Declining oil production of ONGC

By C. V. Gopalakrishnan

THIRUVANANTHAPURAM, NOV. 4. The crude oil production of the Oil and Natural Gas Corporation continues to decline at a disturbing pace and there is right now no indication that the trend will be reversed in the near future. This is in spite of the claims by ONGC about its having targeted higher reserves, higher recovery and higher production.

The output in the producing areas, which stood at 28.25 million tonnes in 1997-98, dropped to 26.38 million tonnes in 1998-99 and to 24.648 million tonnes in 1999-2000. Though ONGC has not yet officially released the production figures for 2000-01, indications are that the output would be less than what was achieved last year and may not exceed 24.50 million tonnes at the most.

If production by Oil India in the North East could be maintained at around 2.5 million tonnes, it is doubtful whether it would even reach the three million tonnes produced in the earlier years, total indigenous production would not be more than 28 million tonnes. Production from the Bombay High, which had been the ONGC's flagship for long and has been claiming the major share in its production has also been declining from the earlier high levels of 25-30 million tonnes annually.

The country's increasing requirements would, therefore, have to be met by imports which may go up to 80 million tonnes a year even at a conservative estimate.

The downward curve in ONGC's production started right from the mid-eighties to bely the optimism earlier felt after it had hit as much as 34 to 35 million tonnes in the late Seventies, Earlier expectations of the ONGC were that its production could well go up to 40 million tonnes before it would become necessary to level it off to ensure against flogging of its producing oil fields. It was hoped that despite this it would be possible for the ONGC to retain a high level of production with its exploration both onshore and offshore, through the initiation of production from newly discovered oil fields, and the induction of Indian and foreign companies under the New Exploration Licensing Policy.

This has not happened and with the exception of the Krishna- Godavari basin where Cairn Energy of Australia should hopefully be able to produce around two million tonnes a year. Production in the Tamil Nadu region from the Cauvery onshore and offshore areas may not amount to more than a million tonnes a year.

While ONGC's production has been declining, its sales of natural gas has, however, increased from 18,620 million cubic metres in 1997-98 to 18,816 million cubic metres in 1999-2000 and it is expected to be higher in 2000-01 having risen from a reduced production of 18,413 million cubic metres in 1998-99. This could be attributed to higher recoveries from its exclusive gas fields. The output of liquefied petroleum gas (LPG) has also gone up from 11.44 lakh tonnes in 1997-98 to 12.06 lakh tonnes in 1999-2000 and is expected to be higher in 2001-02.

The ONGC joint venture company, Petronet LNG's 12.5 per cent equity participation by itself is giving impetus to joint venture activities in areas other than exploration and production. The joint venture, ONGC-JVG, will be participating in downstream projects such as refining and gas processing, power projects and in construction projects, pipelines and process plants. The other partners in this venture are Indian Oil Corporation, Gas Authority of India, Bharat Petroleum Company, each with 12.5 per cent equity. The remaining 50 per cent is being offered to strategic partners, financial institutions and the public.

ONGC-Viddesh, a wholly owned subsidiary of ONGC, is exclusively engaged in acquiring exploration and producing acreage overseas. It has now registered its presence in Iran, Iraq and Tanzania and holds concessions in Vietnam. It is hopeful of further expanding its overseas operations. The corporation has institutionalised its research and development operations, apart from exploration, drilling, reservoir management, production technology, ocean engineering, and environment protection by setting up seven independently managed R & D centres.

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