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ONGC downplays restructuring reports

PROJECTS & INDIA’S state-owned Oil and Natural Gas Corp.
COMPANIES (ONGC) has downplayed reports of government
pressure on company management to divest
some of its assets as part of a wider restructuring
effort.
Indian newswire PTI reported on April 25
that the Ministry of Petroleum and Natural Gas
had directed the state major to partner with
private firms in producing oilfields and for-
eign players in its deepwater gas projects in the
Krishna-Godavari (KG) Basin.
Moreover, the ministry is also understood
to have directed ONGC to sell existing infra-
structure while also creating a new company
to managing drilling and other services. All of
these efforts combined are reportedly expected
to help bolster the company’s production in the
long run.
ONGC responded on April 28 by rebranding
its talks with New Delhi over a “potential restruc-
turing” as the government simply encouraging
the company “to play a much larger role in the
context of India’s oil and gas sector”.
ONGC said its talks with Ministry of Petro-
leum and Natural Gas were nothing new and
served to help the company to act as the “ful-
crum” for a thriving oil and gas ecosystem.
The state developer noted that as part of its The company wants to partner with foreign
effort to boost production it had created a sep- players in suitably sized Category-II and Catego-
arate gas business, was trying to augment its ry-III assets. Fields in Category-II and III basins
renewables portfolio and was also looking at are defined as having seen little to no exploration.
strategic relationships with key international Such assets are auctioned using more attractive
players through ONGC Videsh Ltd (OVL). bidding terms, with work commitments deter-
mining the winning bids.
ONGC added that it also has also plans to
acquire much larger acreage through the Open
Acreage Licensing Policy (OALP), which was
launched in June 2017 to replace the New Explo-
ration Licensing Policy (NELP). OALP seeks to
boost interest in the country’s upstream by offer-
ing attractive terms such as reduced royalty rates
and removing an oil tax, while also providing
marketing and pricing freedom, year-round
bidding and the ability for investors to propose
the borders of blocks they are interested in bid-
ding upon.
At the same time, however, the state major
also aired some of its grievances around gov-
ernment policy with regard to production from
fields that were either directly awarded to the
company or won under NELP.
ONGC said: “Despite uneconomical gas
prices, ONGC has been aggressively pursuing
its deepwater projects in East Coast and couple
of shallow-water projects in West Coast.”
It added: “There are certain issues around
structure where decisive steps can be evaluated
only once the industry is completely under [the]
GST regime.”
ONGC has consistently lobbied for higher
gas prices, arguing that the current structure
does not reflect market realities.™

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