New Delhi: Petroleum Minister Dharmendra Pradhan put state-owned ONGC and OIL on notice Tuesday. He said both ONGC and OIL hold oil and gas reserves and they need to be monetised through joint ventures with domain experts. If that is not done, the government will take them away and auction them. Dharmendra Pradhan made the observations while speaking at the BNEF Summit. He said state-owned firms cannot indefinitely sit on resources when the nation is a net importer of oil and gas.
Despite India bidding out acreages to private and other companies since the 1990s, Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL) hold a ‘sizeable number of acreage for years’, Pradhan pointed out.
“We have asked them to do two things – do it yourself, (produce oil and gas) through some joint venture (with domain experts and foreign companies) (and) through a new business model. But the government cannot permit you to hold resources for an indefinite time,” asserted the minister.
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ONGC and OIL, which discovered and brought to production all of India’s eight sedimentary basins, produce about three-fourths of the nation’s oil and gas. The two, especially ONGC, have faced criticism ranging from not being able to quickly bring discoveries to production to lower recovery.
Pradhan said India needs energy for its ambitious economic growth agenda. “We want to reduce import dependency. We want to monetize our own resources. So we have given policy guidance to our state-owned oil companies – either you do on your own through new partners and new economic model, (else) the government will after a particular period intervene. It will use its authority to bid out the resources,” he informed.
The government has already taken away dozens of small and marginal discoveries from the two firms and auctioned them in what is known as Discovered Small Field (DSF) rounds. DSF offers pricing and marketing freedom to operators, something which ONGC and OIL do not have currently, constraining their efforts to monetise smaller discoveries.
But now Pradhan has indicated the government would not hesitate to take away larger idle discoveries and auction them to private and foreign players.
Pradhan’s statement comes weeks after his ministry told ONGC to sell a stake in producing oil fields such as Ratna R-Series in western offshore to private firms and get foreign partners in KG basin gas fields.
ONGC produced 20.2 million tonne of crude oil in the fiscal year ending March 31 (2020-21), down from 20.6 million tonne in the previous year and 21.1 million tonne in 2018-19. It produced 21.87 billion cubic meters of gas in 2020-21, down from 23.74 bcm in the previous year and 24.67 bcm in 2018-19.