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Oil and Natural Gas Corp (ONGC) executives have protested the government move to give private firms control over some of its producing fields to boost stagnant output, urging the prime minister to review the proposal they claim lacks process clarity.
The oil ministry has prepared a plan to offer 60% participating interest to private players in 11fields of ONGC and 4 of Oil India, with an aim to raise production at these ageing fields. The Directorate General of Hydrocarbons (DGH), the technical arm of the Oil Ministry, reportedly used a performance index it had prepared to draw up the list of fields.
ET first reported on May 31 that the government plans to offer ONGC fields to private players for raising output. Oil and Natural Gas Corp executives say the fields considered for private investment are among the better performing, and are receiving substantial funds for enhancing output.
Losing them would mean a drop of about 15% in annual output, and scant return on investment. In a letter to Prime Minister Narendra Modi on Friday, the Association of Scientific & Technical Officers (ASTO) of ONGC alleged that the process is not transparent and sought similar evaluation of performance of fields operated by private firms.
“The Reliance – BP bid to revive KG-D6 output is still under a cloud, and we also have the striking winding up of the Tapti Asset, which demands a closer look at the success of Panna Mukta Tapti joint venture by the same techno-scientific process vis-a-vis Poor Field Performance Index applied to Ankleshwar, Gandhar, Kalol etc. fields of ONGC,” KC Hari Kumar, president of ASTO ONGC, Baroda, wrote in the letter.
ET View: Sell Stakes In Small Fields
It does make ample sense to offload stake in the smaller oil fields, so as to monetise assets. The move can bring down overhead costs and boost realisations. It would also make sense to plough back some of the proceeds from the limited divestment for much-needed exploration and production activity in the capital intensive and high-risk upstream oil sector. The way ahead is to have transparency in inviting bids for the fields.
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