ONGC clarifies: Govt’s restructuring plan not intended to limit our role in oil & gas sector

• ONGC is to act as the fulcrum around which an ecosystem for thriving oil and gas industry in the country can be created, the company has said

• ONGC is endeavoring to engage all interested players so that the concept of 'Atmanirbhar Bharat' is central theme of our domestic project execution, said the PSU

New Delhi: In a rebuttal to a bunch of reports that have appeared in the media on the government's restructuring plan for ONGC, which was first reported by PSU Watch on April 13, ONGC has said that the discussion on restructuring has been going on since April 2019 and is neither new nor intended to limit "intended to limit role or growth of ONGC." In an official statement released on Wednesday, ONGC said, "A number of press reports pertaining to the purported communication from the Ministry of Petroleum and Natural Gas are noticed that convey an impression that the role of ONGC may be significantly affected in the wake of its potential restructuring. The fact on the contrary is that the government has been continuously encouraging ONGC to play a much larger role in the context of India's oil and gas sector."

'ONGC to act as fulcrum around which an ecosystem can be created'

ONGC has said that its board approved Energy Strategy 2040 in April 2019 which outlined strategic growth initiatives across the energy value-chain. "The expectation and the strategy for ONGC is to act as the fulcrum around which an ecosystem for thriving oil and gas industry in the country can be created consistent with expectations for meeting Prime Minister's vision to reduce import dependence," said the statement. 

ALSO READ

1. Govt wants ONGC to be 'enabler' of growth, seek private partnership to raise crude oil output

2. FY21: India's crude oil production has declined by 20% in a decade, shows official data

"In this context, ONGC has continuously been reviewing its engagements to move up higher in value chain to concentrate on areas where the expected risk-reward payoff offers better business opportunities for growth. Over the years ONGC benefitted from participation of other players and opportunity specific alliances which have helped ONGC enhance value for itself, besides releasing ONGC resources to pursue more promising opportunities with perceived better risk return tradeoff. ONGC, in its efforts to augment production of oil and gas, is endeavoring to engage all interested players so that the concept of 'Atmanirbhar Bharat' is central theme of our domestic project execution," ONGC said in the statement.

ONGC to invite foreign players to explore Category-II, III basins

While stating that ONGC has rolled out its separate gas vertical, the Maharatna company said that it will increase its activities in gas sector, leveraging on its strong domestic and international presence. It added that the company is also taking steps to augment its renewables portfolio.

"ONGC is also looking into strategic relationships and close alliances with key international players through ONGC Videsh. Intention is to invite foreign participations to explore Category-II and Category-III basins which match size and scale of expectations and portfolio of these large players," said the statement.

'Issues around structure can be evaluated only after industry is under GST regime'

"ONGC has also a plan of acquiring much larger acreage through OALP. There are certain issues around structure where decisive steps can be evaluated only once the industry is completely under GST regime," said ONGC.

It added, "Requirement and opportunity for ONGC is to play an even more pronounced role in improving energy security of the country. ONGC feels confident and comfortable that the ongoing discussions within ONGC and with its stakeholders will help delivering greater value to all stakeholders, and make ONGC a much stronger commercial organisation, at par with the best in the world."

The backdrop

A copy of the official action plan prepared by the Directorate General of Hydrocarbons (DGH) and accessed by PSU Watch showed that the government planned to 'restructure and revamp' ONGC in a way that will turn it into an "enabler" of growth in the exploration and production (E&P) sector. Sources, who had spoken PSU Watch on the condition of anonymity, had said that the plan was the result of frustration on the part of the government with the consistent downward trajectory of India's domestic crude oil production, a large share of which is expected to come from ONGC. As part of the plan to improve ONGC's production of crude oil and natural gas, the government has asked the PSU to monetise marginal producing fields, invite private and foreign players for exploration of fields with high prospectivity, like KG Basin, disinvest or monetise marginal producing fields and hive off drilling and various other services into separate entities.

(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)