A.K. Hazarika, Director (Onshore) ONGC in an exclusive interaction with B&E
B&E: ONGC currently has seven on shore fields in India. Can you give us the current standing of these fields across the country?
AKH: We have total of seven assets out of which six assets are producing both oil and gas and one is producing only gas. Currently all the six assets produce a total of about 8 million tones of oil and the total quantity of gas produced by all our assets are around 5.7-5.8 billion cubic meter of gas.
B&E: Cairn has made a major onshore discovery of the Barmer field in Rajasthan in which ONGC holds a 30% interest. Can you throw some light on the discovery and your collaboration with Cairn?
AKH: The region was earlier being explored by both Shell and ONGC. Unfortunately both of us failed to discover any fruitful fields in the region and Shell gave this field to Cairn Energy. Exploration is more of a gambling, who gets what no body knows. Cairn Energy was lucky enough to find hydrocarbon fields after drilling 14-15 wells. Now though discovery has been made by Cairn the catch is that the government has given those blocks on nomination basis but the licensee is ONGC. And as per the policy all the royalty for this blocks production has to be borne by the licensee. Today ONGC owns 30% of the blocks but it has to pay royalty of the rest 70% also. Thus ONGC has to give 100% royalty for being the licensee for the entire production. This is going to badly impact the financial standing and profitability of ONGC. Though the government has promised to reimburse the amount but we have got nothing but sympathy from the government so far. And as the production has already started and it is very high so our loss would also be very high. We are happy for the country but this has definitely put ONGC’s financials in trouble.
B&E: ONGC currently has seven on shore fields in India. Can you give us the current standing of these fields across the country?
AKH: We have total of seven assets out of which six assets are producing both oil and gas and one is producing only gas. Currently all the six assets produce a total of about 8 million tones of oil and the total quantity of gas produced by all our assets are around 5.7-5.8 billion cubic meter of gas.
B&E: Cairn has made a major onshore discovery of the Barmer field in Rajasthan in which ONGC holds a 30% interest. Can you throw some light on the discovery and your collaboration with Cairn?
AKH: The region was earlier being explored by both Shell and ONGC. Unfortunately both of us failed to discover any fruitful fields in the region and Shell gave this field to Cairn Energy. Exploration is more of a gambling, who gets what no body knows. Cairn Energy was lucky enough to find hydrocarbon fields after drilling 14-15 wells. Now though discovery has been made by Cairn the catch is that the government has given those blocks on nomination basis but the licensee is ONGC. And as per the policy all the royalty for this blocks production has to be borne by the licensee. Today ONGC owns 30% of the blocks but it has to pay royalty of the rest 70% also. Thus ONGC has to give 100% royalty for being the licensee for the entire production. This is going to badly impact the financial standing and profitability of ONGC. Though the government has promised to reimburse the amount but we have got nothing but sympathy from the government so far. And as the production has already started and it is very high so our loss would also be very high. We are happy for the country but this has definitely put ONGC’s financials in trouble.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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