Oil and Natural Gas Corporation (ONGC) Chairman Sudhir Vasudeva has said the huge subsidy burden on petroleum products that the PSU has to bear
on behalf of the government is posing a major challenge for the company.
He disclosed that ONGC is using IOR and EOR technology in aging oil blocks, which has increased the cost of production. However, since the company has to sell its oil to the downstream public sector refining companies such as Indian Oil at a discount, its profit gets eroded.
"Most of our production is coming from these blocks only, where we require injecting water to push oil and maintain the pressure. For every barrel of oil we need to inject four barrels," the chairman said.
"Last year our cost of production, including the cess, was $44 a barrel. If we add $12 for this technology, the cost becomes $56 for a barrel of oil while ONGC's realisation is only $47," he lamented.
ONGC roughly has a turnover of Rs 1.5 lakh crore, of which Rs 75,000 crore turnover is from the parent company and the
rest is from OVL and MRPL.
Vasudeva said while the current price of crude oil was at $110 a barrel, ONGC's net realisation was only $47 a barrel which could not take the company very far.
ONGC will be forced to sacrifice growth as enough funds are not being realised. Vasudeva said in such a scenario ONGC was pinning its hopes on the government being consistent in correcting diesel prices as this would not only reduce under-recovery of oil marketing companies, but would also help us in increasing ONGC's net realisation, as it has to compensate the oil marketing companies.
He said ONGC has a long history. Initially it had a modest past
till Bombay High was discovered in 1989. Over the years, it remained a major mover.
Vasudeva said that Bombay High is one of the most difficult terrains to work. It is spread in an area of roughly 1,200 sq kms. The oil is submerged in 15 layers of the crust. "Hence we require several platforms to fully exploit the potential available there. There is so much of heterogeneity that it requires 150-160 platforms at Bombay High, whereas, the blocks near require five to six platforms," he added.
Vasudeva also said ONGC had gone beyond the hydrocarbon business with a power plant in Uttarakhand. "Three of our buildings are already registered as green buildings. We are trying solar and we are also trying to explore offshore wind energy," he added.
Special 
