel, cited the example of Panna-Mukta field wherein production has declined close to 60% over the last seven years. Giving another example, Goel said that the fields discovered and developed by ONGC were eventually returned to ONGC after 20 years as the contract given to a consortium led by Essar oil way back in 1996 could not get finalised. “This clearly shows privatisation alone is not a sufficient condition for augmenting output from any hydrocarbon property” Goel said.
Further, the letter claims that if stagnant or flagging production is a criterion for identifying under-performing fields, then the same yardstick must be extended to all domestic fields.
According to the government officials, about 15 fields, of which 11 belonging to ONGC and four to Oil India, have been identified for privatisation. These fields cumulatively have reserves of 791.2 million tonne of crude oil and 333.46 billion cubic metre of gas.
According to the insiders, the top ONGC management has asked the government to reconsider its decision as they are capable of improving the efficiency by themselves and have even allocated sufficient capital for that.
However, DGH in order to push its decision is said to be coming with a mechanism wherein the explorer PSU can either get a service contractor or form a joint venture with a player which has the expertise to execute the project.
ENERGY SECURITY
- DGH is advocating offering 60% stake in the existing ageing oil and gas fields of ONGC and Oil India Ltd to private sector companies
- The government, which is eyeing 10% cut in oil imports by 2022 over the base year of 2014-15 is reportedly unhappy with the near-stagnant oil and gas production
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