The government has set a production target of 40 MMT of crude oil and 50 BCM of natural gas by FY 2023-24, and 70 percent of the targets are expected to be achieved by ONGC
The government has asked ONGC to identify marginal producing fields for disinvestment or privatisation
New Delhi: Frustrated with the consistent downward trajectory traced by India’s domestic crude oil production, the government has come up with an action plan to ‘restructure and revamp’ state-run Oil & Natural Gas Corporation (ONGC) in a way that will turn it into an ‘enabler’ of growth in the exploration and production (E&P) sector, a copy of the official action plan accessed by PSU Watch shows. “Given their experience and long presence in the Indian E&P sector, NOCs must become engines of E&P growth, by enabling in increasing the production of hydrocarbons to 100 MMToE (40 MMT of Crude Oil and 60 BCM of Natural Gas) by the end of FY 2023-24 not only to reduce import dependency but also to make domestic E&P industry attractive for investment by global companies.”
While acknowledging an “urgent need to restructure and revamp ONGC,” the government has proposed a slew of measures and has placed a lot of emphasis on seeking partnership with private E&P players and disinvestment or monetisation of ONGC assets to increase the production of crude oil and natural gas. The government has set a production target of 40 MMT of crude oil and 50 BCM of natural gas by FY 2023-24, and 70 percent of the targets are expected to be achieved by ONGC, according to the action plan prepared by the Directorate General of Hydrocarbons (DGH).
Govt asks ONGC to disinvestment/privatise/monetise assets
In order to raise the production of crude oil, the government has asked ONGC to identify marginal producing fields for disinvestment or privatisation. Although the Cabinet had approved the plan for disinvestment of marginal producing fields in 2019, little progress has taken place as only two out of 64 fields identified by ONGC have been bid out so far. In addition, ONGC has also been asked to invite private partnership for medium size producing fields through a suitable implementation model, like farm out and Joint Venture (JV) or Technical Service Model (TSM). According to the document, the DGH has also suggested the names of candidate fields that can be taken up by ONGC and it includes Panna-Mukta, Ratna and R Series and onshore fields like Gandhar.
ONGC can invite global players for fields like KG-DWN-98/2
ONGC has been urged to invite E&P companies to join as partners in the blocks operated by them in the NELP regime, for instance, KG-DWN-98/2, KG-OSN-2001/3, Asokenagar, among others. “ONGC needs to have partnership with global players for difficult plays (HP-HT, Ultra-deepwater) with high prospectivity. There is a potential to increase production from these acreages,” said the document. However, the working relations with the partners need to be streamlined to increase the production, it added.
“ONGC may consider developing new business models for monetisation of stranded assets/discoveries. Business models like Design, Finance, Built and Operate as well as Annuity & Securitisation based models for development should be explored,” said the document. The Centre wants ONGC to acquire acreages in OALP bid rounds in such a way that they bid for at least 50,000 sq km basinal area in every OALP cycle and bring in partners after de-risking. The aim is to bring 1 million sq km under acreage by the end of FY 2023-24.
Govt has asked ONGC to hive off drilling, other services into separate company
According to the action plan, the government has also advised ONGC to hive off drilling and various other services into separate entities. “Given its experience in every sphere of E&P, work centres and infrastructure and vast army of employees, ONGC may explore creating separate entities for drilling, well services, logging, workover services and data processing entities through various modes,” said the document reviewed by PSU Watch.
Empower asset managers: Govt to ONGC
The government has also urged ONGC to revamp administration and allocation of power in such a way that puts more power into the hands of asset managers. “Assets may be empowered to act like small companies, and all powers and functions of Board related to Operational decisions of Assets may be delegated to Asset Managers so that they can deploy the resources as per their requirements for expeditious monetisation of discoveries and further exploration. Board of Directors should act as enablers for Asset Managers in achieving their targets through policy guidelines, coordinating with the Government and providing strategic guidance from Group point of view,” said the document.
(PSU Watch– India's Business News centre that places the spotlight on PSUs, Bureaucracy, Defence and Public Policy is now on Telegram. Join PSU Watch Channel in your Telegram. You may follow us on Twitter here and stay updated)