Page 4 - AsianOil Week 44 2021
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ONGC under pressure to divest assets
PROJECTS & THE Indian government’s ongoing quest to
COMPANIES improve upstream performance has circled back
once more to the idea of forcing state-run Oil
and Natural Gas Corp. (ONGC) to relinquish
control of several of its production assets.
This time, the government wants the coun-
try’s largest oil and gas producer to sell 60%
stakes and operatorship in its two biggest devel-
opments – the offshore Mumbai High and Bas-
sein & Satellite (B&S).
The Ministry of Petroleum and Natural Gas’
additional secretary of exploration, Amar Nath,
suggested the divestment strategy to ONGC
chairman and managing director Subhash
Kumar in a three-page letter sent on October 28,
local news agency PTI reported on November 2.
Nath, who sits on the ONGC board as the
government’s nominated director, argued that
divesting 60% stakes in some of the state major’s
most productive assets would open the door to
international investors.
Nath said the productivity of both devel-
opments, which account for two-thirds of the Commenting on B&S, Nath said that while
major’s oil and gas production, was low. development projects would boost the asset’s the
While redevelopment projects are expected recovery rate from 45% to 70%, ONGC could
to boost Mumbai High’s recovery rate from 28% plan for a “substantial increase” while again pro-
to 32%, Nath said this was “quite low”. Nath viding an “entry point” to international investors.
noted that the Mumbai High had “substantial He added: “ONGC should plan to invite
potential to contribute to domestic production”, experienced international partners and give 60%
but that it required an overhaul of ageing infra- PI and operatorship.”
structure – a task ONGC was expected to strug- The government has been pushing ONGC to
gle to complete. streamline its portfolio and its structure for some
“ONGC will, however, find this challenging time amid hopes of turning around a production
as its improvement/development projects have decline.
lagged behind schedule. Procedural aspects and The major’s crude oil production fell to
other constraints will not encourage ONGC 20.2mn tonnes (405,700 barrels per day) in
to take quick decisions,” Nath said. “[ONGC] financial year 2020-2021 from 20.6mn tonnes
should bring a joint venture partner of interna- (413,700 bpd) in the 2019-2020 and 21.1mn
tional experience and farm out 60% [participat- tonnes (423,700 bpd) in 2018-2019. Natural gas
ing interest] and operatorship of the field.” production, meanwhile, slid to 21.87bn cubic
metres in 2020-2021, from 23.74 bcm in 2019-
2020 and 24.67 bcm in 2018-2019.
Nath also called on ONGC to “divest its
drilling and well services arms”, a move that is
expected to help the company become flexible
and efficient. This is the second time this year
that Nath has called on ONGC to hive off various
operations into separate companies, according
to PTI.
The official reportedly wrote to Kumar
in April, calling for the implementation of a
seven-step action plan entitled “ONGC Way
Forward”.
Under the plan, ONGC would have sold off
its smaller producing oilfields – such as the Pan-
na-Mukta, Ratna and R-Series – while teaming
up with a foreign partner to develop the mul-
ti-billion dollar deepwater KG-DWN-98/2 (KG-
D5) development.
The plan also envisions creating separate enti-
ties for drilling, well services, logging, workover
services and data processing entities.
P4 www. NEWSBASE .com Week 44 04•November•2021
