The Union Ministry of Petroleum and Natural Gas, driven by the government’s privatisation spree to ramp up revenue, has advised the state-owned Oil and Natural Gas Corporation to sell 60 per cent of its stake in its two major oil and gas fields to private companies to boost output.
Reports, however, said that the government’s suggestion to sell stakes at ONGC’s Mumbai High and Bassein and Satellite oil and gas fields was not a binding order.
Petroleum Secretary Tarun Kapoor confirmed the same to reporters on Thursday, stating that the government has been encouraging the public sector enterprise to involve private companies and service providers to raise production.
The government for the past many years has been asking ONGC, the largest energy company in the country, to increase production, especially when the country’s dependence on imported oil has grown (to 85 per cent) amid a stagnation in production at oil and gas refineries at home.
“ONGC has to explore more so that it can discover more oil and gas reserves and bring them quickly to production to raise domestic output. The government is very clear that ONGC has to do more,” Kapoor said.
The secretary said it is time the oil company taps into less explored areas like deepsea and take expertise of the private sector to mine oil from there. The state-owned company could either handover partially explored or underdeveloped discoveries to private companies or rope them in enhancing production at existing fields, Kapoor said.
He, however, said that the government has only put forth its suggestions, leaving it to the ONGC board to take a final call.
Last month, Kapoor had informed the media about global oil major ExxonMobil Corp’s interest to buy stakes in local deep water fields of ONGC along the east coast, adding that India would be keen to invite participation from global oil companies to boost its oil and gas production.
According to reports, Amar Nath, the Additional Secretary (exploration) in the ministry in a letter to the ONGC chairman and managing director Subhash Kumar on October 28, had pointed to the low productivity levels at Mumbai High and Bassein and Satellite (B&S) refineries, and urged him to offer 60 per cent participating interest and operatorship at ONGC to international partners to boost output.
In the letter, Nath had asserted that that the changes will raise the recovery of the “mature and continuously declining Mumbai High field” from 28 per cent to 32 per cent.
This is the petroleum ministry’s third attempt to coax ONGC into tying up with private players, so far.
Mumbai High, discovered in 1974 and B&S, discovered in 1988 are the chief assets of ONGC which contribute to almost two thirds of its oil and gas production. Without them, the company would be only left with minor oil and gas fields.