India meets 82% of its energy requirements through imports. Though the country made great strides towards energy security by discovering over a billion tonne plus reserves, it still has to go a long way to meet the needs of the world’s second fastest growing economy. This puts tremendous pressure on state-run energy explorer Oil & Natural Gas Corp, which is in charge of exploring resources within the country and abroad. ONGC chairman & managing director RS Sharma takes stock of the achievements of the company and the problems faced by it in an free-wheeling interview with ET. Excerpts:
How do you defend the Rs 28,000-crore subsidy outgo, which is against shareholders’ interest?
You will appreciate that subsidy mechanism is not a unique phenomenon in India. A large number of developing countries opt for subsidizing the consumer. In India’s case, making energy available at an affordable cost is a priority for the government. To support this endeavour, ONGC was made to contribute Rs 28,225 crore last fiscal.
As far as the rationale of sharing subsidy, I would like to mention that the entire oil production for ONGC is coming from the nominated fields for which ONGC does not share any kind of profit petroleum as stipulated in the production sharing contracts (PSCs) under NELP.
As such we consider subsidy as the government’s take from the nominated blocks. However, we resent the ad hoc manner in which subsidy is calculated and imposed. All along we lobbied hard with the government for evolving a pre-defined mechanism for subsidy sharing.
Do you have a way to protect the inter-ests of both the government (the largest shareholder) and minority shareholders?
We have suggested that the subsidy should be taken in the form of a special levy on a calibrated scale. The expert group constituted by the government for recommending a viable system for fuel pricing (chaired by Kirit Parikh) has accepted our recommendations in this regard. As per this calibrated formulation, the special levy be imposed once crude oil price crosses $60/bbl.
There have been no major oil finds in the recent past. What is your strategy to enhance oil & gas production?
You are right to the extent that major oil finds are elusive. But that is the global phenomenon. However, in recent years we have accreted substantial quantity of hydrocarbon reserves in the country. As a result, we have been able to maintain positive reserve replacement ratio consistently for the last five years. In the last six years, we have established more than 1 billion tonne of in-place hydrocarbon reserves in our domestic fields, out of which Ultimate Reserves are 330 MT.
ONGC’s Vision 2020 focuses on strengthening the core activities i.e., exploration and production of oil & gas. ONGC is focusing on three strategic goals. To double the volume of hydrocarbon reserves from 6 billion tonne to 12 billion tonne by 2020, to enhance global recovery factor from 28% to 40%, and to access 20 MMT per annum equity oil from abroad.
Time-bound plans have systematically been rolled out and are at various stages of implementation. Improving reserve replacement ratio remains the first priority. Production enhancement, arresting the decline in matured fields and expeditious development of discovered fields are the other priorities.
ONGC Videsh has acquired major assets such as Imperial Energy and Satpaev block. But some criticised ONGC for paying high for these assets....
Any acquisition has to be seen in terms of its lifecycle objectives and achievements. From this perspective, we strongly believe that OVL pays a fair price at the time of acquiring assets. Let it be clearly understood that OVL goes through a very professional due diligence process for evaluating opportunities and arriving at the offer prices.
What is OVL strategy to ensure acquisition of global oil & gas assets; especially in the light of aggressive Chinese firms?
Each company follows its own strategy given its circumstances and conditions — both external and internal. Therefore it would not be appropriate to compare them with others. OVL has a long-term mission of securing equity oil and gas for the country. At the moment, OVL is all set to exceed strategic goal of 20 MMT per year of oil and gas by 2020.
ONGC is also working towards generating new (other than conventional) hydrocarbon assets such as gas hydrates. What is the progress in this direction?
ONGC is actively pursuing energy from new sources like – coal bed methane (CBM), underground coal gassification (UCG), shale gas, gas hydrates, etc. Our CBM Pilot project in Jharia pilot commercial production since Jan’2010.
ONGC is also taking up a pilot project in the Damodar basin for shale gas exploration. As far as gas hydrate is concerned we are looking for technology breakthrough for its exploitation.
As far as alternate energy sources are concerned, ONGC has already commissioned a 50 mw wind power project at Bhuj, Gujarat and is now planning to set up a 10 mw Photo Voltaic Solar farm. Besides, ONGC Energy Centre has launched research projects in several new alternative sources of energy including thermo-chemical generation of hydrogen, bioconversion of coal/oil to methane gas, solid state lighting, solar thermal energy etc. It has also joined hands with Uranium Corporation of India Limited (UCIL) for exploration and exploitation of uranium in India and abroad.
Source: Economic Times
__________________________________________________________________________________
Posts
No comments:
Post a Comment